Court quashes transfer order under Indian Income-Tax Act citing lack of jurisdiction

The court quashed the transfer order under Section 127(2) of the Indian Income-Tax Act, 1961, due to lack of jurisdiction and non-compliance with legal requirements. The court emphasized the necessity of a positive agreement between jurisdictional Commissioners of Income-Tax for such transfers, citing precedents. As the transfer order did not meet the legal criteria of having an agreement between officers of equal rank, the court declared the order illegal and void, ruling in favor of the petitioner and allowing the petition with no costs imposed.

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Issues:
Challenge to the transfer order under Section 127(2) of the Indian Income-Tax Act, 1961 for lack of jurisdiction and compliance with legal requirements.

Analysis:
The Writ Petition under Article 226 challenges the transfer order dated 2nd January, 2018, transferring the petitioner's case from Kolhapur to Mumbai, alleging lack of jurisdiction. The petitioner contends that the notice did not reference an agreement between officers of equal rank at Mumbai and Kolhapur, as required by Section 127(2) of the Act. The petitioner raised objections to the transfer, citing difficulties, but the order was passed without considering these objections. The petitioner sought to quash the impugned notice and order, arguing non-compliance with legal provisions.

The petitioner's objections were conveyed to higher authorities, and despite further objections raised by the petitioner, the transfer order was issued without due consideration. The petitioner argued that the transfer proceedings were initiated based on a decision by the Centralised Committee, not as required under Section 127(2) of the Act. The petitioner highlighted the absence of a positive agreement between authorities of equal rank, rendering the order illegal and void.

The Principal Commissioner of Income-Tax (2), Kolhapur, in response, asserted that proper communication and deliberations were conducted before passing the transfer order. The reply detailed the process of centralization and coordination between authorities, emphasizing the absence of dissenting notes and the agreement reached between relevant officers. However, the petitioner disputed the existence of a formal agreement as required by law.

In the judgment, the court relied on precedents, including the Supreme Court's decision in Noorul Islam Educational Trust case, emphasizing the necessity of a positive agreement between jurisdictional Commissioners of Income-Tax for invoking powers under Section 127 of the Act. The court found that the absence of a dissenting note does not constitute an agreement as mandated by law. Consequently, the court quashed the impugned order and notice, declaring the order issued without jurisdiction. The petition was allowed with no costs imposed.

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