1964 (10) TMI 8 - SC - Income Tax

Supreme Court: No need to record reasons for transferring income-tax proceedings within the same locality

The Supreme Court upheld the validity of orders transferring income-tax proceedings to a different Income-tax Officer in the same locality without ... What is the effect of the proviso to section 127(1) of the Income-tax Act, 1961 (43 of 1961)? Held that:- the construction for which Mr. Jain contends is a reasonably possible construction. In fact if the words used in the proviso are literally read, Mr. Jain would be justified in contending that the requirement that reasons must be recorded applies even to cases falling under it. On the other hand, if the obvious object of the proviso is taken into account and the relevant previous back ground is borne in mind, it would also seem reasonable to hold that in regard to cases falling under the proviso, an opportunity need not be given to the assessee, and the consequential need to record reasons for the transfer is also unnecessary, and this view is plainly consistent with the scheme of the provision and the true intent of its requirements. We would accordingly hold that the impugned orders cannot be challenged on the ground that the Board has not recorded reasons in directing the transfer of the cases pending against the assessee from one Income-tax Officer to another in the same locaity. Appeal dismissed. Issues:Challenge to the validity of orders passed by the Central Board of Revenue under section 127(1) of the Income-tax Act, 1961 for transferring income-tax proceedings to a different Income-tax Officer in the same locality without recording reasons.Analysis:The appellant filed writ petitions challenging the validity of two orders passed by the Central Board of Revenue under section 127(1) of the Income-tax Act, 1961, transferring income-tax proceedings to a different Income-tax Officer in the same locality without recording reasons. The High Court summarily dismissed the petitions, leading to the appeal to the Supreme Court. Section 127(1) allows for the transfer of cases between Income-tax Officers, requiring the recording of reasons and providing the assessee with a reasonable opportunity to be heard, except in cases where the transfer is within the same city, locality, or place.The key issue before the Supreme Court was the interpretation of the proviso to section 127(1) regarding the necessity of recording reasons for transfers within the same locality. The appellant argued that while the proviso exempts the requirement to provide an opportunity to the assessee, it does not exempt the recording of reasons. The Court analyzed the language and intent of the proviso, emphasizing the emphatic wording exempting the opportunity requirement. The Court concluded that in cases like the present, where transfers are within the same locality, the recording of reasons is not mandatory as it is a purely administrative transfer for departmental convenience.The Court also considered the background of the provision in section 127, referencing a previous case challenging a similar provision under the earlier Income-tax Act. The Court highlighted that the requirement to record reasons and provide an opportunity to the assessee was intended for transfers between officers in different places, not within the same locality. The Court held that the proviso to section 127(1) should be construed to exempt both the opportunity and reason recording requirements for transfers within the same locality.In light of the above analysis, the Supreme Court dismissed the appeals, upholding the validity of the orders transferring the income-tax proceedings to a different Income-tax Officer in the same locality without recording reasons. The Court emphasized that such transfers within the same locality are administrative in nature and do not necessitate the recording of reasons.