2016 (12) TMI 497 - HC - Income Tax

Transfer of case jurisdiction from Rourkela to Sambalpur - opportunity not been provided to the assessee - Held that - It is not that the cases of the assessees petitioners herein have only been transferred, rather by virtue of the policy decision, the cases of other assessees have also been transferred. Furthermore, there is no mala fide alleged against the authorities. The petitioners when came to know about the transfer of their cases from Rourkela to Sambalpur, they made representations before the authority that copy of the order be provided since decision has been taken without providing an opportunity of being heard. The authorities have taken into consideration this aspect of the matter and passed a well reasoned order showing the reason that due to the policy decision of re-structuring of the Income Tax Department in the area concerned, the decision has been taken to transfer the cases from Rourkela to Sambalpur and by this the petitioners assessees are not going to be prejudiced in any way. We gathered from the record that the underlying object of the decision is equitable distribution of work and as such the order passed by the authorities is for administrative convenience. The authorities have taken into consideration the grievance of the assessees that if they will feel any inconvenience, they may make request before the authority to hear their matter at Camp Court, Rourkela in this way also the interest of the petitioners assessees have been protected. So far as the ground that the authorities while passing order on 22nd August, 2016 have reviewed its own order, which they cannot do and as such, the said order is per se illegal, but we find no force in this argument for the reason that this cannot be said to be review of the order, since there is no change in the orders, i.e. in the orders dtd.29.1.2015 and 22.8.2016, rather the grievance of the petitioners has been looked into and reasons of transfer of the cases has been communicated to them by reitering the reasons. No reason to interfere with the decisions taken by the authority.

Summary

Issues Involved:
1. Legality of the transfer of jurisdiction under Section 127 of the Income Tax Act, 1961.
2. Adequacy of opportunity of being heard provided to the assessees.
3. Allegation of review of its own order by the tax authorities.

Detailed Analysis:

1. Legality of the Transfer of Jurisdiction:
The petitioners challenged the order dated 29th January 2015, under Section 127(2) of the Income Tax Act, 1961, which transferred their cases from the ACIT, Circle-2(1), Sambalpur to the Assistant Commissioner of Income Tax (Central Circle), Sambalpur. The transfer was initiated following the restructuring of the Income Tax Department in November 2014, creating a Central Range at Bhubaneswar and a Central Circle at Sambalpur. The Director General of Income Tax (Investigation), Hyderabad, proposed the centralization of cases where searches were conducted in the financial years 2013-14 and 2014-15. The transfer was in line with the Board's Circular No.286/88/2008-IT (Investigation-II) dated 17th September 2008, which mandates the centralization of search cases.

2. Adequacy of Opportunity of Being Heard:
The petitioners argued that the transfer order was passed without providing an opportunity of being heard and without assigning any reason, violating the principles of natural justice. The Income Tax Department contended that the initial transfer was due to administrative restructuring and that the petitioners were later notified and given an opportunity to present their objections. The authorities, after considering the objections, affirmed the transfer decision on 22nd August 2016, stating that the restructuring necessitated the transfer and that the assessees were aware of the reasons for the transfer. The court noted that Section 127 of the Income Tax Act requires an opportunity of hearing "wherever it is possible to do so" and mandates recording reasons for the transfer. The court found that the authorities had acted reasonably and bona fide, and the petitioners failed to show any prejudice caused by the lack of initial notice. The court emphasized that the purpose of providing an opportunity is to inform the assessee of the reasons for the transfer, which was eventually done.

3. Allegation of Review of Its Own Order:
The petitioners contended that the authorities had no jurisdiction to review their own order dated 29th January 2015. The court found no merit in this argument, stating that the subsequent order dated 22nd August 2016 did not constitute a review but rather a reiteration of the original decision, addressing the petitioners' grievance and providing the reasons for the transfer. The court held that the authorities' actions were not a review but a clarification and communication of the reasons for the transfer.

Conclusion:
The court dismissed the writ petitions, holding that the transfer of jurisdiction under Section 127 of the Income Tax Act was legal and justified due to the administrative restructuring of the Income Tax Department. The court found that the petitioners were eventually provided with an opportunity to be heard and were informed of the reasons for the transfer, fulfilling the requirements of natural justice. The court also rejected the argument that the authorities had reviewed their own order, concluding that the subsequent order was merely a reiteration and clarification of the original decision.