2004 (3) TMI 56 - HC - Income Tax

Legality and validity of the order passed by the Commissioner of Income-tax transferring the income-tax and wealth-tax cases of the petitioners - centralisation of the cases for co-ordinated and effective investigation - order of transfer clearly reveals that the impugned course of action had to be adopted by way of transfer of the assessment records in question for co-ordinating investigations Hence CIT was justified in transferring the cases

Issues Involved:

1. Legality and validity of the transfer order dated November 6, 2003.
2. Compliance with procedural requirements under Section 127 of the Income-tax Act, 1961.
3. Adequacy and specificity of the reasons provided for the transfer.
4. Alleged prejudice and inconvenience to the petitioners due to the transfer.

Detailed Analysis:

1. Legality and Validity of the Transfer Order:

The petitioners challenged the legality and validity of the order dated November 6, 2003, passed by the Commissioner of Income-tax, Guwahati-II, which transferred their income-tax and wealth-tax cases from Guwahati to Kolkata. The order was issued under Section 127(2) of the Income-tax Act, 1961, citing the need for centralisation of cases for coordinated and effective investigation as the reason for the transfer.

2. Compliance with Procedural Requirements under Section 127 of the Income-tax Act, 1961:

Section 127 of the Income-tax Act, 1961, mandates that the Commissioner must provide the assessee with a reasonable opportunity to be heard and must record the reasons for the transfer. The petitioners argued that the impugned order was cryptic and lacked specific and tangible reasons. However, the court noted that the petitioners were issued show cause notices and had filed their objections without any reservation. The court found that the procedural requirements under Section 127 were met, as the petitioners were given an opportunity to be heard, and reasons were recorded in the order.

3. Adequacy and Specificity of the Reasons Provided for the Transfer:

The primary reason for the transfer, as stated in the order, was the necessity for centralisation of the cases for coordinated and effective investigation. The court examined whether this reason was specific and tangible. The court referred to multiple precedents, including the Division Bench judgment of the Gauhati High Court in Assam Surgical Co. v. CBDT [1984] 145 ITR 400, which upheld similar reasons for transfer as valid. The court distinguished the present case from others where reasons such as "facility of investigation" were deemed vague. The court concluded that the reason provided in the impugned order was specific, tangible, and sufficient for the transfer.

4. Alleged Prejudice and Inconvenience to the Petitioners Due to the Transfer:

The petitioners contended that the transfer would cause serious prejudice as they had no establishment or office in Kolkata. The court noted that while the convenience of the assessee is a consideration, it cannot override the need for effective investigation by the Revenue. The court found no evidence of prejudice that would outweigh the public interest in centralising the cases for coordinated investigation. The court also observed that the petitioners had not requested further materials or clarification when given the opportunity, indicating that they were not significantly prejudiced in preparing their objections.

Conclusion:

The court dismissed the writ petitions, holding that the impugned order dated November 6, 2003, was legally valid, procedurally compliant, and based on specific and sufficient reasons. The necessity for centralisation of cases for coordinated and effective investigation was deemed a valid ground for the transfer. The court found no merit in the petitioners' arguments and upheld the transfer of their cases from Guwahati to Kolkata.

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