1974 (7) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Application for transfer of cases under Section 127 of the Income-tax Act, 1961.
2. Alleged harassment and unfair treatment by the Income-tax Officer.
3. Opportunity for the assessee to be heard before the transfer decision.
4. Jurisdiction and power of the Commissioner under Section 127.
5. Scope of judicial review under Article 226 of the Constitution.

Detailed Analysis:

1. Application for Transfer of Cases under Section 127 of the Income-tax Act, 1961:

The petitioners, a company and its managing director, filed an application under Article 226 of the Constitution seeking a writ of certiorari to quash the proceedings of the Commissioner of Income-tax, which refused to transfer their cases from the file of the Income-tax Officer. The petitioners alleged that the Income-tax Officer was harassing them and using harsh language, and thus, they would be denied justice.

2. Alleged Harassment and Unfair Treatment by the Income-tax Officer:

The petitioners contended that the Income-tax Officer was calling for information on the phone and insisting on immediate compliance, using harsh language, and threatening to post the case daily until the end of the financial year. They also alleged that the Officer issued an attachment notice for personal income-tax arrears and did not vacate it even after the arrears were cleared. The Commissioner called for reports from the Income-tax Officer and the Inspecting Assistant Commissioner, who submitted their reports. After reviewing the reports, the Commissioner decided not to transfer the cases, emphasizing the need for expeditious completion of arrear assessments.

3. Opportunity for the Assessee to be Heard Before the Transfer Decision:

The petitioners argued that they were not given an opportunity to make their representations before the impugned order was passed. Section 127(1) of the Income-tax Act mandates giving the assessee a reasonable opportunity of being heard and recording reasons for the transfer. However, the proviso to Section 127(1) states that such an opportunity is not required if the transfer is within the same city, locality, or place. In this case, the Commissioner did not transfer the cases, so the question of giving an opportunity to be heard did not arise.

4. Jurisdiction and Power of the Commissioner under Section 127:

The petitioners' counsel contended that the Commissioner failed to exercise the power vested in him under Section 127 of the Act. However, it was established that the Commissioner did exercise his power under Section 127 and passed the order, which was communicated by the Income-tax Officer (Headquarters). The court also addressed the argument that Section 127 confers power on the Commissioner to suo motu exercise the power of transfer and not on the application of an assessee. The court rejected this argument, stating that Section 127 is intended to confer a right on the assessee to move the Commissioner or the Board for the transfer of his case on appropriate grounds.

5. Scope of Judicial Review under Article 226 of the Constitution:

The court considered whether it could interfere under Article 226 of the Constitution with the order passed by the Commissioner refusing to transfer the cases. The court held that the discretion exercised by the Commissioner, based on the reports and representations, would not be interfered with unless there was a patent error of law or an error apparent on the face of the record. The court found no such error in the Commissioner's decision and noted that the plea of unfair assessments was not accepted by the Commissioner. Thus, the court concluded that there was no justification to interfere with the Commissioner's discretion under Article 226.

Conclusion:

The writ petition was dismissed with costs, and the court upheld the Commissioner's decision not to transfer the cases, emphasizing the need for expeditious completion of assessments and the absence of any patent error in the Commissioner's discretion.