2017 (5) TMI 1167 - HC - Income Tax

Transfer of cases u/s 127 - Held that - Even the reasons are recorded to transfer the case of the petitioner from respondent No.2 to respondent No.1 i.e. for coordinated investigation . Proposal was made by DGIT (Investigation) Ahmedabad for centralization of 234 cases of the beneficiaries who have taken contrived losses through Client Code Modification at their respective places of assessment (without change of location) with one officer of Central charge of respective station. The same came to be accepted and the case of the petitioner came to be transferred to Centralized office at Rajkot i.e. respondent No.1. All the requirements which are required to be followed have been followed. The decision seems to have been taken in larger public interest and for coordinated investigation of similar cases at the Central Office at the location. As in the present case the case has been transferred from one Officer to another Officer in the same city / station and that the procedure as required to be followed under Section 127 of the IT Act has been followed and that even the reasons are recorded i.e. coordinated investigation at one Central Office at the locations. As observed hereinabove even in the present case subsequently the assessment order has been passed by the respondent No.1 to whom the case was transferred vide order of assessment dated 29.12.2016 passed under Section 143(3) read with Section 147 of the IT Act against which the petitioner assessee has preferred the appeal which is pending before the learned CIT(A). Considering it cannot be said that the impugned order of transfer under Section 127 of the IT Act suffers from any illegality more particularly when the case has been transferred from one Officer to another Officer at same station and neither any prejudice is pleaded nor any prejudice is shown to have been caused to the petitioner.

Issues Involved:
1. Challenge to the impugned transfer order under Section 127 of the Income Tax Act, 1961.
2. Challenge to the subsequent assessment order under Section 143(3) read with Section 147 of the Income Tax Act, 1961.
3. Non-communication of reasons for transfer and failure to provide an opportunity to be heard.
4. Legality of the transfer of the case for "coordinated investigation."

Issue-wise Detailed Analysis:

1. Challenge to the Impugned Transfer Order:
The petitioner challenged the transfer order under Section 127 of the Income Tax Act, 1961, arguing that the transfer was illegal and contrary to law. The court noted that the transfer was from one Assessing Officer to another within the same city, which, according to Section 127(3) of the IT Act, does not require an opportunity to be heard or recording of reasons. The court cited the Supreme Court's decision in Kashiram Aggarwalla vs. Union of India, which held that such transfers are administrative orders made for the convenience of the department and do not necessitate the recording of reasons or providing an opportunity to the assessee.

2. Challenge to the Subsequent Assessment Order:
The petitioner also sought to challenge the assessment order passed under Section 143(3) read with Section 147 of the IT Act. However, the court rejected this part of the draft amendment, stating that it would change the entire cause of action and grounds of the original petition. The petitioner was given liberty to challenge the assessment order before the appropriate Court/Forum.

3. Non-communication of Reasons for Transfer and Failure to Provide an Opportunity to be Heard:
The petitioner argued that no reasons were recorded or communicated for the transfer, which vitiated the order under Section 127(2) of the IT Act. The court, however, held that since the transfer was within the same city, neither recording reasons nor providing an opportunity to be heard was necessary as per Section 127(3) of the IT Act. The court referenced the Supreme Court's decision in Pannalal Binjraj vs. Union of India, which emphasized that such transfers are administrative and do not require reasons to be recorded or communicated.

4. Legality of the Transfer of the Case for "Coordinated Investigation":
The court found that the transfer order did record reasons, stating it was for "coordinated investigation." The transfer was part of a proposal by the DGIT (Investigation) for centralizing cases of beneficiaries of contrived losses through Client Code Modification at their respective places of assessment. The court held that the decision was taken in the larger public interest and for coordinated investigation, which justified the transfer. The court also noted that all procedural requirements were followed.

Conclusion:
The court dismissed the petition, holding that the transfer order under Section 127 of the IT Act did not suffer from any illegality. The court emphasized that the transfer was within the same city, and no prejudice was shown to have been caused to the petitioner. The court clarified that it did not enter into the legality and validity of the assessment order, as the appeal against it was pending before the CIT(A).

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