Retrospective validation of tax transfer orders upheld; absence of hearing alone did not invalidate the transfers.

A retrospective validating amendment to section 5(7A) of the Indian Income-tax Act, 1922 was treated as if it had always formed part of the provision, so prior transfer orders were upheld despite being made before the amendment. The absence of an opportunity of hearing did not, by itself, invalidate the transfer orders, as earlier decisions only recognised the desirability of hearing and brief reasons where circumstances permit and did not make hearing a mandatory condition for validity. The challenged transfer orders were therefore sustained and the petition failed.

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Issues: (i) Whether the retrospective amendment to section 5(7A) of the Indian Income-tax Act, 1922 validated the impugned transfer orders, and (ii) whether the transfer orders were invalid for want of an opportunity of being heard.

Issue (i): Whether the retrospective amendment to section 5(7A) of the Indian Income-tax Act, 1922 validated the impugned transfer orders.

Analysis: The amended provision was retrospective and the Explanation was to be deemed always to have been part of the section. In that legal setting, the transfer orders had to be tested on the footing that the amended section existed from the beginning, and the contention that the prior orders remained invalid merely because they were made before the amendment could not be accepted.

Conclusion: The retrospective amendment validated the transfer orders, and this contention failed.

Issue (ii): Whether the transfer orders were invalid for want of an opportunity of being heard.

Analysis: The observations in earlier decisions emphasised the desirability of hearing the assessee where circumstances permit and of recording reasons briefly, but they did not lay down that absence of a hearing necessarily vitiated a transfer order. The relevant legal position was that the absence of a hearing was not treated as rendering the transfer power unconstitutional or the particular orders void, especially where the statutory challenge based on article 14 had not been accepted.

Conclusion: The transfer orders were not vitiated for want of hearing.

Final Conclusion: The challenged transfer orders were upheld and the petition was dismissed.

Ratio Decidendi: A retrospective validating amendment to the transfer provision cures prior invalidity, and the absence of an opportunity of hearing does not by itself vitiate a transfer order unless the statute or binding law makes such hearing mandatory.

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