Transfer order under Section 127 not proved communicated; proceedings under Sections 143(2), 142(1) stayed pending challenge

HC considered a challenge to a transfer order u/s 127 on the ground that, though passed by the Principal CIT, Bareilly, it was not communicated to the assessee. The record showed the order was endorsed to several authorities and only sixth to the assessee, with no proof of dispatch. Relying on SC precedent that both passing and communication of the order are mandatory, HC held the matter requires consideration. Notice was issued, time granted for counter affidavit, and further proceedings pursuant to notices u/s 143(2) and 142(1) were stayed meanwhile.

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Petitioner challenged that a notice dated 03.08.2023 under Section 127, Income Tax Act, 1961 was not communicated though an order dated 23.08.2023 purportedly under Section 127 was passed. Respondents produced instructions indicating the order was passed by the Principal Commissioner on 23.08.2023 but details of dispatch to the assessee are not readily available. Endorsement on the order lists the assessee as the sixth addressee, and "apparently, the order has not been communicated to the petitioner." Reliance was placed on Ajanhta Industries v. Central Board of Direct Taxes ([1976] 102 ITR 281) that "passing of the order and its communication to the assessee is mandatory and non-communication thereof is not saved by showing that reasons existed." Court issued notice, directed filing of a counter-affidavit within six weeks, and ordered that, "in the meanwhile and till further orders, further proceedings pursuant to notice under Section 123(2) and 142 of the Act ... shall remain stayed."

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