2012 (10) TMI 1192 - HC - Indian Laws

Summary

Issues Involved:
1. Legality of the transfer order u/s 127(2) of the IT Act, 1961.
2. Adequacy of reasons provided for the transfer.
3. Compliance with procedural requirements under s. 127 of the Act.

Summary:

1. Legality of the transfer order u/s 127(2) of the IT Act, 1961:
The petitioners challenged the order dated 2nd April 2012, passed by respondent No. 2, transferring the cases of various assessees from the AO at Raipur to the AO at Visakhapatnam. The transfer was purportedly for "co-ordinated investigation" following a search and seizure operation conducted on 19th Aug. 2011. The petitioners argued that the transfer was illegal and arbitrary as it did not satisfy the requirements of s. 127(2) of the Act.

2. Adequacy of reasons provided for the transfer:
The court noted that the show-cause notice proposed the transfer for "co-ordinated investigation" but did not provide specific reasons why such an investigation could not be conducted at Raipur. The court cited several precedents, including Sagarmal Spg. & Wvg. Mills Ltd. v. CBDT, V.K. Steel Industries (P.) Ltd. v. Asstt. CIT, and Vijayasanthi Investments (P.) Ltd. v. Chief CIT, which emphasized that vague and general reasons like "co-ordinated investigation" are insufficient. The reasons must be specific and communicated to the assessee to allow for an effective representation.

3. Compliance with procedural requirements under s. 127 of the Act:
The court highlighted that s. 127 requires two essential aspects: a reasonable opportunity of being heard and the recording of reasons for the transfer. In this case, the reasons were not adequately communicated to the petitioners, and the phrase "co-ordinated investigation" was deemed too vague. The court also noted that additional reasons mentioned in the respondents' return were not disclosed to the petitioners or the court, violating the principles laid down in Mohinder Singh Gill v. Chief Election Commissioner.

Conclusion:
The court quashed the impugned transfer orders for not being in conformity with s. 127 of the Act and allowed the writ petitions. No order as to costs was made.