2007 (2) TMI 694 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the transfer order dated 18-1-2007 u/s 127(2) of the Income-tax Act.
2. Compliance with principles of natural justice.
3. Validity of the reasons for transfer provided in the notice dated 10-11-2006.

Summary:

Issue 1: Legality of the transfer order dated 18-1-2007 u/s 127(2) of the Income-tax Act
The petitioner challenged the transfer order dated 18-1-2007 issued by the Commissioner of Income-tax-II, Kanpur, transferring its cases to the Deputy Commissioner of Income-tax, Central Circle-19, New Delhi. The petitioner argued that the notice dated 10-11-2006 was vague and did not state the grounds for transfer, rendering the petitioner unaware of the reasons for the transfer. The court examined the provisions u/s 127(2) of the Act, which allow transfer of cases with the concurrence of respective authorities and require reasonable opportunity of being heard and recording of reasons. The court found that these requirements were met as the petitioner was issued a show-cause notice and its reply was considered before passing the transfer order.

Issue 2: Compliance with principles of natural justice
The petitioner contended that the transfer order was a non-speaking order and violated principles of natural justice. The court referred to several precedents, including *Ajantha Industries v. CBDT* and *Canara Bank v. Debasis Das*, emphasizing the necessity of recording and communicating reasons for transfer to ensure fairness. The court found that the notice provided to the petitioner mentioned the search conducted at the premises of M/s. Radico Khaitan Ltd. and the need for coordinated investigation, which were sufficient grounds for transfer. The court concluded that the principles of natural justice were complied with as the petitioner was given an opportunity to respond to the notice.

Issue 3: Validity of the reasons for transfer provided in the notice dated 10-11-2006
The petitioner argued that the reasons for transfer were not adequately detailed in the notice, causing prejudice. The court examined the sufficiency of the reasons provided and found that the notice mentioned the search operation and the need for centralizing cases for assessment, which were valid reasons. The court held that the extent of details required in the notice depends on the nature of the case and the proposed action. The court concluded that the reasons provided were adequate and the transfer order was not arbitrary or based on irrelevant considerations.

Conclusion:
The court dismissed the writ petition, finding no merit in the petitioner's arguments. The transfer order dated 18-1-2007 was upheld as it complied with the statutory requirements u/s 127(2) of the Act and adhered to principles of natural justice. The reasons for transfer provided in the notice were deemed sufficient and valid.