2017 (1) TMI 1204 - HC - Income Tax

Transfer of case - whether order U/s.127 of the Income Tax has been passed without providing an opportunity of being heard and without assigning any reason? - Held that - 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. We further find that 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. Taking into consideration these aspects of the matter, we find no reason to interfere with the decisions taken by the authority. Hence, the writ petitions deserve to be dismissed

Summary

Issues Involved:
1. Transfer of jurisdiction under Section 127 of the Income Tax Act, 1961.
2. Opportunity of being heard before passing the transfer order.
3. Legality of the transfer order dated 29th January 2015 and subsequent order dated 22nd August 2016.
4. Allegation of the Principal Commissioner of Income Tax reviewing its own order.

Detailed Analysis:

1. Transfer of Jurisdiction under Section 127 of the Income Tax Act, 1961:
The petitioners challenged the transfer of jurisdiction from Rourkela to Sambalpur under Section 127 of the Income Tax Act, 1961. The transfer was executed by the Commissioner of Income Tax, Sambalpur, based on instructions from the Director General of Income Tax (Investigation), Hyderabad. The restructuring of the Income Tax Department in November 2014 led to the creation of a Central Range at Bhubaneswar and a Central Circle at Sambalpur. The Director General of Income Tax (Investigation) proposed the centralization of cases where searches were conducted in the financial years 2013-14 and 2014-15, resulting in the transfer of the petitioners' cases.

2. Opportunity of Being Heard Before Passing the Transfer Order:
The petitioners argued that the transfer order under Section 127 was passed without providing them an opportunity of being heard and without assigning any reason. The Income Tax Department contended that the transfer was an administrative decision due to restructuring, and a corrigendum was issued after providing the petitioners an opportunity to be heard. The court emphasized that Section 127 requires giving the assessee a reasonable opportunity of being heard wherever possible and recording reasons for the transfer. The court found that the authorities had provided an opportunity to the petitioners after the initial order and considered their objections.

3. Legality of the Transfer Order Dated 29th January 2015 and Subsequent Order Dated 22nd August 2016:
The court examined whether the transfer orders were legal despite the initial lack of opportunity to be heard. It was noted that the authorities had rectified the technical defect by issuing a corrigendum and providing a hearing. The court held that the decision to transfer the cases was based on administrative convenience due to the restructuring of the Income Tax Department. The court also noted that the petitioners failed to demonstrate any prejudice caused by the initial lack of opportunity to be heard.

4. Allegation of the Principal Commissioner of Income Tax Reviewing Its Own Order:
The petitioners argued that the Principal Commissioner of Income Tax had no jurisdiction to review its own order. The court rejected this argument, stating that the order dated 22nd August 2016 was not a review but a reiteration of the reasons for the transfer, addressing the petitioners' grievance about the lack of opportunity to be heard. The court found that the authorities had acted within their jurisdiction and had not changed the substance of the original order.

Conclusion:
The court concluded that the transfer of jurisdiction was an administrative decision based on the restructuring of the Income Tax Department. The authorities had provided the petitioners an opportunity to be heard after the initial order and had communicated the reasons for the transfer. The court found no illegality in the transfer orders and dismissed the writ petitions, stating that the petitioners had not demonstrated any prejudice caused by the initial lack of opportunity to be heard. The court also noted that the authorities had addressed the petitioners' grievances and provided options to mitigate any inconvenience caused by the transfer.