2014 (5) TMI 156 - HC - Income Tax

Transfer of jurisdiction u/s 127 of the Act Held that - As such no reason has been recorded, that is not possible to provide the reasonable opportunity of hearing - it was obligatory on the part of the CIT to provide the reasonable opportunity of hearing before passing the transfer order - It is a pre-requisite and mandatory - no opportunity has been given before passing the transfer order - u/s 127, the reasons should be recorded for the transfer of the case but the order reveals that no reason has been recorded - both the requirements have not been fulfilled, thus, the transfer order dated 11.9.2008 is illegal. Relying upon Ajantha Industries v. Central Board of Direct Taxes 1975 (12) TMI 1 - SUPREME Court - for exercising the power u/s 127 for transferring of the case from one officer to another officer of different jurisdiction, it is mandatory to give opportunity of hearing before passing the order and further the reason for the transfer of the case must be recorded - neither any notice nor any opportunity has been given to the assessee before passing the order, nor there is any finding that it is not possible to give opportunity nor any reason has been recorded for the transfer of the case - the Central Circle-4, New Delhi has assumed the jurisdiction by virtue of the transfer order dated 11.9.2008, all the orders passed by the Assistant Commissioner of the Income Tax, Central Circle-4 New Delhi are without jurisdiction and are set aside Decided in favour of Assessee.

Issues Involved:
1. Legality of the transfer order dated 11.9.2008.
2. Requirement of opportunity of hearing before passing the transfer order.
3. Validity of assessment orders passed by the Assistant Commissioner of Income Tax, Central Circle-4, New Delhi.

Issue-wise Detailed Analysis:

1. Legality of the Transfer Order Dated 11.9.2008:
The petitioner challenged the transfer order dated 11.9.2008 issued by the Commissioner of Income Tax, Ghaziabad, arguing that it was passed without giving any opportunity to the petitioner and without recording any reason for the transfer. The court found that the transfer order did not record any reasons for transferring the case from ITO Ward 2 (3), Ghaziabad to Central Circle 4, New Delhi. The court referred to Section 127 of the Income Tax Act, which mandates that reasons must be recorded for such transfers and that the assessee must be given a reasonable opportunity of being heard. The court concluded that both these requirements were not fulfilled, rendering the transfer order patently illegal and liable to be set aside.

2. Requirement of Opportunity of Hearing Before Passing the Transfer Order:
The petitioner argued that no opportunity of hearing was provided before the transfer order was issued, which is a mandatory requirement under Section 127 of the Income Tax Act. The court agreed, stating that the reasonable opportunity of hearing is a prerequisite for passing a transfer order unless it is shown that it is not possible to do so. In this case, no such reason was recorded. The court emphasized that the requirement of recording reasons and providing an opportunity of hearing is mandatory. The court cited the Apex Court's decision in Ajantha Industries v. Central Board of Direct Taxes, which held that non-communication of reasons for transfer is not saved by merely recording reasons in the file without communicating them to the assessee.

3. Validity of Assessment Orders Passed by the Assistant Commissioner of Income Tax, Central Circle-4, New Delhi:
The petitioner contended that the assessment orders passed by the Assistant Commissioner of Income Tax, Central Circle-4, New Delhi were invalid as they were based on the illegal transfer order. The court agreed, stating that since the transfer order dated 11.9.2008 was illegal, all subsequent assessment orders passed by the Assistant Commissioner of Income Tax, Central Circle-4, New Delhi were without jurisdiction and thus liable to be quashed. The court quashed the assessment orders for the years 2000-01 to 2006-07.

Conclusion:
The court quashed the transfer order dated 11.9.2008 and all subsequent assessment orders passed by the Assistant Commissioner of Income Tax, Central Circle-4, New Delhi, due to the failure to provide a reasonable opportunity of hearing and the absence of recorded reasons for the transfer, as mandated by Section 127 of the Income Tax Act.

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