2014 (9) TMI 1026 - HC - Income Tax

Transfer of cases - Held that - Section 127(2) makes it explicit that in case of inter-jurisdiction transfer, first there has to be an agreement regarding transfer of an assessment case between the Directors General or Chief Commissioners of two jurisdictions. Thereafter the assessee has to be given hearing by the Director General or Chief Commissioner or Commissioner of the transferor jurisdiction. If not actual hearing, an opportunity of hearing has to be given. Then the file can be transferred, recording reasons for the transfer. These stipulations are not empty formalities. When the assessee s case is transferred from Kolkata to Bhubaneshwar great inconvenience is caused to them. Their officers have to go from Kolkata to Bhubaneshwar to attend to the officers, carry documents, to be produced before them, answer interrogatories etc. There must be compelling reasons before such a transfer is made. For example, in this case if the department is referring to the assessment of Ganesh Sponge Pvt. Ltd., at least the relationship of the petitioner with Ganesh has to be mentioned. How the petitioner appears to be connected with the financial transactions of Ganesh has also to be mentioned. Even a reasonable suspicion of connection is enough. But, unfortunately, in this case there are no reasons. In those circumstances, the order dated 12th September, 2013 is set aside with a direction upon the Chief Commissioner to pass a fresh order with reasons after giving an opportunity of hearing to the writ petitioner within three months from the date of communication of this order.

Summary

Issues Involved: Lack of reasons in transfer order under Section 127(2) of the Income Tax Act, 1961

Analysis:
The judgment by the High Court of Calcutta, delivered by Justice I.P. Mukerji, addresses the issue of flawed orders due to lack of reasons, specifically in the context of a transfer order under Section 127(2) of the Income Tax Act, 1961. The court notes that while the deserving nature of the case is uncertain, the order dated 12th September, 2013, is deemed flawed due to the absence of reasons. It is highlighted that in cases of inter-jurisdiction transfer, certain procedures must be followed, including an agreement between relevant authorities, a hearing for the assessee, and the recording of reasons for the transfer. The judgment emphasizes that these procedures are not mere formalities but essential to prevent undue inconvenience to the assessee. In this case, the transfer of the petitioner's file to Bhubaneshwar lacked crucial details such as the connection between the petitioner and the subject of assessment, Ganesh Sponge Pvt. Ltd. The court sets aside the order and directs the Chief Commissioner to issue a fresh order within three months, accompanied by reasons and after providing an opportunity for the petitioner to be heard.

Additionally, the judgment underscores the importance of maintaining the status quo regarding the location of the file and the assessment until the issuance of the fresh order by the Chief Commissioner. The court clarifies that the writ application was disposed of based on existing documents without the requirement for affidavits. Finally, the judgment concludes by stating that a certified copy of the order will be provided to the parties upon completion of necessary formalities.