2017 (6) TMI 553 - HC - Income Tax

Transferring the case from DCIT,Cor.Cir.1(1), Chennai to DCIT, Central Circle 3 (4), Mumbai u/s 127 - Held that - A perusal of the said communication does not anywhere indicate the intention of Department to transfer the petitioner s own case from Chennai to Mumbai. On the other hand, a careful perusal of the said notice would only show that the respondent Department sought to centralize the Radford Group case with Mumbai, for which, they sought a reply from the petitioner under Section 127 (2). No doubt, the petitioner has stated in their reply dated 02.03.2016 that they have no objection for centralization of the above cases with Mumbai. As rightly pointed out by the learned counsel for the petitioner, a thorough perusal of the reply dated 02.03.2016 would undoubtedly indicate that the petitioner has given their no objection for centralization of the Radford case with Mumbai, also by specifically stating that they have no client registered under the name and style RADFORD/RADFORD GROUP. The very notice issued under section 127 (2) to the petitioner dated 23.02.2016 is bereft of material particulars indicating specifically that the petitioner case is sought to be transferred from Chennai to Mumbai to be tagged along with the Radford Group cases. In the absence of such material particulars, we do not think that the No Objection given by the petitioner, that too, for centralization of the Radford Group cases can have any barring or relevance on the impugned transfer order. Apart from the above said fact, it is curious to note that the 1st respondent, while passing the order on 04.04.2016 has not at all referred to the reply given by the petitioner on 02.03.2016. Hence, it is the bounden duty of the 1st respondent to record the reasons for transfer, especially, when section 127(2) contemplates the recording of such reasons. In this case, it has not been done so. The matter has to go back to the 1st respondent for passing fresh order after issuing notice to the petitioner with material particulars and after hearing their objections

Summary

Issues:
1. Transfer of petitioner's case from Chennai to Mumbai under Section 127 of the Income Tax Act, 1961.

Analysis:
The petitioner, a stock broking entity registered with SEBI, challenged the order transferring their case from DCIT, Corporate Circle 1(1), Chennai to DCIT, Central Circle 3 (4), Mumbai. The petitioner had no connection with the Radford Group but had given a No Objection for centralization of the Radford Group cases with Mumbai. The main contention was whether the petitioner's consent for centralization extended to transferring their own case to Mumbai. The petitioner argued that the notice lacked specifics about transferring their case, and the order was non-speaking as it did not provide reasons for the transfer.

The respondent Department contended that issuing a notice under Section 127(2) implied the intention to transfer the petitioner's case to Mumbai. They argued that since the petitioner had given a No Objection for centralization, they could not challenge the transfer. The respondent believed that reasons for transfer were unnecessary once the petitioner consented.

The High Court noted that the notice to the petitioner did not explicitly mention transferring their case to Mumbai. The petitioner's reply only indicated No Objection for centralizing the Radford Group cases with Mumbai, not transferring their own case. The Court emphasized the importance of recording reasons for transfer under Section 127(2), which was lacking in this case. The Court found the order deficient and directed the matter to be reconsidered.

Consequently, the High Court allowed the writ petition, setting aside the impugned order. The case was remitted back to the 1st respondent for fresh orders after issuing a notice to the petitioner with specific details and hearing their objections. The 1st respondent was instructed to pass a new order after considering the petitioner's response and providing a personal hearing. The Court clarified that it was not expressing any opinion on the transfer's merits, leaving it to the 1st respondent to decide. No costs were awarded, and connected miscellaneous petitions were closed.