High Court allows appeal on jurisdiction transfer, emphasizes right to be heard

The High Court of Calcutta, in a judgment by Justice T.S. Sivagnanam, allowed the condonation of delay in filing an appeal, citing sufficient cause. The appeal contested the transfer of assessment jurisdiction from Kolkata to Kanpur under Section 127 of the Income Tax Act, 1961, following a search and survey. The court found flaws in the transfer process, emphasizing the necessity of providing the appellant an opportunity to be heard. The matter was remanded for a fresh decision, with a stay on re-assessment proceedings until the Principal Commissioner of Income Tax in Kolkata makes a new determination.

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Issues:
1. Condonation of delay in filing appeal.
2. Validity of jurisdiction transfer under Section 127 of the Income Tax Act, 1961.
3. Opportunity of being heard before transfer of assessment jurisdiction.
4. Observations regarding pendency of writ petition and assessment proceedings.
5. Remand of the matter for a fresh decision.
6. Stay on re-assessment proceedings and notice issued under Section 148.

Analysis:
1. The High Court of Calcutta, in a judgment delivered by Justice T.S. Sivagnanam, allowed the application for condonation of delay in filing an appeal, noting sufficient cause shown by the appellant, thereby condoning the delay and granting the application.

2. The appeal challenged an order transferring assessment jurisdiction from Kolkata to Kanpur, following a search and survey operation. The appellant contended that the transfer was flawed due to failure in following the mandatory procedure under Section 127 of the Income Tax Act, 1961. The Court noted the absence of reasons recorded for not providing the appellant with an opportunity of being heard before the transfer.

3. Section 127 of the Act mandates that the assessee must be given a reasonable opportunity of being heard before transferring the case to a different assessing officer. The Court emphasized the necessity of affording such an opportunity and highlighted the lack of reasons for not doing so in the present case.

4. The Court observed that the pendency of the writ petition should not bar the assessing authority from proceeding with the assessment. However, it directed the authority to issue a notice to the appellant, allowing them a reasonable opportunity of being heard before making a decision, ultimately remanding the matter for a fresh decision.

5. Consequently, the Court disposed of the appeal and the writ petition by instructing the appellant to treat the previous order as a show cause notice, submit objections within fifteen days, and receive a hearing before a decision is made by the Principal Commissioner of Income Tax.

6. The Court ordered a stay on the re-assessment proceedings and notice issued under Section 148 until a fresh decision is made by the Principal Commissioner of Income Tax, Kolkata, in accordance with the directions provided in the judgment. No costs were awarded, and parties were to receive a certified copy of the order promptly upon completion of legal formalities. Justice Hiranmay Bhattacharyya concurred with the judgment.

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