2013 (3) TMI 138 - HC - Income Tax

Transfer of Petitioner s case from DCIT-8(1) Mumbai to DCIT, Delhi - validity of notice u/s 127(2) - Assessee against non providing of intimation of transfer - Held that - The order of transfer was passed on 5 January 2012. As the endorsement by the registry in the present case in respect of the date of filing is 23 October 2012. Though the assessee had by its letters dated 7 February 2012, 20 April 2012 and 7 May 2012 requested the AO to hold proceedings in abeyance since a Petition was being filed before this Court, no Petition was filed until the last week of October 2012. The Petition was moved before the Court for the first time on 2 January 2013. The assessment proceedings for A.Y. 2010-11 would become time barred by 31 March 2013 in view of the mandate of Section 153(1)(a). The present case does not fall within the ambit of the provisions of Section 153 (3) including clause (ii). The assessee has waited for nearly ten months before instituting the proceedings. Having regard to the fact that the assessment would otherwise become time barred, the ends of justice would require that the final order that the Court would pass should be so modulated to balance the need to comply with the principles of natural justice on the one hand with the necessity of protecting the Revenue on the other. No interference with the order dated 5 January 2012 to the extent that the case file stands transferred to New Delhi in relation to the assessment proceedings for A.Y. 2010-11 on the ground of the delay on the part of the assessee in moving this Court in relation to the transfer pertaining to proceedings for A.Y. 2010-11 which, would become time barred on 31 March 2013.

Summary

Issues:
Challenge to validity of order transferring case under Section 127(2) of the Income Tax Act, 1961 from Mumbai to New Delhi without affording a personal hearing to the assessee.

Analysis:

1. The petitioners challenged the order dated 5 January 2012 transferring the case from DCIT-8(1) Mumbai to DCIT, Delhi (Central)-6, New Delhi under Section 127(2) of the Income Tax Act, 1961. The petitioners contended that no personal hearing was provided despite submitting objections regarding the proposed transfer and the hardships it would cause due to all records being in Mumbai.

2. The court noted that Section 127(1) mandates a reasonable opportunity of being heard to the assessee before transferring a case. The Division Bench judgment in a similar case emphasized that the word "may" in the provision should be read as "shall," making a personal hearing mandatory. In this case, although reasons were provided to the assessee, no personal hearing was granted, which was deemed necessary.

3. The court deliberated on the relief to be granted to the assessee due to the absence of a personal hearing. Despite the delay in approaching the court, the court balanced the principles of natural justice with the need to protect revenue. The court declined to interfere with the transfer of the case for A.Y. 2010-11 to New Delhi, considering the impending time bar under Section 153(1)(a) by 31 March 2013. However, the court directed the CIT-8 Mumbai to provide an opportunity for a personal hearing to the assessee regarding the transfer order.

4. The court directed the assessee to file a reply within two weeks before the CIT-8 Mumbai, who would then pass final orders within three weeks after affording a personal hearing. The assessee was required to appear before the CIT-8 Mumbai on a specified date with a copy of the court order.

5. The court made the rule absolute in the aforementioned terms and decided that there would be no order as to costs in this matter.