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of <h1>Court quashes transfer orders citing lack of reasons & natural justice, remands to tax officials</h1> The court found the transfer orders under Section 127(2) of the Income Tax Act unsustainable due to inadequate reasons in the show cause notices and ... Denial of fair opportunity - Held that:- Denial of a fair opportunity to the assessee through disclosure of appropriate reasons germane to the objective intended to be achieved, at the stage of show cause notice and therefore the consequential order(s) dated 31.8.2015 and 31.7.2015, are found to be unsustainable and the same are quashed. The matter is however remanded back to the respective Principal Commissioners of Income Tax, Guwahati-I and Guwahati-II, who may take fresh steps under Section 127 of the Income Tax Act, after giving fair opportunity to the petitioners and pass appropriate order thereafter, in accordance with law, after recording his reason. Issues Involved:1. Validity of the transfer of cases under Section 127(2) of the Income Tax Act.2. Adequacy of reasons provided in the show cause notices.3. Compliance with principles of natural justice.Issue-wise Detailed Analysis:1. Validity of the transfer of cases under Section 127(2) of the Income Tax Act:The income tax authorities invoked Section 127(2) of the Income Tax Act to transfer the cases of the assessees from Guwahati to New Delhi. The Principal Commissioners of Income Tax in Guwahati issued show cause notices proposing the transfer for centralization of cases under one Officer. The final orders were passed without specifying any reasons for the proposed action, transferring the cases from Guwahati to New Delhi.2. Adequacy of reasons provided in the show cause notices:The petitioners contended that the show cause notices did not disclose the reasons for transferring the cases to New Delhi, making it difficult for them to make effective representations. The notices merely stated that the transfer was for centralization purposes, without explaining why the cases could not be centralized under an officer in Guwahati. The court emphasized that the show cause notice must convey the reason for the proposed transfer to enable the assessee to make effective representation.3. Compliance with principles of natural justice:The court referred to the judgment in Ajantha Industries Vs. Central Board of Direct Taxes, which stated that non-communication of reasons in an order prejudicially affecting the interest of any person violates the principle of natural justice. The court found that the show cause notices in the present cases did not satisfy the requirement of Sub-Section (2) of Section 127 of the Income Tax Act, as they did not disclose the reasons for the proposed transfer. The court held that the hearing provided to the assessees was a mere formality and did not satisfy the requirement of natural justice.Conclusion:The court concluded that the transfer orders were unsustainable due to the lack of proper reasons in the show cause notices and the failure to provide a fair opportunity to the assessees. The court quashed the transfer orders dated 31.8.2015 and 31.7.2015 and remanded the matter back to the respective Principal Commissioners of Income Tax in Guwahati to take fresh steps under Section 127 of the Income Tax Act, after giving fair opportunity to the petitioners and recording the reasons for the proposed action. The cases were disposed of without any order as to cost.
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