S.L. Singhania And Ors. vs Assistant Commissioner Of Income ...
1991 Latest Caselaw 643 Del

JUDGMENT

B.N. Kirpal, J.

(1) In this writ petition the challenge is to the order passed under Section 127 on 7th May 1990 by the Commissioner of Income Tax, Central I, who has transferred the cases of the petitioners from one Assistant Commissioner of Income Tax under his jurisdiction, namely. Central Circle 18 to another Assistant Commissioner of Income Tax also under his jurisdiction being Central Circle

(2) Interestingly enough both the transferor and the transferee Offices are situated on the same floor, in the same building and in the same city. This writ petition which seeks to challenge this order of transfer and the consequent assessment orders passed in respect of petitioners 2 and 4 appears to be a desperate effort to avoid being assessed by the transferee officer. The challenge in this writ petition, as we shall presentlyee, has been made despite the fact that the legal contentions sought to be raised before us are squarely covered by an authoritative pronouncement of a Constitutional Bench of the Supreme Court of India in the case of Kashi Ram Aggarwala v. Union of India & Ors., 56 Itr 14.

(3) As is evident what has been stated above, the petitioners, who are five in number and belong to the same family known as 'Sirghania family' and are being, presumably, assessed as a group, and were being dealt with by the Assistant Commissioner of Income Tax, Central Circle 18.

(4) After the order of 7th May 1990 was passed by the Commissioner of Income Tax, Central Circle I, transferring the cases to Assistant Commissioner of Income Tax, Central Circle 20. the peitioners were informed by latter dated. 8th May 1990 by the transferor officer that lh; cases have been transferred to- Central Circle 20 with effect from 10th Mav 1990. The order dated 7ih May 1990 according to the petitioner, was not CJmmunicated to it. This averment is made even though at ihe boitJm of the order dated 7th May 1990 a copy of the same is endorsed to the assesssee. Be that as it may, there ii no denying of the fact, and this is admited in the writ petition, that vide a letter dated 24th of January 1991 the Assessing Officer enclosed a copy of the said order dated 7thi May 1990.

(5) Prior to the filing of ihe present writ petition assessment orders' were passed by the Transferring Officer in respect of petitioners 2 and 4.

(6) It is submitted by the learned counsel for the petitioners before us that the Commissioner of Income Tax did not communicate the reasons for the transfer to the petitioners. Relyinp on Ajanta Industries and Others v. Central' Board of Direct Taxes, 102 Iir 251, Manoj Didania v. U.O I , W Itr 177, Saptagiri Enterprises v. CIT- 189 Itk 705. Viflysanthi Investments Pvt Ltd. v. Chief Commissioner of Income Tax, 187 Itr 405. V. VishwanathSaratvNew Education Institute, 161 Itr 895, and K. Joseph Jacobs. Agricultural income Tax Officer, 190 Itr 964, three contenions have been raised by the learned counsel for the petitioner. The first contention is that the reaso's for the transfer should have been communicated. The section cantention is that the order dated 7th May 1990 was not served on the assessed by the Commissioner of Income Tax and lastly, it is contended that the order of transfer is effective onlyfronv the date when it was communicated to the petitioners. Intbisconriclionitis- submitted that any action taken prior to the communication of ihe order is. invalid.

(7) We find no force or substance in any of these contentions. Section 127, sub-sections (1) and (3), which are relevant, read as follows :- "S. 127(1). The Director General or Chief Commissioner or Commissioner may. after giving the assessed a redsonable opportunity of being heard in the mfctter whereever it is posoition ble to do so, and after recordiig his rea?ons for doing so, transfer any case from one or more Assessing Officers subordi- nate to him (whether wiih. or without concurrent jurisdiction) and other Assessing Officer or Asstssing Officers (whether with or without concurrent jurisdiction) also subordinate to- him. (2) x x x (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 Aisessirg Officers (whether with or without coECurrent jurisdiction) to any otter Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers arc situated in the same city, locality or place "

(8) It is evident from the reading of the aforesaid provisions that when an order is sought to be passed transferring the cases from one Assessing Officer to another, ordinarily the provisions of Sub-section (1) of Section 127 applies. The requirements of Section 127(1) are that where-ever possible an opportunity of being heard should be granted and thereafter reasons for effecting the transfer of the case should be recorded. Sub-section (3) is, however, an exception to Sub-section (1). This Sub-section is analogous to the original proviso to Section 127(1) and it provides that an opportunity of hearing is not required to be granted when the transfer is from one Asseising Officer to another and the two officers are situated in the same city, locality or place. It is not in dispute that in the inst.ini case ihe transfer is from one Assessing Officer who has office on the fifth floor of Mayur Bhawan, New Delhi to another Assessing Officer having his office on the same floor and the same building. Sub-section (3) of Section 127 is, therefore, clearly applicable. There is no requirement of giving an opportunity to the assessed to be heard before effecting the transfer.

