Hon'ble Shashi Kant,J.
We have heard Sri Satyender Kumar Singh, learned counsel for the petitioner and Sri Dananjay Awasthi learned Senior Standing Counsel appearing on behalf of the respondents.
By means of the present petition, the petitioner is seeking following reliefs :-
a) Issue a writ, order or direction in the nature of certiorari quashing the impugned order dated 11.9.2008 passed by Commissioner of Income Tax, Ghaziabad and also to quash the further proceeding done in pursuance of this order.
b) Issue a writ, order or direction in the nature of mandamus commanding and directing the Assistant Commissioner of Income Tax, Central Circle 4, New Delhi to send the case of the petitioner back to Ghaziabad for Adjudication.
c-1) Issue a writ, order or direction in the nature of certiorari quashing the order dated 15.2.2010 passed by the Income Tax Officer (T) for Commissioner of Income Tax, Ghaziabad and also the assessment order from the year 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 20005-06, 2006-07 passed by Assistant Commissioner of Income Tax, Central Circle-IV, New Delhi.
c)Issue any order of further order or direction as this Hon'ble Court may deem fit and proper in the circumstances of the case.
d)Award the cost of the petitioner in favour of the petitioner.
Learned counsel for the petitioner submitted that the impugned transfer order dated 11.9.2008 has been passed without giving any opportunity to the petitioner and without recording any reason for the transfer of the case from ITO Ward 2 (3), Ghaziabad to Central Circle 4, New Delhi and therefore, the impugned transfer order is patently illegal. Accordingly, The assessment orders passed by the Assistant Commissioner of the Income Tax, Central Circle-4, New Delhi are invalid and liable to the quashed. In para-11 of the writ petition, it is specifically stated that "transfer order has been passed without giving any opportunity of hearing to the petitioner which is mandatory in nature". The same has not been denied in paragraph-11 of the counter affidavit.
The reliance has been placed on the decisions of the Apex Court in the Case of Ajantha Industries v. Central Board of Direct Taxes reported in (1976) 102 ITR 281 and on the decision of the Division Bench of this Court in the Case of M/s. Bansal Sharevests Services Limited, Kanpur and Others v. Commissioner of Income Tax, Kanpur and Another reported in (2006 U.P.T.C.-398) and on the decision of the Division Bench of this Court in the case of Rimjhim Ispat Ltd. v. Commissioner of Income-tax-II, Kanpur reported in (2007) 164 Taxman 90 (Allahabad)/(2009) 311 ITR 42.
Sri Dananjay Awasthi, learned Senior Standing Counsel appearing for the respondents submitted that there is nothing on record to show that the opportunity of hearing has been given to the petitioner before passing the order under Section 127 Income Tax Act. But he submitted that after the transfer of the case, the petitioner has filed the objection on 9.12.2009 which has been disposed off vide order dated 15.2.2010 which is annexure- C.A.-1. He further submitted that after transfer of the case, the Central Circle-4 New Delhi has issued the notices and the petitioner participated in the proceeding and thereafter the assessment orders have been passed.
We have heard the rival submissions and perused the record. It would be appropriate to refer section 127 of the Income Tax Act, which runs as follows:-
"Section 127 (1) The Director General or Chief Commissioner or Commissioner 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, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.
(2)Where the Assessing Officer or Assessing Officers from who the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General of Chief Commissioner or Commissioner.
(a) where the Directors General or Chief Commissioner or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the director General or Chief Commission or Commissioners from whose jurisdiction the case is to be transferred 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, authorise 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) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place.
(4)The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred."
It appears that the transfer order has been passed under Section 127 (2) of the Act. Section 127 (2) (a) provides that " the Director General or Chief Commissioner or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioners from whose jurisdiction the case is to be transferred 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." Therefore, the reasonable opportunity of hearing is pre-requisite for passing the transfer order unless it is shown that it is not possible to do so. In the present case, no reason has been recorded, that is not possible to provide the reasonable opportunity of hearing. Therefore, it was obligatory on the part of the Commissioner Income Tax to provide the reasonable opportunity of hearing before passing the transfer order. It is a pre-requisite and mandatory. In the present case admittedly, no opportunity has been given before passing the transfer order.
Further, we find that under the section, the reasons should be recorded for the transfer of the case.Perusal of the impugned order reveals that no reason has been recorded. In this regard, we would like to refer the order dated 11.9.2008 passed by Commissioner of Income Tax, Ghaziabad :-
" In exercise of Power conferred by sub-section (1) and (2) of section 127 of the Income-tax Act, 1961 (43 of 1961) and all powers enabling me in this behalf, I, the Commission of Income-tax, Ghaziabad to hereby transfer the case(s) particulars of which are mentioned in column (2) of the Schedule appended below from the Assessing Officer in column (4) to the Assessing Officer mentioned in column 5 of the Schedule.
S.N.
NAME ADDRESS OF THE ASSESSEE PAN FROM TO 1 2 3 4 5 1 M/s. S.K. Singhal (H.U.F.) 209/A-14, Devika Chamber, Raj Nagar, Ghaziabad AAEHS 4642A ITO, Ward-2(3), Ghaziabad Central Circle-4, New Delhi This order shall come into force with effect from 11.9.2008."
