2009 (1) TMI 275 - HC - Income Tax

Transfer of case - In the writ petition the petitioner has challenged the order passed under section 127 by the Commissioner transferring the file from Kolkata to Ranchi on the ground that neither the petitioner was given an opportunity of hearing to present its case nor the order reveals how written objections filed pursuant to the notices proposing transfer were considered. - It is clear from the order impugned that the written objections were not at all scrutinised and the order was passed mechanically. In my opinion filing of objection is not an idle and empty formality. Therefore the order impugned passed under section 127 of the Act cannot be sustained and is thus set aside and quashed.

Issues:
Challenge to order under section 127 of the Income-tax Act, 1961 transferring file from Kolkata to Ranchi without opportunity of hearing.

Detailed Analysis:

1. Challenge to Transfer Order:
The petitioner, a private limited company, challenged the order transferring its file from Kolkata to Ranchi under section 127 of the Income-tax Act, 1961. The challenge was based on the grounds that the petitioner was not given an opportunity of hearing as requested in a letter dated October 17, 2008. The order did not consider the written objections filed by the petitioner on August 22, 2008, and September 2, 2008, in response to notices dated August 19, 2008, and August 27, 2008. The petitioner argued that the transfer to Ranchi was unjust as the search took place in Kolkata, Dhanbad, and Jhalda, with no cause of action in Ranchi.

2. Contentions of the Revenue:
The advocate representing the Revenue supported the transfer order, stating that the place of business was in Jharkhand, justifying the transfer to Ranchi. The order under section 127 of the Income-tax Act, 1961, provided opportunities for the assessees to be heard and raised objections against the transfer. The objections included reasons such as no search conducted on specific companies, non-residency of directors and employees in Ranchi, and lack of infrastructure for proceedings in Ranchi.

3. Consideration of Objections:
The order under section 127 detailed the objections raised by the assessees and the subsequent communication with the Commissioner of Income-tax-I, Patna, for comments and information on centralization. The assessees filed rejoinders and letters reiterating their objections, emphasizing personal inconvenience in attending proceedings at Ranchi. However, the Commissioner found no substantive merit in the objections, emphasizing the public interest of coordinated investigation in group search cases.

4. Judicial Decision:
The High Court found that the order transferring the case lacked substantive consideration of the objections raised by the petitioner. The Court noted that the order did not provide a reasoned and cogent explanation of how the objections and materials on record were considered. The failure to address the objections and denial of the opportunity of hearing rendered the order unsustainable. Consequently, the Court set aside and quashed the impugned order, directing the respondent to proceed afresh in accordance with the law after granting the petitioner an opportunity of hearing based on existing records.

5. Court's Ruling:
The Court ruled in favor of the petitioner, allowing the writ petition and setting aside the transfer order. The respondent was directed to proceed afresh in compliance with the law, ensuring the petitioner's right to be heard. The Court clarified that the filing of objections is not a mere formality and must be duly considered. The respondents were not required to file affidavits, and no costs were awarded. Urgent certified copies of the order were to be provided to the parties upon request.

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