1990 (11) TMI 139 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Assistant Commissioner of Income-tax, Vishakhapatnam.
2. Compliance with Section 127 of the Income-tax Act, 1961.
3. Reasonable opportunity of being heard.
4. Communication of reasons for transfer.
5. Validity of the transfer order.
6. Appropriate jurisdiction for filing the writ petition.

Summary:

1. Jurisdiction of the Assistant Commissioner of Income-tax, Vishakhapatnam:
The petitioner questioned the jurisdiction of the third respondent, the Assistant Commissioner of Income-tax (Inv. Circle-2), Vishakhapatnam, regarding the transfer of its file from Bombay to Vishakhapatnam, alleging it violated Section 127 of the Income-tax Act, 1961.

2. Compliance with Section 127 of the Income-tax Act, 1961:
The petitioner argued that the conditions requisite u/s 127(2) of the Act were not complied with, as the respondents did not provide a reasonable opportunity of being heard, and the reasons for the transfer were not communicated.

3. Reasonable Opportunity of Being Heard:
The court emphasized that u/s 127, giving a reasonable opportunity of being heard and recording reasons for the transfer are essential. The Supreme Court in Ajantha Industries v. CBDT [1976] 102 ITR 281 held that non-communication of reasons is a serious infirmity, rendering the order invalid.

4. Communication of Reasons for Transfer:
The court noted that neither the notice dated November 22, 1988, nor the intimation dated February 13, 1989, contained any reasons for the transfer. The petitioner was never informed of any reasons for the transfer, which is a mandatory requirement as per the law.

5. Validity of the Transfer Order:
The court found that the final order of transfer, even as recorded in the file, did not contain the various reasons mentioned in the counter-affidavits. The transfer was, therefore, declared invalid and quashed.

6. Appropriate Jurisdiction for Filing the Writ Petition:
The objection raised by the respondent that the writ petition should have been filed in Bombay was dismissed. The court held that since the third respondent at Vishakhapatnam took action pursuant to the transfer order, a part of the cause of action arose within the State of Andhra Pradesh.

Conclusion:
The writ petition was allowed, declaring the order transferring the file from Bombay to Vishakhapatnam invalid. The court emphasized that this decision does not preclude the competent authority from taking further action in accordance with the law. There was no order as to costs.