TMI Blog2012 (9) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioners' objections were filed on 19.12.2011 and the impugned order was passed on 05.01.2012 i.e. within 16 days as the Paragraphs 6 & 7 of the affidavit in rejoinder refer to the petitioner's letter dated 19.12.2011 and the impugned order dated 05.01.2012 respectively. No details have been furnished as to when the petitioner's Counsel were heard. Paragraph 8 merely states that the sequence of facts and correspondence indicate that sufficient opportunities of being heard were given to the petitioner without furnishing details in respect of the alleged hearing. Paragraph 8 of the rejoinder further states that the petitioner had indicated in its letter that it preferred to submit its objection in writing and that the same were therefore considered before passing the impugned order. This is incorrect. In the correspondence which we have already referred to the petitioner had expressly requested for a personal hearing, thus he impugned order is liable to be set aside on the ground that the petitioner had not been heard - in favour of assessee. - WRIT PETITION NO.596 OF 2012 - - - Dated:- 12-9-2012 - S.J.VAZIFDAR M.S.SANKLECHA, JJ. Mr. Percy Pardiwalla, Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons and requested him to furnish the reasons for the proposed transfer and thereafter, to offer it reasonable time to object to the same. It is important to note that the Petitioner expressly stated that the first respondent ought to grant it a personal hearing after receiving its objections. Accordingly, the petitioner requested the first respondent to keep the proposed transfer in abeyance till the personal hearing was granted. (C) Respondent No.1 by a letter dated 23.11.2011 stated that the transfer was proposed in view of the large scale finance transactions and investments of the petitioner with the Sahara Group of Companies to which it belonged and that the other entities of the Sahara Group were already centralized in New Delhi. The letter offered the petitioner an opportunity to file its written submissions on or before 05.12.2011. The letter did not mention anything about a personal hearing. (D) The petitioner by a letter dated 05.12.2011 stated that it would submit its detailed reply by 20.12.2011 and requested an adjournment accordingly. The letter refers to the hearing fixed today (05.12.2011) vide notice dated 23.11.2011, but, as noted earlier that letter di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also a fact that the assessee has substantial loan / financial transactions with the other group entities. Therefore, since the assessee's group cases are centralized with DCIT Central Circle6, New Delhi, for the purpose of coordinated investigation and assessment, in exercise of the powers conferred by subsection (2) of Section 127 of Income Tax Act, 1961 and all other powers enabling me in this behalf, I, the Commissioner of Income Tax8, Mumbai, hereby transfer the case, the particulars of which are mentioned in column (2) of the schedule hereunder, from the officer mentioned column (3) to the officer mentioned in column (4) thereof. The order was directed to take effect from 06.01.2012. 8 Mr. Pinto, the learned Counsel appearing on behalf of the respondents submitted that Section 127 merely requires an assessee to be granted an opportunity of placing its submission in writing before the concerned officer. According to him, Section 127 does not require the concerned officer to grant an assessee a personal hearing in respect of proceedings under section 127(1) and 127(2) even where it is possible to do so. 9 This submission is illfounded on principle and on precedent. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. 10 The Section read as above indicates that the word 'may' in sub sections (1) and (2) of Section 127 ought to be read as 'shall'. It is obvious that upon the transfer of a case from one jurisdiction to another in a different city as opposed to cases where the transfer is from one officer to another in the same city, locality or place, would adversely affect the rights of an assessee for reasons too obvious to state. This becomes clear when sub sections (1) (2) on the one hand are compared to subsection (3) on the other. In cases falling under sub Section (3), there is no requirement of giving the assessee a reasonable opportunity of being heard in the matter. 11 The Madhya Pradesh High Court in Sagarmal Spinning Weaving Mills Ltd. v. C.B.D.T., (1972)83 ITR 130 held as under: As already indicated by us, on a plain reading of Section 127 of the Income Tax Act, 1961, two things are absolutely necessary, namely, a reasonable opportunity of being heard in the matter wherever it is possible to do so and, secondly, the recording of reasons for transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Officer to another whose offices are situate in the same city, locality or place. (B) It is useful to note that the Supreme Court dealt with a case which fell within the proviso i.e. the transfer was from one ITO to another where offices were situate in the same city. Such a case falls under subsection (3) of section 127 as it now stands. In the case before us the transfer is from one officer in Mumbai to another in New Delhi which falls within subsection (2) of section 127 as it now stands and would have fallen under the main section 127 prior to its amendment. The Supreme Court has noted and dealt with the two types of cases. The Supreme Court held as under: 3. ............. It will be noticed that Section 127(1) requires that where the power conferred by it is intended to be exercised, an opportunity should be given to the assessee wherever it is possible to do so, and reasons have to be recorded for making the order of transfer. The requirement that opportunity should be given, cannot be said to be obligatory, because it has been left to the discretion of the authority to consider whether it is possible to give such an opportunity to the assessee. It is, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o so, Section 127(1) requires that the transfer being of a category where a reasonable opportunity should be given to the assessee, the authority should record its reasons for making the transfer, even though no opportunity was in fact given to the assessee. If that be the true position, it is not easy to understand why the proviso should be so construed as to require reason to be given for the transfer, even though no opportunity to the assessee is required to be given. That is one aspect of the matter which has to be borne in mind in determining the true scope and effect of the proviso. (emphasis supplied) 16 The Supreme Court has therefore clearly held that a reasonable opportunity should be given to the assessee wherever it is possible to do so. The opportunity referred to is a reasonable opportunity of being heard. There is no other opportunity referred to in the section. The observation in paragraph 3 that the opportunity cannot be said to be obligatory, refers to those cases where it is not possible to give such an opportunity to the assessee. The discretion of the authority is only to consider whether it is possible to give such an opportunity to the assessee or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon an affidavit in surrejoinder filed by respondent no.1 who had passed the impugned order. In paragraph 1 it is stated that sufficient opportunity of being heard was given to the Counsel appearing for the petitioner before the impugned order was passed. He was however, unable to indicate anything in support of this averment. The affidavit does not even furnish the approximate date on which the petitioner's Counsel were heard. As stated earlier, the petitioners' objections were filed on 19.12.2011 and the impugned order was passed on 05.01.2012 i.e. within 16 days. Paragraphs 6 7 of the affidavit in surrejoinder refer to the petitioner's letter dated 19.12.2011 and the impugned order dated 05.01.2012 respectively. All that is stated in paragraph 7 is that these submissions (i.e. the submissions contained in the petitioner's letter dated 19.12.2011) were taken into consideration. No details have been furnished as to when the petitioner's Counsel were heard. Paragraph 8 merely states that the sequence of facts and correspondence indicate that sufficient opportunities of being heard were given to the petitioner without furnishing details in respect of the alleged hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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