Non-communication of recorded reasons for an income-tax transfer order breaches natural justice and invalidates the transfer.

Under section 127(1) of the Income-tax Act, a transfer order affecting an assessee is invalid if the recorded reasons are not communicated to the assessee. The requirement to record reasons is not satisfied by keeping them only in the departmental file, because the affected person must know the basis of the transfer to challenge it effectively in writ jurisdiction. Given the prejudicial nature of such an order and the absence of a statutory appeal, non-communication of reasons breaches fairness and natural justice, and the transfer order is vitiated.

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Issues: Whether an order transferring an assessee's case under section 127(1) of the Income-tax Act, 1961 is invalid when the reasons recorded for the transfer are not communicated to the assessee.

Analysis: Section 127(1) requires the authority to record reasons before transferring a case. The requirement is not satisfied merely because reasons exist in the departmental file; they must be made known to the assessee so that the affected party can understand the basis of the order and effectively challenge it in writ jurisdiction if necessary. The need to communicate reasons is reinforced by the prejudicial effect of a transfer order and the absence of any statutory appeal against it. An order requiring recorded reasons but withholding them from the person affected cannot be treated as a mere administrative matter insulated from the requirements of fairness.

Conclusion: Non-communication of the recorded reasons vitiates the transfer order, and the order is invalid in favour of the assessee.

Final Conclusion: The transfer orders were quashed because the statutory duty to record reasons necessarily included communicating those reasons to the assessee.

Ratio Decidendi: Where a statute mandates recording of reasons for an order prejudicially affecting a person, those reasons must be communicated to the affected person; otherwise the order is invalid for breach of natural justice.

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