2021 (10) TMI 46 - HC - Income Tax

Transfer of case u/s 127 - no opportunity of hearing to the petitioner and without recording the reason for not giving opportunity of hearing to the petitioner - HELD THAT - As in view of the factual and legal position that the impugned order of transfer under Section 127 (2) of the Income Tax Act dated 18th February, 2021 transferring the case of the petitioner was passed without giving opportunity of hearing to the petitioner and without recording the reason for not giving opportunity of hearing to the petitioner before passing such order of transfer of the case of the petitioner under Section 127 (2) of the Income Tax Act, 1961, from Kolkata to Delhi and without considering and disposing the reply/objection to the show-cause notice by the petitioner against the proposed action of transfer of case of the petitioner by the respondent is illegal, invalid and not sustainable in law and the said impugned order of transfer dated 18th July, 2019 under Section 127 (2) of the Income Tax Act, 1961 is accordingly quashed and the respondents concerned are directed to send back the case of the petitioner from Delhi to Kolkata immediately after receipt of communication of this order.

Summary

Issues:
Challenge to transfer of income tax case under Section 127 of the Income Tax Act, 1961 without due process or opportunity of hearing.

Analysis:
The petitioner contested the transfer of his income tax case from Kolkata to Delhi under Section 127 of the Income Tax Act, 1961. The petitioner received a show-cause notice in September 2019, requesting a response within 14 days regarding the proposed transfer. Despite the petitioner's replies seeking more time and details, there was no communication from the authorities. Surprisingly, after almost two years, the petitioner discovered the transfer on the income tax portal in July 2021. The petitioner argued that his objections were not considered, no hearing was granted, and the order of transfer was not communicated to him, rendering the decision unfair and arbitrary.

The court directed the respondent to provide records regarding the petitioner's objections and representations against the transfer. It was revealed that the objections were received but not considered or disposed of before the transfer order was issued. The court noted that the transfer was executed without affording the petitioner an opportunity of hearing or providing reasons for bypassing this crucial step. Consequently, the court deemed the transfer order illegal, invalid, and unsustainable in law. The court ordered the immediate return of the case from Delhi to Kolkata upon receipt of the judgment.

The court emphasized that the quashing of the transfer order did not prohibit the Income Tax Authority from initiating a transfer in the future, provided proper procedures and statutory requirements under Section 127 (2) of the Income Tax Act, 1961 were followed. The writ petition was allowed without the need for counter-affidavits, considering the parties' submissions and the available records, as the respondent failed to present any arguments beyond the existing documentation.