1984 (7) TMI 26 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the transfer order under Section 127(1) of the Income-tax Act, 1961.
2. Alleged violation of natural justice principles.
3. Alleged contravention of Articles 14 and 19 of the Constitution.

Comprehensive, Issue-Wise Detailed Analysis:

1. Validity of the Transfer Order under Section 127(1) of the Income-tax Act, 1961:
The petitioner, a partnership firm, challenged the order dated November 15, 1978, by the Central Board of Direct Taxes (CBDT) transferring their case from the Income-tax Officer (ITO), District V(1), Survey Ward, Calcutta, to the ITO, District III(18), New Delhi. The transfer was purportedly for the purpose of "Co-ordinated Investigation." The petitioner argued that the reason for the transfer was insufficient and that no particulars were provided to show how the transfer was necessary, thereby making it impossible for them to make an effective representation against the proposed transfer. The respondents countered that the reason for the transfer was adequately communicated and that the provisions of Section 127(1) were complied with.

The court held that the reason for the proposed transfer, i.e., "facility of coordinated investigation," was sufficient to enable the assessee to make an effective representation. The petitioner had indeed made such a representation both in writing and verbally. The court found that the reason recorded in the order of transfer and communicated to the petitioner was sufficient for the appropriate court to understand why the transfer was made.

2. Alleged Violation of Natural Justice Principles:
The petitioner contended that the transfer order was passed in gross violation of the principles of natural justice and the provisions of Section 127 of the Income-tax Act. They argued that the reason communicated in the show-cause notice was merely a conclusion and did not provide sufficient particulars for them to contest the transfer effectively. The respondents argued that the petitioner understood the reason for the proposed transfer and that the reason recorded in the order of transfer was sufficient.

The court noted that the petitioner did not raise the plea of insufficient particulars in their reply to the show-cause notice, suggesting that this plea was an afterthought. The court referenced the Supreme Court's decision in Ajantha Industries v. Central Board of Direct Taxes [1976] 102 ITR 281, where it was held that the reason for recording reasons in the order and making these reasons known to the assessee is to enable an opportunity to challenge the order. The court found that in the present case, the petitioner had a reasonable opportunity to be heard and that the reason for the transfer was adequately communicated.

3. Alleged Contravention of Articles 14 and 19 of the Constitution:
The petitioner claimed that the transfer order contravened Articles 14 and 19 of the Constitution. The respondents argued that the question of contravention of these articles did not arise as the provisions of Section 127(1) were complied with.

The court did not find any merit in the petitioner's argument regarding the contravention of Articles 14 and 19. The court held that the inconvenience to the assessee could not outweigh the need for proper investigation by the Revenue. The court found that the impugned order of transfer was valid and did not contravene the constitutional provisions.

Conclusion:
The court concluded that the writ petition failed, and the rule was discharged. The transfer order was held to be valid, and no order was made as to costs. An oral prayer for a stay of the order was granted for three weeks from the date of the judgment.