Invalid Transfer of Jurisdiction Orders Set Aside, Procedural Fairness Ensured

The court found that the orders transferring jurisdiction under Section 127(2) of the Income Tax Act, 1961 were invalid as they were issued without affording the petitioner a proper opportunity to be heard. The court set aside the impugned orders and directed the Commissioner of Income Tax, Gurgaon, to reconsider the matter after providing the petitioners with an opportunity to respond to the proposed transfer of jurisdiction, ensuring procedural fairness within one month.

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Issues:
1. Legality of an order passed under Section 127(2) of the Income Tax Act, 1961 without affording an opportunity of hearing to the petitioner.

Analysis:
The judgment pertains to the controversy surrounding the legality of an order passed under Section 127(2) of the Income Tax Act, 1961. The petitioner contended that the order transferring jurisdiction to Kanpur was issued without serving a show cause notice or providing an opportunity of hearing. The counsel argued that Section 127(1) of the Act mandates the transfer of jurisdiction only after the assessee is given a reasonable opportunity to be heard. It was highlighted that no notice was ever served upon the petitioner, depriving them of the chance to present their case. The petitioner further argued that had a show cause notice been issued, they would have informed the officer about the shift in their registered office to Meerut, emphasizing the lack of procedural fairness in the transfer of jurisdiction.

The counsel for the revenue acknowledged the absence of a written show cause notice but pointed out that a post-decisional reply from the assessee indicated awareness of the transfer proceedings through a telephone call. Additionally, a note-sheet signed by the petitioner's representative suggested that an opportunity of hearing, as mandated by Section 127(2) of the Act, had been granted. However, the court emphasized that the requirement of affording an assessee a reasonable opportunity of hearing includes serving a notice calling for a response before transferring jurisdiction. The court stressed that the officer must inform the assessee of the proposed transfer, provide an opportunity for a hearing, and issue a reasoned order as per the Act.

Upon examining the record and submissions, the court found that the impugned orders did not comply with the provisions of Section 127 of the Act. It was concluded that the petitioner was not afforded a proper opportunity of being heard, rendering the orders invalid. Consequently, the court allowed the writ petitions, set aside the impugned orders, and directed the Commissioner of Income Tax, Gurgaon, to reconsider the matter after providing the petitioners with an opportunity to respond to the proposed transfer of jurisdiction. The court mandated the resolution of the matter within one month from the receipt of the order's certified copy, ensuring procedural fairness and adherence to statutory requirements.

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