Transfer of income-tax proceedings requires fair hearing and reasons; successor officer may continue without de novo hearing.

Transfer of an income-tax case under section 127 requires notice, an opportunity of hearing, and recorded reasons unless a clear legal basis dispenses with those safeguards; on the facts, the transfer was unjustified because no cogent ground supported moving the matter away from the assessee's place of business and assessment convenience. Section 129 allows a successor Assessing Officer to continue proceedings from the stage left by the predecessor, so a change in incumbent does not by itself require a fresh de novo hearing, though the assessee may seek reopening or rehearing. The transfer order was therefore invalid to that extent, and the matter was directed to proceed only after notice and a reasoned decision.

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Issues: Whether the transfer of the income-tax case from one Assessing Officer to another could be sustained without prior notice, hearing, and recorded reasons under section 127 of the Income-tax Act, 1961; and whether the assessee's convenience and the change of incumbent under section 129 of the Income-tax Act, 1961 negated any requirement of de novo hearing.

Analysis: The transfer power under section 127 was treated as a supervisory power that must ordinarily be exercised consistently with fairness and the principles of natural justice. In the absence of a clear legal basis dispensing with notice and opportunity of hearing, and where no cogent ground justified shifting the matter away from the place of business and assessment convenience, the transfer was found to be unjustified. The Court also noted that section 129 permits continuation of proceedings by a successor officer from the stage left by the predecessor, subject to the assessee's right to seek reopening or rehearing, and therefore there was no requirement of a fresh de novo hearing merely because the incumbent changed.

Conclusion: The transfer order was invalid for want of fair hearing and proper justification, and the assessee succeeded on the challenge to that extent. The authority was directed to issue notice, afford a reasonable opportunity, and pass a reasoned order, with the assessment proceeding kept stayed in the meantime.

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