1971 (5) TMI 3 - HC - Income Tax

Summary

Issues Involved:

1. Validity of the order of transfer dated 23rd June, 1964, by the Commissioner of Income-tax, Lucknow.
2. Validity of the assessment orders for the assessment years 1960-61 and 1961-62.
3. Adequacy of the opportunity provided to the petitioner to show cause against the proposed transfer.
4. Recording of reasons for the transfer by the Commissioner of Income-tax.
5. Applicability of section 127 of the Income-tax Act, 1961, versus section 5(7A) of the Income-tax Act, 1922.

Issue-wise Detailed Analysis:

1. Validity of the Order of Transfer:

In both writ petitions, the petitioner challenged the validity of the order of transfer dated 23rd June, 1964, made by the Commissioner of Income-tax, Lucknow. The petitioner argued that the Commissioner had no jurisdiction to transfer the assessment proceedings for the years 1960-61 and 1961-62 under section 127 of the Income-tax Act, 1961, because the returns for these years were filed before 1st April, 1962. The court held that even if section 127 of the 1961 Act did not apply, the transfer could still be justified under section 5(7A) of the 1922 Act, which did not require giving the assessee an opportunity to be heard or recording reasons for the transfer.

2. Validity of the Assessment Orders:

The petitioner contended that the assessment orders made by the Income-tax Officer, Special Investigation Circle, Lucknow, were without jurisdiction and should be quashed. The court found that the assessment proceedings were validly transferred and conducted under the jurisdiction of the Income-tax Officer, Special Investigation Circle, Lucknow, and thus, the assessment orders were not without jurisdiction.

3. Adequacy of the Opportunity Provided to Show Cause:

The petitioner argued that they were not given an effective opportunity to show cause against the proposed transfer because the reasons for the transfer were not communicated to them. The court noted that the Commissioner had issued a notice on 25th May, 1964, and another on 10th June, 1964, requiring the petitioner to show cause. The petitioner requested more time and the reasons for the transfer but failed to appear on the scheduled date. The court held that the opportunity provided was adequate.

4. Recording of Reasons for the Transfer:

The petitioner claimed that the Commissioner did not record reasons for the transfer, making the order defective. The court examined the reasons recorded by the Commissioner, which stated that the cases required proper investigation. The court found that these reasons were sufficient under section 127 of the 1961 Act.

5. Applicability of Section 127 of the Income-tax Act, 1961, Versus Section 5(7A) of the Income-tax Act, 1922:

The petitioner argued that section 127 of the 1961 Act did not apply because the returns were filed before 1st April, 1962, and therefore, the proceedings should be governed by the 1922 Act. The court agreed that section 127 of the 1961 Act might not apply but held that section 5(7A) of the 1922 Act, which allowed the Commissioner to transfer cases without giving an opportunity to be heard or recording reasons, was applicable. Thus, the transfer order was valid under the 1922 Act.

Conclusion:

The court dismissed the writ petitions, holding that the transfer order dated 23rd June, 1964, was valid under section 5(7A) of the 1922 Act, and the assessment orders for the years 1960-61 and 1961-62 were not without jurisdiction. The court found that the petitioner was given adequate opportunity to show cause, and the reasons for the transfer were sufficiently recorded. The petitions were dismissed with costs.