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2009 (8) TMI 779

..... asons while exercising power of transfer - Since, the reasons have been recorded in a separate order would not satisfy the requirement of section 127 of the Act because the reasons have to be part of the order and recording of separate reasons on file without communicating the same to the assessee has been considered to be unfair and unwarranted - the recording of separate reasons which are not part of the impugned order and their non-communication to the petitioners would not be sustainable in the eyes of law - Therefore,petition succeeds and the same is allowed - However,leave it open to the Commissioner to pass a fresh order in accordance with the law laid down by the hon'ble the Supreme Court in Ajantha Industries'[1975 -TMI - 6462 - SU .....

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..... rd No. III(4). 5. On January 3, 2008, the Commissioner-respondent No. 5 issued notice to Gautam Malhotra-respondent No. 2 suggesting centralization of assessment records/jurisdiction in the group cases of Sh. Gautam Malhotra and others. He was asked to show cause on or before January 16, 2008. According to the notice it was alleged that petitioner No. 2 is a resident of Delhi and he has business there (P.1). The petitioners filed objection on February 1, 2008, asserting that they are resident of old Cantt. Road, Faridkot and they did not have any kind of business in Delhi. They further averred that they are doing the business of liquor in the State of Punjab and disclosed their place of residence and properties at Faridkot. They also disclo .....

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..... d, does not disclose any reasons then such an order is liable to be set aside. In support of his submission, learned counsel has placed reliance on a judgment of the hon ble the Supreme Court rendered in the case of Ajantha Industries v. CBDT [1976] 102 ITR 281. He has further submitted that the aforesaid view has been repeatedly followed by various High Courts including this court which is the jurisdictional High Court. In that regard reliance has been placed on a Division Bench judgment in the case of Lt. Col. Paramjit Singh v. CIT [1996] 220 ITR 446 (P&H) and a Single Bench judgment in the case of Rajesh Mahajan v. CIT [2002] 257 ITR 577 (P&H). 8. Ms. Savita Saxena, learned counsel for the respondents has however argued that the .....

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..... nsferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order ; (b) Where the Directors-General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director-General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) .....

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..... 02 ITR 281 has interpreted the provisions of section 127(1) of the Act and it has been held that the requirement of recording the reasons is mandatory. The view of their Lordships is discernible from the following paragraph of the judgment which reads thus (page 285) : The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under article 226 of the Constitution or even this court under article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether .....

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..... o the assessee has been considered to be unfair and unwarranted. In support of the aforesaid proposition reliance may be placed on the observations made by a Constitution Bench of the hon ble Supreme Court in the case of Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851. In paragraph 8 of the judgment it has been observed as under : The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later .....

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