TaxTMI 
TaxTMI 
2012 (9) TMI 520
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....swered the question in the affirmative both, on principle and on authority. In this case, petitioner no.1, the assessee was admittedly not heard although it was possible to do so. The impugned order has therefore been set aside on this ground alone. In view thereof we did not permit Mr. Pardiwalla to advance any further submissions. 3 The petitioner's registered office which was originally in Delhi, was shifted to the State of Maharashtra in the year 2003. By an order dated 22.09.2003 under Section 127(2) of the Income Tax Act, 1961 ('the Act') the petitioner's case was transferred from the ITO, New Delhi to respondent no.2 for administrative convenience and coordinated investigation. Accordingly, the petitioner's tax returns were filed in and taken up for assessment for the assessment years 2003,2004 to 2009,2010 in Mumbai. 4(A) The petitioner filed its return for the assessment years 2010,2011 and 2011,2012 in Mumbai. However, by a letter dated 12.09.2011, respondent no.1 informed the petitioner that he was directed to propose to transfer the petitioner's case from ACIT, Mumbai to DCIT, New Delhi. Respondent no.1 requested the petitioner for its no objection certific....
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....ranted the petitioner time till 16.01.2012 to respond to the same. (B) Subsequently, the petitioner received a notice dated 18.01.2012 under Section 142(1) issued by respondent no.3, Deputy Commissioner of Income Tax, New Delhi stating that the jurisdiction over the case had been centralized with Central Circle 6, New Delhi. The petitioner was called upon to attend the office of respondent no.3 in connection with the assessment including the said notice under section 142(1) dated 28.12.11 issued by respondent no.2, Asst. Commissioner of Income Tax, Mumbai. (C) The Petitioner by a letter dated 27.01.2012 addressed to respondent no.3 stated that nothing had been heard by it, nor had any order been passed for centralizing the case by the Commissioner of Income Tax, Mumbai and that the notice issued by Respondent no.3 was therefore beyond jurisdiction. On the same day, the petitioner's representative, who attended the office of respondent no.3 was furnished a copy of impugned order passed under section 127(2) purporting to transfer the petitioner's case from respondent no.2 in Mumbai to respondent no.3 in New Delhi. 7 This bring us back to the impugned order dated 05.01.201....
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....any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same DirectorGeneral or Chief Commissioner or Commissioner,- (a) where the Director Generals or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the DirectorGeneral or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order; (b) where the Director Generals or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such DirectorGeneral or Chief Commissioner or Commissioner as the....
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....e him to effectively show cause against the proposed transfer. The notice must also propose to give a personal hearing." 13 A Single Judge of the Calcutta High Court in Chhota Nagpur Industrial Gases (P) Ltd. v. CIT (1998) 233 ITR 377 held that the provision of a reasonable opportunity of hearing the assesee was mandatory when it was possible to give such a hearing. It was held that the entire proceeding was vitiated because of the denial of a reasonable opportunity of hearing to the assessee. 14 A Division Bench of the Delhi High Court in Melco (P) Ltd. v. CIT, (2003) 260 ITR 450 followed the Judgment of the Andhra Pradesh High Court in Vijayasanthi Investments Pvt. Ltd. (Supra) 15(A) Section 127 fell for the consideration of a Constitution Bench of the Supreme Court in Kashiram Aggarwalla v. Union of India, (1965)1 SCR 671 = (1965) 56 ITR 14. The Supreme Court considered Section 127 prior to its amendment. However, for the present purpose, the position remained the same. Section 127(1) prior to its amendment, insofar as it was relevant, read as under: "127. The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is ....
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....e present case is from one Income Tax Officer to another whose offices are situate in the same locality; and so, the point to consider is, what is the effect of this proviso? It is urged by Mr Jain that the effect of the proviso is that the requirement as to the giving of a reasonable opportunity alone is dispensed with in respect of cases falling under the proviso, but not the requirement as to the recording of reasons. If the words used in the proviso are literally construed, it may have to be conceded that there is some force in this contention. 5. But, on the other hand, the provision that nothing in subsection (1) shall be deemed to require any opportunity to be given, is worded in an emphatic form; and that fact has to be borne in mind in considering the effect of the proviso. Besides, it would not be unreasonable to assume that the recording of reasons prescribed by Section 127(1) would be appropriate where a transfer is being made otherwise than in the manner prescribed by the proviso. In such a case, normally, the assessee has to be given a reasonable opportunity to be heard; and the natural corollary of this requirement is that his objections to the transfer should be ....
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....opportunity to be heard. In other words, it is only where it is not possible to offer the assessee an opportunity of being beard that the requirement of giving him a reasonable opportunity of being heard is dispensed with. 17 It is important to note that under Section 5(7A) of the Indian Incometax Act, 1922, there was no requirement of the assessee being given a reasonable opportunity of being heard. Section 5(7A) of the 1922 Act read as under: "Section 5(7A) The Commissioner of Incometax may transfer any case from one Incometax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Incometax Officer to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Incometax Officer from whom the case is transferred." The introduction in Section 127(1) and (2) of the 1961 Act indicates the legislative intent of providing an assessee a reasonable opportunity of being heard in cases falling under subsections (1) & (2) thereof. 18 In conclusion therefore we hold that the word "may" in Section 127 should be read as "shall". The requirement ....