(9) Relying upon Ajantha Industries Case (supra), it is submilted that even though opportunity of being heard need not be granted nevertheless reasons had to be recorded and communicated to the petitioners. The learned counsel overlooks the fact that Ajantha Industries case arose when an order was passed under Section 127(1) and the proviso to that Sub-section, which is analogous to Section 127(3), as it now exists, was not applicable. In Ajantha Indusiries Case assessments were transferred from Nellore to Hyderabad. On behalf of the Revenue reliance had been placed on the decision of Kashi Ram Aggarwalla but the Supreme Court observed that "this decision is not of any assistance to the revenue in the present case since that was transfer from one Income-tax Officer to another Income tax Officer in the same citv, or, as stated in the judgment itself, "in the same locality" and the proviso to Section 127(1). therefore, applied.

(10) It is clear from above that the Supreme Court was not laying down the law with regard to the cases covered by Section 127(3). The other decisions relied by the learned counsel for the petitioners are also those where transfers were from one city to another. What is relevant, in our opinion, is the decision of the Supreme Court in Kashi Ram Aggarwalla's case, where transfer had been effected from two Income-tax Officers in Calcutta to a third Income-tax Officer in Calcutta itself. The transfer had been ordered by the Central Board of Direct Taxes and that had been challenged on the ground that no opportunity of being heard had been granted. The Supreme Court went further and also observed that where the provisions of the proviso to Section 127 applies, it may not even be necessary to give reasons for transfer. It was observed by the Supreme Court as follows : But, 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 reading of reason 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 assessed 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 considered and reasons given why the transfer is made despite the objeclion of the assessed. In other words, the requirement as to the recording of reasons flows as a natural consequence and corollary of the requirement that a reasonable opportunity should be given to the assessed. If, however, a reasonable opportunity is not given to the assessed on the ground that it is not possible to do so, section 127(1) requires that the transfer being of a category where a reasonable opportunity should be given to the assessed, the authority should record its reasons for making the transfer, even though no opportunity was in fact given to the assessed. If that be the true position, it is not easy to understand why the proviso should be so construed as to require reasons to be given for the transfer, even though no opportunity to the assessed is required to be given. That is one aspect of the matter which has to be borne in mind in determining the true scope and effect of the proviso."

(11) Reference may also be made to the following observation in Kashi Ram Aggarwalla's case which dealt with a question of the notice of transfer :- "THISprovision clearly indicates that where a transfer is made under the proviso to section 127(1) from one Income-tax Officer to another in the same locality, it merely means that instead of one Income-tax Officer who is competent to deal with the case, another Income-tax Officer has been asked to deal with it. Such an order is purely in the nature of an administrative order passed for considerations of convenience- of the department and no possible prejudice can be involved in such a transfer. Where, as in the present proceedings, assessment cases pending against the appellant before an officer in one ward are transferred to an officer in another ward in the same place, there is hardly any occasion for mentioning any reasons as such, because such transfers are invariably made on grounds of administrative convenience, and that shows that on principle in such cases neither can the notice be said to be- necessary, nor would it be necessary to record any reasons for the transfer.

(12) Lastly, it was observed by the Supreme Court at page 19 as follows :- "ONthe other hand, if the obvious object of the proviso is taken into account and the relevant previous background is borne in mind, it would also seem reasonable to hold that in; regard to cases falling under the proviso an opportunity need not be given to the assessce. and the consequertial need to record reasons for the transfer is also unnecessary, and this view is plainly consistent wilh the scheme of the provision and the true intent of its requirements. We would accordingly hold that the impugned orders cannot be challenged on the ground that the Board has not recorded reasons in directing the transfer of the cases pending against the assessed from one Income-tax Officer to another in the same locality."

(13) From the aforesaid it is clear that the order passed under Section 127(3), as the said provision now exists, is merely an administrative order and even reasons for ordering the transfer need not be recorded, nor is there any requirement that the reasons be given to the assessed. In our opinion, the aforesaid decision of Kashi Ram Aggarwalla is a complete answer to all the contentions raised by the petitioner before us. In view of this we need not go into the submissions of learned counsel for the respondent that the provisions of Section 124(3) of the Income Tax Act

were attracted in the present case and the petitioners did not raise the question of jurisdiction within the time prescribed by the said provisions.

(14) We have no doubt in our mind that there can be no question of any prejudice caused to the petitioners by the impugned o:der which has been passed. That apart, the petitoners bad been informed by the transferor officer that the petitioners' cases have been transferred on 27th January 1991. Admittedly, the petitioners received formal orders of transfer.

(15) If the petitioners had any grievance, though, in our opinion, the petitioners have no justified grievance, the petitioners should have approached this court at an early date and certainly before the assessments were completed. In any case no illegality has been committed in the present case and this writ petition is devoid of any merit. The writ petition is accordingly dismissed with costs. Counsel fee Rs. 500.00 .