VINAY KUMAR JAISWAL VS COMMISSIONER OF INCOME-TAX, 1998 PTD-ALLAHABAD-HIGH-COURT-INDIA 836 (1996)

Income-tax---

----Transfer of cases---Notice to be given under 5.127 to indicate reasons for proposed transfer---That assessees filed objections upon information about transfer---Does not amount to compliance with requirement of S.127---Order under S.127 passed without giving notice liable to be set aside---Indian Income Tax Act, 1961, 5.127.

The assessees challenged an order under section 127(2) of the Income Tax Act, 1961, by which the Commissioner of Income-tax transferred certain cases of the assessees from Kanpur, U.P. to Raipur, M.P.,. contending that it was incumbent upon the Commissioner to have given an opportunity of hearing which he had not done. The Department contended that since the assessees had themselves filed objections to the proposed transfer, merely because they had not been given notice by the Commissioner of Income-tax the order of transfer would not be vitiated:

Held, (i) that a notice has to be given under section 127 whenever it is proposed to transfer a case from one officer to another and it must briefly indicate the reasons for the proposed transfer, since otherwise the assessee would not know on what basis it is proposed to be transferred and would not be able to meet the said 'notice. The mere filing of objections by the assessees did not comply with the requirement of section 127. The order under section 127 was liable to be set aside.

V.K. Steel Industries (Pvt.) Ltd. v. Assistant CIT (1991) 187 ITR 403 (AP) fol.

(ii) that the order of transfer was vitiated also because the Commissioner had not dealt with the assessees objections:

(iii) that failure to communicate the order of transfer also was an illegality.

Ajantha Industries v. CBDT (1976) 102 ITR 281 (SC) and V.K. Steel Industries (Pvt.) Ltd. v. Assistant CIT (1991) 187 ITR 403 (AP) fol.

V.K. Upadhyay and Vikram Gulati for Petitioners.

Rajesh Kumar Agarwal for Respondents.

JUDGMENT

All the abovementioned writ petitions are being disposed of by a common judgment.

We have heard Shri V.K. Upadhyay and Shri Vikram Gulati, learned counsel for the petitioners and Shri Rajesh Kumar Agarwal for the Department.

The petitioners have challenged the impugned order, dated April 29, 1994, under section 127(2) of the Income Tax Act, 1961, a true copy of which is Annexure 10 to the writ petition, by which the Commissioner of income-tax has transferred certain cases of the petitioners from Kanpur, U.P. to Raipur, in M.P.

Shri Upadhyay has firstly contended that under section 127 of the Income-tax Act, it was incumbent upon the Commissioner to give an opportunity of hearing to the petitioner which he had not done. This allegation has been made in paragraphs 11 and 13 to the writ petition. In reply Shri Rajesh Kumar Agarwal has invited our attention to paragraph 10 to the counter-affidavit, wherein it has been stated that the petitioners had themselves filed objection, dated March 30, 1994, before the Commissioner of Income-tax, true copy of which is Annexure 10 to the counter-affidavit This objection has also been annexed in Annexure 4 to the writ petition. Shri Agarwal has submitted that since the petitioners had themselves filed the objection to the proposed transfer, hence, merely because they had not been given notice by the Commissioner of Income-tax, the impugned order of transfer would not be vitiated.

We do not agree with this submission of learned standing counsel in our opinion, a notice has to be given under section 127 whenever it is proposed to transfer the case from one officer to another and this notice must briefly indicate the reasons why it is proposed to transfer the case, since otherwise the assessee would not know on what basis the case is proposed to be transferred and would not be able to meet the said notice.

The same view has been taken by the Andhra Pradesh High Court in the case of V.K. Steel Industries (Pvt.) Ltd. v. Asst. CIT (1991) 187 ITR 403.

In the present case, it may be noticed that the petitioners had no doubt filed some objection before the Commissioner of Income-tax, dated March 30, 1994, objecting to the proposed transfer, but it was evident that this was so done because the petitioners got some information that the respondents are going to transfer their cases. In our opinion, mere filing of the objection does not comply with the requirement of section 127 of the Income-tax Act because as already stated above, unless the assessees know the reasons for the proposed transfer, they will not be able to properly meet the basis of the proposed transfer. Moreover, it may also be pointed out that the averments made in the objection, dated March 30, 1994, have not been dealt with in the impugned transfer order and for this reason also the said order is vitiated.

It is obvious that when certain factual allegations are made in the objections of the assessee, they have to be dealt with, otherwise the very purpose of hearing would be frustrated. In their objections, the petitioners had specifically mentioned that all the concerns of the family barring a few which were recently established are being assessed at Kanpur and they were paying a good amount of tax in Kanpur. They had also mentioned that the accounts of all the concerns of the family are maintained at Kanpur and only manufacturing and trading activities are conducted at Bhilai. Hence it was incumbent upon the Commissioner of Income-tax to deal with the said averments which he has not done in the impugned order and for this reason also the impugned order has been vitiated.

That apart the petitioners have alleged in paragraphs 11 and 13 to the writ petition that the transfer order has not been communicated to them. It has been held by the Supreme Court in the case of Ajantha Industries v. CBDT (1976) 102 ITR 281 that non-communication of the transfer order is a serious infirmity and hence the order was invalid. The same view was also taken by the Andhra Pradesh High Court in the case of V.K. Steel Industries (Pvt.) Ltd. (1991) 187 ITR 403.

Shri Rajesh Kumar Agarwal has submitted that since the petitioners have annexed the transfer order with the writ petition, hence it is obvious that the transfer order was communicated to them. In our opinion, this argument is not tenable. It is obvious that even in the decision of the Supreme Court and the Andhra Pradesh High Court the transfer order had been annexed to the writ petition but yet it was held that non-communication of the transfer order was an illegality.

For the above reasons, we set aside the impugned order, dated April 29, 1994, but leave it open to the Commissioner of Income-tax to pass a fresh order after issuing notice under section 127 of the Income-tax Act and after complying with the other requirements of law.

The writ petition is allowed. No order as to costs.

A certified copy of this shall be given to counsel for the parties by August 11, 1996, on payment of usual charges.

M.B.A./1283/FCPetition allowed.