2015 (2) TMI 762 - HC - Income Tax

Legality of an order passed under Section 127(2) - Power to transfer cases - Held that - Perusal of the record as well as the reply reveals that the respondents are unable to refer to any show cause notice much less any communication that may answer to the description of a notice informing the assessee about the proposed change of jurisdiction. A reference in the post decisional representation filed by the assessee to a telephone call may give rise to an inference that the assessee was aware of a proposal to transfer jurisdiction, but does absolve the authority of its obligation to disclose the particulars of the proposed transfer. The presence of a representative of the assessee on 29.5.2014, as recorded in the order-sheet could have been relevant if this fact had been recorded in the impugned order or if the impugned order had recorded any contention raised by the said representative. A perusal of the impugned order reveals that it does not refer to any contention raised on behalf of the assessee thereby clearly proving that the assessee was not afforded any opportunity of hearing. Thus no hesitation in holding that the impugned orders are contrary to the provisions of Section 127 of the Act and consequently, set aside and direct the Commissioner of Income Tax, Gurgaon, to pass a fresh order after affording an opportunity to the petitioners to file their reply to the proposed transfer of jurisdiction - Decided in favour of assessee.

Summary

Issues:
1. Legality of an order passed under Section 127(2) of the Income Tax Act, 1961 without affording an opportunity of hearing to the petitioner.

Analysis:
The judgment pertains to the controversy surrounding the legality of an order passed under Section 127(2) of the Income Tax Act, 1961. The petitioner contended that the order transferring jurisdiction to Kanpur was issued without serving a show cause notice or providing an opportunity of hearing. The counsel argued that Section 127(1) of the Act mandates the transfer of jurisdiction only after the assessee is given a reasonable opportunity to be heard. It was highlighted that no notice was ever served upon the petitioner, depriving them of the chance to present their case. The petitioner further argued that had a show cause notice been issued, they would have informed the officer about the shift in their registered office to Meerut, emphasizing the lack of procedural fairness in the transfer of jurisdiction.

The counsel for the revenue acknowledged the absence of a written show cause notice but pointed out that a post-decisional reply from the assessee indicated awareness of the transfer proceedings through a telephone call. Additionally, a note-sheet signed by the petitioner's representative suggested that an opportunity of hearing, as mandated by Section 127(2) of the Act, had been granted. However, the court emphasized that the requirement of affording an assessee a reasonable opportunity of hearing includes serving a notice calling for a response before transferring jurisdiction. The court stressed that the officer must inform the assessee of the proposed transfer, provide an opportunity for a hearing, and issue a reasoned order as per the Act.

Upon examining the record and submissions, the court found that the impugned orders did not comply with the provisions of Section 127 of the Act. It was concluded that the petitioner was not afforded a proper opportunity of being heard, rendering the orders invalid. Consequently, the court allowed the writ petitions, set aside the impugned orders, and directed the Commissioner of Income Tax, Gurgaon, to reconsider the matter after providing the petitioners with an opportunity to respond to the proposed transfer of jurisdiction. The court mandated the resolution of the matter within one month from the receipt of the order's certified copy, ensuring procedural fairness and adherence to statutory requirements.