Court sets aside transfer order under Income-tax Act for lack of hearing, emphasizes legal basis over administrative convenience.

The court allowed the writ petition, setting aside the transfer order under section 127 of the Income-tax Act, 1961, as it was made without providing the assessee a reasonable opportunity of hearing. The court emphasized that transfers should be based on legal provisions, not administrative convenience, and noted that the initial transfer lacked proper reasons. The respondents were directed to transfer the files back to Kolkata, with no costs awarded. An urgent certified copy of the order was to be provided to the parties for compliance.

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Issues:
Challenge to order under section 127 of the Income-tax Act, 1961 for transfer of files without notice or hearing.

Analysis:
The writ application challenged an order transferring files under section 127 of the Income-tax Act, 1961. The petitioners contended that the transfer was done without notice or hearing, violating statutory requirements. The respondents argued that the transfer was made under a notification for centralization of search cases, dispensing with the need for a hearing. The impugned order cited "administrative convenience" as the reason for transfer.

The court noted that section 127 mandates a reasonable opportunity of hearing to the assessee before transfer, which was not provided in this case. The order was passed solely for administrative convenience without recording proper reasons. The court emphasized that the transfer should be based on the law, not a notification. The respondents' argument of effective investigation was refuted by subsequent orders directing retransfer of files. The court found the transfer not in accordance with statutory provisions due to lack of reasons and opportunity for hearing.

Regarding the respondents' reliance on a Supreme Court judgment, the court held that each case must be considered on its own facts. The petitioners had promptly filed representations and the writ petition, indicating no delay on their part. The inconvenience to the respondents in retransferring files was dismissed as the initial transfer lacked legal basis. The court emphasized that the validity of an order must be judged from the order itself, not from subsequent justifications in affidavits.

Ultimately, the court allowed the writ petition, setting aside the transfer order and quashing consequential proceedings. The respondents were directed to transfer the files back to Kolkata. No costs were awarded, and the parties were permitted to communicate the order's gist for compliance. An urgent certified copy of the order was to be provided to the parties upon request.

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