2013 (7) TMI 263 - HC - Income Tax

Power to transfer a case u/s 127 - Violation of principle of natural justice - Relevant material not provided to petitioner before transferring petitioner s case - Held that - if there is a power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a NULLITY. Natural justice is another name for commonsense justice. Rules of natural justice are not codified cannons. But they are principles ingrained into the conscience of man - Respondent, without furnishing relevant material along with the notice Annexure G , which might throw light upon the matter in question, sought to obtain objection from the petitioner assessee in the absence of material and information, which a properly informed decision requires, in short, passed the order Annexure G transferring the case of the petitioner for assessment to the State of Andhra Pradesh at Hyderabad by furnishing to the petitioner imperfect knowledge - The extreme impropriety of such a course could not be made too plain. - matter remanded back for fresh decision in accordance with law - Decided in favor of assessee.

Summary

Issues: Violation of principles of natural justice in transferring a tax case without providing relevant material particulars.

Analysis:
1. The judgment pertains to a case where the petitioner-assessee was issued a notice proposing to transfer their tax case from one jurisdiction to another. The notice lacked essential material particulars and documents related to a search and seizure operation, which is crucial for the petitioner to provide a proper objection. The court noted that the notice was in violation of the principles of natural justice as it did not provide all relevant information required for the petitioner to respond adequately.

2. The respondent sought to transfer the case under the jurisdiction of section 127 of the Income-tax Act, 1961, which allows for the transfer of cases after giving the assessee a reasonable opportunity of being heard and providing reasons for the transfer. However, in this case, the transfer was initiated without providing necessary material particulars to the petitioner, rendering their objection process incomplete and unfair.

3. The court emphasized that when there is a power to decide to the prejudice of a person, the duty to act judicially is implicit. By failing to provide all relevant material along with the transfer notice, the respondent acted improperly and unfairly towards the petitioner. The court highlighted that natural justice requires all relevant information to be made available to ensure a fair decision-making process.

4. Consequently, the court quashed the order transferring the petitioner's case and remitted the proceeding for reconsideration. The court directed the respondent to furnish all relevant material particulars, including copies of search and seizure documents, to the petitioner before passing any order. The assessment order passed by the authority at the new jurisdiction was declared a nullity due to the improper transfer process and lack of essential information provided to the petitioner.