TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 1300
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....ssessing Officer at New Delhi, after cases stood transferred to New Delhi, on the ground that transfer order itself being illegal, all consequential actions initiated by Assessing Officer at New Delhi are also illegal. 3. The order of transfer has been challenged on the ground that neither any show cause notice nor opportunity was afforded to petitioner nor the impugned order mentions any reason which is an obligatory requirement under Section 127, before an order of transfer could have been passed, in view of law laid down in Ajantha Industries Vs. Central Board of Direct Taxes, (1976) 102 ITR 281 (SC) and Division Bench judgments of this Court in Bansal Sharevests Services Ltd. and another Vs. Commissioner of Income Tax and another, (2006) 283 ITR 332 (All); RPS Associates Vs. Director of Income Tax (Investigation), (2015) 280 CTR 582; Bansal Sharevests Services and another Vs. Commissioner of Income Tax and another, (2006) 283 ITR 332; Vinay Kumar another Vs. Commissioner of Income Tax another, (1996) 221 ITR 566; Writ (Tax) Petition No. 877 of 2010, Sanjay Gupta Vs. Union of India and others decided on 25.11.2010. Writ Tax Petition No. 16 of 2014, Smt. Chandra Prabha Kushwaha ....
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....elve cases of Chadha Group of Moradabad which include petitioner also, and concurrence granted by CIT (Central-III) for centralization of these cases, necessary order of transfer under Section 127 for coordination and investigation of cases is being passed. Stand taken by respondents is that looking to urgency and objective of coordinated investigation at one place, centralization of all cases was found necessary. 6. Manish Goyal, counsel for respondent urged that Section 127 contemplates reasonable opportunity of hearing "wherever it is possible to do so" and not in all cases. In the present case looking to above facts, authorities found utmost expediency to pass immediate order hence opportunity was not found feasible. Further, disclosure of detailed reasons could have defeated the purpose of transfer and may have come in the way of proper and effective enquiry, hence detailed reasons were not furnished in the order. 7. Before proceeding further, we may place on record certain additional facts which have emerged from record. After order of transfer was passed, Assessing Officer at Delhi issued notice under Section 153A to petitioner on 8th April, 2013 for filing returns for Ass....
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....atter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order;" (emphasis added) 12. Provision is very clear, Order of transfer can be passed after complying two requirements; (i) after giving Assessee, a reasonable opportunity of hearing wherever it is possible to do so; and (ii) recording of reasons for doing so. 13. Statute says that opportunity of hearing is necessary in such cases where it is possible to do so meaning thereby it is not necessary to be observed invariably in each and every case, whenever orders transferring cases are passed. However, second requirement that reasons shall be recorded is applicable in all the cases irrespective of the fact whether order of transfer has been passed after giving opportunity of hearing or not. Statute is clear and in emphatic terms requires that reasons shall be recorded by Competent Authority. Not only that but reasons must be communicated to Assessee, otherwise very purpose of recording reasons would be frustrated. When it is said that order shall be passed after recording reasons, in our view, reasons cannot be recorded and kept in file but the order itself must contain reasons for tran....
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.... argument of Revenue was not accepted. Court said that Section 127 has been introduced in Act, 1961 and even substituted Section 127 by Finance Act, 1976 emphasizes upon "recording of reasons". Once an order is passed transferring a case of an Assessee to another area, order containing reasons has to be communicated. Communication of order is absolutely essential requirement since Assessee is then made aware of reasons which impelled authority to pass order of transfer. Assessee shall have an opportunity to approach High Court under Article 226 of Constitution of India. Court thus said that "we are clearly of opinion that the requirement of recording reasons under Section 127(1) is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to Assessee". Court specifically overruled an otherwise judgment of Delhi High Court in Sunanda Vs. Union of India, (1975) 99 ITR 391. Court said, when law requires reasons to be recorded in the order affecting prejudicially, interests of any person, who can challenge such order in Court, it ceases to be a mere administrative order and the vice of violatio....
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....s of natural justice as also recording of reason but simultaneously has used phrase "whenever it is possible to do so". This has been noticed by a Constitution Bench in Kanshi Ram Agarwal Vs. Union of India, AIR 1965 SC 1028. Reading Section 127, Court has said that Section 127(1) imposes an obligation on the authority exercising its power under the said Section to record its reasons for directing transfer of a case from one Income Tax Officer to another. It further requires that whenever power conferred by Section 127 is intended to be exercised, an opportunity should be given to Assessee, "whenever it is possible to do so" and reasons have to be recorded for making the order of transfer. Court thus held that opportunity to Assessee shall be offered "whenever it is possible to do so" but order must contain reasons for transfer. Court further held that "requirement that opportunity should be given, cannot be said to be on obligatory, because it has been left to discretion of authority to consider whether it is possible to give such opportunity to Assessee". This is of course, true, in coming to the conclusion, that Authority must act reasonably and bona-fide; but if Authority comes....
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....s not given shall vitiate order of transfer, in our view, cannot be accepted for reason that statute does not make requirement of opportunity mandatory but it is subject to condition "wherever it is possible to do so" and in a given case, the mere fact that notice was not given to Assessee, will not vitiate order if the circumstances do justify such non affording opportunity. 24. A careful reading of Section 127(2)(a) leads no manner of doubt that requirement of "reasonable opportunity" to Assessee is subjected and conditional i.e. "whenever it is possible to do so". Department may proceed to pass an order of transfer without giving such opportunity if opportunity is not possible. 25. When a phrase has actually been used by Legislature in a statute, we cannot either ignore it or omit or render it redundant by reading that in every case an opportunity is must, else order of transfer is rendered bad. The words used by legislature have to be read and given due meaning and effect and that is the basic principle of interpretation. Each and every word used by legislature has some meaning or consequence and whenever an statute is considered, every word must be given its logical meaning ....
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.... the mind of Competent Authority to exercise power of transfer and such reason or ground is not flimsy, imaginary, whimsical. It must disclose that patently, logic and prudence has been applied before passing it. 29. In M/s Redwood Hotel (P.) Limited Vs. Chief Commissioner of Income Tax and others, (2003) 259 ITR 191, a similar reason for transfer of cases under Section 127(2) was held valid. Court observed that Section 127 only provides for an administrative arrangement authorizing Chief Commissioners to transfer files from one officer to another for better and more efficient handling of files. When group of cases are handeled, it is always desirable to have one officer handling all assessments together so that related transactions can be better appreciated by officer. Court further held that it is for Department to consider consolidation of all files of firms and companies and partners and directors, including those who are now assessed at different places so as to be assessed at one place. 30. In K.P. Mohammed Salim Vs. Commissioner of Income tax, Cochin, (2008) 11 SCC 573, considering Section 127, Court said, order of transfer is passed for the purpose of assessment of income....