2014 (1) TMI 503 - HC - Income Tax

Order passed without giving reasonable opportunity of being heard - Held that - It is well settled position in law that a reasonable opportunity of being heard shall be furnished to the assessee - Decided in favour of assessee.

Summary

Issues:
Challenge to legality of order passed by Commissioner of Income Tax under Section 127(2) of the Income Tax Act, 1961 without providing a reasonable opportunity of being heard and recording reasons.

Analysis:
The petitioner contested the legality of an order issued by the Commissioner of Income Tax, Allahabad under Section 127(2) of the Income Tax Act, 1961. The petitioner received a copy of the order on 3 January 2014, which was passed without providing a reasonable opportunity of being heard or recording any reasons for the transfer of the case. The Supreme Court and a Division Bench of the Court have established principles requiring a reasonable opportunity of being heard and recording reasons for such transfers. In this case, the impugned order lacked both these essential elements.

Analysis:
The Revenue's counsel argued that reasons for the transfer were recorded in letters from the CIT (Central) Kanpur and DIR (Investigation) Kanpur, citing a judgment from the Kerala High Court. The counsel contended that centralization of cases was necessary due to a search operation. However, the Court declined to comment on the centralization issue's merits, emphasizing that the procedure under Section 127(2) must be followed. It was noted that the order lacked the necessary spelled-out reasons, as mandated by the Act.

Analysis:
In line with established legal principles, the Court set aside the order dated 17 December 2012 issued under Section 127(2) of the Act. The Court directed the assessee to respond to the proposed transfer within two weeks and appear before the Commissioner of Income Tax at Allahabad. All issues were to be decided by the Competent Authority, and a fresh order was to be issued after providing a reasonable opportunity for the assessee to be heard. The petition was allowed as indicated, with no costs imposed on any party.