Allahabad High Court
Ashok Kumar Jain vs Commissioner Of Income Tax, ... on 7 July, 2014
Bench: Tarun Agarwala, Dinesh Gupta
HIGH COURT OF JUDICATURE AT ALLAHABAD
AFR
Court No. - 33
Case :- WRIT TAX No. - 620 of 2010
Petitioner :- Ashok Kumar Jain
Respondent :- Commissioner Of Income Tax, Ghaziabad & Others
Counsel for Petitioner :- Nikhil Agrawal,Dhruv Agrawal
Counsel for Respondent :- C.S.C.,A.N.Mahajan,Dhananjay Awasthi
Hon'ble Tarun Agarwala,J.
Hon'ble Dinesh Gupta,J.
We have heard Shri Nikhil Agrawal, assisted by Shri Piyush Agrawal, the learned counsel for the petitioner and Shri Dhananjay Awasthi, the learned counsel appearing for the Income Tax Department.
The petitioner is an assessee being assessed by the Income Tax Department, Ghaziabad and has filed the present writ petition questioning the validity and illegality of the order dated 9.3.2006 passed by the Commissioner of Income Tax, under Section 127 (1) and (2) of the Income Tax Act, 1961 by which the jurisdiction of the petitioner's to file his returns has been transferred from the Income Tax Officer, Ward 1(1), Ghaziabad to Additional Commissioner of Income Tax, Central Circle-11, New Delhi with effect from 9.3.2006.
As a consequence of the said order, a notice dated 17.3.2010 has been issued by the Deputy Commissioner of Income Tax, Central Circle-11, New Delhi under Section 148 of the Income Tax Act for the assessment year 2003-04, which has also been questioned in the writ petition alleging that the same has been issued without any jurisdiction and without any authority of law.
The facts leading to the filing of the writ petition in brief is, that petitioner has filed his returns before the Income Tax Department, Ghaziabad. The Commissioner of Income Tax, Ghaziabad issued an order dated 9.3.2006 under Section 127 (1) and (2) of the Act transferring the case of the petitioner from Ghaziabad to New Delhi. This order was never communicated to the petitioner nor any notice was given to the petitioner prior to the passing of the said order nor any opportunity was provided to him.
The petitioner came to know about the transfer order for the first time when the Deputy Commissioner of Income Tax, New Delhi issued a notice under Section 147 of the Act for reopening the assessment proceedings for the assessment year 2003-04.
At that stage, the petitioner upon coming to know about the transfer order has filed the present writ petition. An interim order dated 20.4.2010 was passed staying further proceedings under Section 148 of the Act.
The learned counsel submitted that prior to an order being passed under Section 127 of the Act, it was essential and imperative for the authority to issue a show cause notice containing the reasons for exercising the powers under Section 127 as well as the reasons for transferring the case from one area to another area. The learned counsel further submitted that apart from service of notice, it was also essential that a reasonable opportunity was provided to the assessee and that after passing any order the same should also be communicated which in the instant case was not done. Consequently the order passed under Section 127 was in gross violation of the principles of natural justice. The learned counsel also submitted that as a result of transfer of the jurisdiction, notice so issued under Section 147 was patently illegal and without jurisdiction, which is also liable to be quashed.
For facility, the provision of Section 127 of the Income Tax Act, 1961 is extracted herein under:-
127. Power to transfer cases.-
(1) The Director General or Chief Commissioner or Commissioner 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, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officer (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 Director General or Chief Commissioner or Commissioner,-
(a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General 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 Directors General 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 Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf.
(3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the officers of all such officers are situated in the same city, locality or place.
(4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.
From a perusal of the aforesaid provisions, it is apparently clear that the authority was required to give a notice indicating the reasons for transferring the case from one area to another area. The said provision also indicates that a reasonable opportunity of hearing was required to be given to the assessee.
The petitioner, in the instant case, has categorically stated in paras 3, 4 and 5 of the writ petition that no notice was ever given to the petitioner under Section 127 of the Act nor any opportunity of hearing was provided and that the notice did not contain any reason for transfer. These facts have not been denied by the Income Tax Department in their counter affidavit.
In Bansal Sharevests Services Ltd vs. Commissioner of Income Tax and another, (2006) 283 ITR 332 (All), a Division Bench of this Court had the occasion to consider the provisions of Section 127 (2) of the Act, held that the authority was required to give a reasonable opportunity of hearing and that reasons were also required to be recorded before passing the order. Since the order transferring the case did not record any reason nor opportunity of hearing was provided to the assessee, the Court held that impugned order could not be sustained and accordingly quashed the order transferring the case from one area to another area.
In Ajantha Industries and others vs. Central Board of Direct Taxes and others, 102 ITR 281, the Supreme Court held that the authority was required to record reasons prior to passing the order of transfer and since the impugned order did not indicate any reasons while passing the order of transfer, the said order could not be sustained and was accordingly quashed. The Supreme Court held that the requirement of recording reasons under section 127 (1) is mandatory under the law and non-communication thereof was not saved by showing that the reasons existed in the files although not communicated to the assessee.
In the light of the aforesaid, from a perusal of the counter affidavit as well as from a perusal of the impugned order passed under Section 127, no reasons have been recorded for transferring the case from Ghaziabad to New Delhi.
Further, we find that no opportunity of hearing was provided and consequently the order of Commissioner of Income Tax dated 9.3.2006 passed under Section 127 (2) of the Act, cannot be sustained and is quashed.
As a consequence of this order, the Deputy Commissioner of Income Tax, New Delhi, does not have any jurisdiction to issue a notice under Section 147 of the Act and consequently the said order, being without any authority of law, is also quashed.
The writ petition is allowed.
Order Date :- 7.7.2014
Ajeet
(Dinesh Gupta, J.) (Tarun Agarwala, J.)
