1996 (3) TMI 115 - HC - Income Tax

Transfer order under Income-tax Act set aside due to lack of hearing opportunity & notice to petitioners. Importance of formal notice highlighted. Commissioner to issue fresh order.

The court set aside the transfer order under section 127 of the Income-tax Act due to the lack of opportunity of hearing and non-communication of the ... Proposed Transfer Issues involved: Challenge to transfer order u/s 127 of the Income-tax Act, 1961; Allegation of lack of opportunity of hearing; Non-communication of transfer order.Challenge to Transfer Order u/s 127:The petitioners contested the transfer order dated April 29, 1994, u/s 127(2) of the Income-tax Act, which transferred their cases from Kanpur, U. P. to Raipur, in M. P. The petitioners argued that the Commissioner failed to provide them with an opportunity of hearing as required by the Act. The respondents claimed that the petitioners had submitted objections to the transfer, but the court held that a formal notice must be given when transferring a case to ensure the assessee is aware of the reasons for the transfer.Non-Compliance with Section 127 Requirements:The court emphasized the necessity of providing a notice under section 127 when transferring a case, as it enables the assessee to understand the basis for the transfer and respond adequately. Mere filing of objections by the petitioners did not fulfill the statutory requirement, especially since the reasons for transfer were not addressed in the impugned order. The court cited a similar view taken by the Andhra Pradesh High Court in a relevant case.Failure to Address Assessee's Allegations:The petitioners had raised specific concerns in their objections, highlighting the tax payments and business operations conducted in Kanpur. However, the Commissioner failed to address these crucial points in the transfer order, leading to a lack of proper consideration of the assessee's contentions. This failure to address factual allegations made by the petitioners rendered the transfer order invalid.Non-Communication of Transfer Order:The petitioners alleged that the transfer order had not been communicated to them, which was deemed a serious flaw according to legal precedents. Despite the respondents' argument that annexing the order to the writ petition implied communication, the court held that non-communication of the order was a significant irregularity, as established by previous court decisions.Judgment and Relief:In light of the above reasons, the court set aside the impugned order dated April 29, 1994, but granted the Commissioner the opportunity to issue a fresh order after complying with the necessary legal requirements, including providing a formal notice u/s 127 of the Income-tax Act. The writ petition was allowed with no costs awarded to either party, and a certified copy of the judgment was to be provided to the counsels by a specified date.