2016 (8) TMI 1300 - HC - Income Tax

Court Upholds Income Tax Transfer Order Validity Under Section 127(2)(a)

The court dismissed the writ petition, upholding the validity of the transfer order under Section 127(2)(a) of the Income Tax Act, 1961. It found that the ... Transfer of case u/s 127 - order of transfer has been challenged on the ground that neither any show cause notice nor opportunity was afforded to petitioner nor the impugned order mentions any reason which is an obligatory requirement under Section 127, before an order of transfer could have been passed - Held that:- Absence of opportunity to Assessee has been explained on the ground that there is a large number of Assessees' who were under different Assessing Officers and some of the matter were already assigned to Assessing Officer under Central Range-6, New Delhi. Thus for coordinated assessment by an authority who has a complete information with him, transfer of cases from Moradabad which was under one Commissioner, to Delhi which was under another Commissioner, was found expedient and since time was short as a period would have expired on 31st March, 2012, Competent Authority in its wisdom found it a case of urgency to transfer cases without giving any opportunity. In our view, looking to the entire facts as noted above, it is not a fit case where impugned order of transfer deserves to be interfered on the ground that no reasonable opportunity was granted to Assessee. In the present case, reason of centralized assessment as a result of search and seizure conducted at entire group of Assessee, in our view, is justified cause for transferring all the cases so that the same may be handled by one officer at one place. We find some other reasons also to non suit the petitioner. When petitioner received notice from Assessing Officer to whom cases were transferred, at the earliest opportunity, he did not raise any objection that cases have been transferred without complying requirement of Section 127. It is only at the fag end when there remains a short time, rendering his cases time barred, he raised this objection obviously to frustrate the assessment. Lastly, we are also informed that assessments have already been made and petitioner has filed appeals, which are pending. These facts, in our view, also justify to decline interference in writ jurisdiction under Article 226 of Constitution of India. Thus, this is not a fit case where interference by this Court in extraordinary jurisdiction would be justified. Issues Involved:1. Legality of the transfer order under Section 127(2)(a) of the Income Tax Act, 1961.2. Requirement of show cause notice and opportunity of hearing before passing the transfer order.3. Recording and communication of reasons for the transfer order.4. Validity of consequential actions taken by the Assessing Officer at New Delhi following the transfer.Issue-wise Detailed Analysis:1. Legality of the transfer order under Section 127(2)(a) of the Income Tax Act, 1961:The petitioner challenged the transfer order dated 11th September 2012, issued by the Commissioner of Income Tax, Moradabad, transferring the income tax cases to the Assistant Commissioner of Income Tax, New Delhi. The transfer was executed under Section 127(2)(a) of the Income Tax Act, 1961, which allows for such transfers with the agreement of the respective Commissioners and after giving the assessee a reasonable opportunity of being heard, wherever possible. The court examined whether the statutory requirements under Section 127(2)(a) were met.2. Requirement of show cause notice and opportunity of hearing before passing the transfer order:The petitioner argued that no show cause notice or opportunity of hearing was provided before the transfer order was passed, violating the obligatory requirement under Section 127. The respondents contended that due to the urgency and the objective of coordinated investigation, it was not feasible to provide such an opportunity. The court noted that the phrase 'wherever it is possible to do so' allows for discretion in providing an opportunity of hearing, and in this case, the authorities found it expedient to bypass this requirement due to the urgency and the need for coordinated investigation.3. Recording and communication of reasons for the transfer order:The court emphasized that recording reasons for the transfer is mandatory under Section 127, irrespective of whether an opportunity of hearing is provided. The reasons must be communicated to the assessee to fulfill the statutory requirement. In this case, the transfer order mentioned 'centralization of cases at one place' as the reason, which the court found to be a valid reason for transfer. The court held that the requirement of recording reasons is satisfied if the order shows a conscious application of mind and is not a mechanical exercise.4. Validity of consequential actions taken by the Assessing Officer at New Delhi following the transfer:The petitioner also challenged the notices issued under Sections 153(A), 276 CC, and 277D by the Assessing Officer at New Delhi, arguing that these actions were illegal due to the illegality of the transfer order. The court found that since the transfer order was valid, all consequential actions taken by the Assessing Officer at New Delhi were also valid. The court noted that the petitioner did not raise any objection to the transfer at the earliest opportunity and only did so at a later stage, which appeared to be an attempt to frustrate the assessment process.Conclusion:The court dismissed the writ petition, holding that the transfer order was validly passed under Section 127(2)(a) of the Income Tax Act, 1961. The court found that the statutory requirements of recording and communicating reasons were met, and the urgency justified the non-issuance of a show cause notice and opportunity of hearing. Consequently, the actions taken by the Assessing Officer at New Delhi following the transfer were also deemed valid. The court declined to interfere in the extraordinary jurisdiction under Article 226 of the Constitution of India.