1970 (10) TMI 18 - HC - Income Tax

Petitions under article 226 of the Constitution of India have been filed against the order of the first respondent transferring the cases - transfering of case without recording the reason for transfer is invalid

Summary

Issues:
Challenge to order transferring cases from Indore to Bombay under section 127 of the Income-tax Act, 1961 without giving a reasonable opportunity of being heard and without recording reasons for transfer.

Analysis:
The judgment pertains to two writ petitions challenging the transfer of cases from Indore to Bombay under section 127 of the Income-tax Act, 1961. The petitioners contended that the order of transfer did not comply with the requirements of the Act as it did not provide a reasonable opportunity of being heard or record reasons for the transfer. The respondents argued that such transfers are administrative in nature and consider factors like convenience. However, the court held that the power conferred by the Act is quasi-judicial, requiring a reasonable opportunity of being heard and the recording of reasons for transfer.

The court referred to the provisions of section 127 of the Income-tax Act, 1961, emphasizing the importance of compliance with its requirements. It was argued that failure to provide a reasonable opportunity of being heard and to record reasons for transfer would render the order of transfer invalid. The court highlighted that the order of transfer must be quasi-judicial in nature, and non-compliance with the statutory provisions could lead to judicial intervention.

The judgment cited precedents from the Supreme Court emphasizing the quasi-judicial nature of such orders and the necessity of passing speaking orders with recorded reasons. It was noted that any violation of statutory provisions or principles of natural justice cannot be permitted, especially in light of the specific requirements of section 127 of the Income-tax Act, 1961.

The court also discussed a Division Bench judgment of the Allahabad High Court where the order of transfer was challenged on the grounds of not being passed collectively by all members of the Central Board of Revenue and lack of recorded reasons. The court disagreed with the reasoning that "facility of investigation" was a sufficient reason for transfer, emphasizing the need for specific reasons in the order of transfer itself.

Ultimately, the court found the impugned order of transfer to be in contravention of section 127(1) of the Income-tax Act, 1961, as it lacked a proper reason for transfer. Consequently, the court allowed the writ petitions, quashed the order of transfer in each case, and awarded costs to the petitioner.

In conclusion, the judgment underscores the importance of procedural fairness, quasi-judicial nature of transfer orders under the Income-tax Act, and the necessity of providing a reasonable opportunity of being heard and recording specific reasons for transfer to ensure compliance with statutory requirements.