The aforesaid order reveals that no reason has been recorded for transferring the case from ITO Ward 2 (3), Ghaziabad to Central Circle 4, New Delhi.
In view of the above, we are of the opinion that both the requirements have not been fulfilled in the present case and therefore, the transfer order dated 11.9.2008 annexure 1 to the writ petition is patently illegal and liable to be set-aside.
We do not find any substance in the argument of the learned counsel for the respondents that since the petitioner has participated in a subsequent proceeding, therefore, it amounts to giving the proper opportunity by the Assessing Authority and it is not open to the petitioner to challenge the validity of the transfer order passed under section 127 of the Income Tax Act. Section 127 of the Act requires an opportunity to be given by the Director General or Chief Commissioner or Commissioners and not by the Assessing Authority and that too before passing the transfer order. The subsequent participation in the assessment proceeding is wholly irrelevant and will not validate the order passed under section 127.
The Apex Court in the case of Ajantha Industries v. Central Board of Direct Taxes (Supra) on the consideration of section 127 of the Act held as follows :-
" This judgment was rendered by this court on December 21, 1956, and we find that in the 1961 Act section 127 replaced section 5(7A) where the legislature has introduced, Inter alia, the requirement of recording reasons in making the order of transfer. It is manifest that once an order is passed transferring the case file of an assessee to another area the order has to be communicated. Communication of the order is an absolutely essential requirement since the assessee is then immediately made aware of the reasons which impelled the authorities to pass the order of transfer. It is apparent that if a case file is transferred from the usual place of residence or office where ordinarily assessments are made to a distant area, a great deal of inconvenience and even monetary loss is involved. That is the reason why before making an order of transfer the legislature has ordinarily imposed the requirement of a show-cause notice and also recording of reasons. The question then arises whether the reasons are at all required to be communicated to the assessee. It is submitted, on behalf of the revenue, that the very fact that reasons are recorded in the file, although these are not communicated to the assessee, fully meets the requirement of section 127(1). We are unable to accept this submission.
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 such a writ or special leave application ultimately fails is not relevant for a decision of the question.
We are clearly of opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee.
Mr. Sharma drew our attention to a decision of this court in Kashiram Aggarwalla v. Union of India4. It is submitted that this court took the view that orders under section 127(1) are held in that decision to be "purely administrative in nature" passed for consideration of convenience and no possible prejudice could be involved in the transfer. It was also held therein that under the proviso to section 127(1) it was not necessary to give the appellant an opportunity to be heard and there was consequently no need to record reasons for the transfer. This decision is not of any assistance to the revenue in the present case since that was a transfer from one Income-tax Officer to another Income-tax Officer in the same city, or, as stated in the judgment itself, "in the same locality" and the proviso to section 127(1), therefore, applied.
When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated."
In the case of M/s. Bansal Sharevests Services Limited, Kanpur and Others vs. Commissioner of Income Tax, Kanpur and Another (Supra), the Division Bench of this Court has held that "for the transfer of the case from Kanpur to Mumbai not only opportunity of hearing was required to be given but also reasons for the transfer of the case ought to have been recorded before transferring the case. In the absence of giving opportunity of hearing and recording the reason for the transfer of the case, the transfer order passed under Section 127 has been quashed."
In the case of Rimjhim Ispat Ltd. v. Commissioner of Income-tax-II, Kanpur (Supra), the Division Bench of this Court has held in paragraph 23 that :
" The assessee has to be assessed by an officer who has been vested with jurisdiction over an area where the persons carries on a business or profession under Section 124(1) of the Act. The exigencies of the tax collection may require the Income Tax Authorities to transfer the case of a particular assessee from the assessing officer of the area within which he resides or carries on business to another Income Tax officer under sub-sections (1) and (2) of Section 127 of the Act. The order of transfer is not a material infringement of the assessees' rights. Before transferring the case from one officer to another a notice has to be given to the assessee. The notice should briefly state the reasons why it is proposed to transfer the case. Before ordering transfer reasons have to be recorded and it has to be communicated to the assessee. The officer has to apply his mind to the materials on record or information available while passing an order of transfer".
On the consideration of the decision of the Apex Court and the decision of the this Court referred herein above and having regard to the provisions of section 127 of the Act, we are of the view that for exercising the power under section 127 for transferring of the case from one officer to another officer of different jurisdiction, it is mandatory to give opportunity of hearing before passing the order and further the reason for the transfer of the case must be recorded.
In the present case, neither any notice nor any opportunity has been given to the petitioner before passing the order, nor there is any finding that it is not possible to give opportunity nor any reason has been recorded for the transfer of the case.
Therefore, we are the view that the transfer order dated 11.9.2008 annexure-1 to the writ petition is illegal and liable to be quashed.
We are further of the view that since the Central Circle-4, New Delhi has assumed the jurisdiction by virtue of the transfer order dated 11.9.2008, all the orders passed by the Assistant Commissioner of the Income Tax, Central Circle-4 New Delhi are without jurisdiction and liable to be quashed and accordingly the assessment orders dated 24.12.2009 passed for the assessment years 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07 are hereby quashed.
Order Date :- 29.4.2014 Monika