Section 127(1) confers powers, inter alia, on the Commissioner after giving the assessee a reasonable opportunity of being heard in the matter, whenever it is possible to do so, and after recording his reasons for doing so to transfer any case from one Assessing Officer subordinate to him to any other Assessing Officer also subordinate to him. Under sub-section (2), where the Assessing Officer from whom the case is to be transferred and the Assessing Officer to whom the case is to be transferred are not subordinate, inter alia, to the same Commissioner, the power is, inter alia, conferred upon the Commissioner from whose jurisdiction the case is to be transferred. In such a case, the Commissioner, the statute provides, may after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so and after recording his reasons for doing so, pass the order.
Text of section 127
[1][Power
to transfer cases
127.(1) The [2][Principal Director General or]
Director General or [2][Principal
Chief Commissioner or] Chief Commissioner or [2][Principal Commissioner
or] Commissioner may, after giving the assessee a reasonable opportunity of
being heard in the matter, wherever it is possible to do so, and after
recording his reasons for doing so, transfer any case from one or more Assessing
Officers subordinate to him (whether with or without concurrent jurisdiction)
to any other Assessing Officer or Assessing Officers (whether with or without
concurrent jurisdiction) also subordinate to him.
(2)
Where the Assessing Officer or Assessing Officers from whom the case is to be
transferred and the Assessing Officer or Assessing Officers to whom the case is
to be transferred are not subordinate to the same [2][Principal Director
General or] Director General or [2][Principal Chief Commissioner or] Chief
Commissioner or [2][Principal Commissioner or] Commissioner,—
(a) where the [2][Principal Directors
General or] Directors General or [2][Principal Chief Commissioners or]
Chief Commissioners or [2][Principal Commissioners or] Commissioners
to whom such Assessing Officers are subordinate are in agreement, then the [2][Principal
Director General or] Director General or [2][Principal Chief Commissioner or] Chief
Commissioner or [2][Principal Commissioner or] Commissioner
from whose jurisdiction the case is to be transferred may, after giving the
assessee a reasonable opportunity of being heard in the matter, wherever it is
possible to do so, and after recording his reasons for doing so, pass the
order;
(b) where the [2][Principal Directors General or] Directors General
or [2][Principal Chief Commissioners or] Chief Commissioners
or Principal Commissioners or Commissioners aforesaid are not in agreement, the
order transferring the case may, similarly, be passed by the Board or any such [2][Principal
Director General or] Director General or [2][Principal
Chief Commissioner or] Chief Commissioner or [2][Principal
Commissioner or] Commissioner as the Board may, by notification in the
Official Gazette, authorise in this behalf.
(3) Nothing in sub-section (1) or sub-section
(2) shall be deemed to require any such opportunity to be given where the
transfer is from any Assessing Officer or Assessing Officers (whether with or
without concurrent jurisdiction) to any other Assessing Officer or Assessing
Officers (whether with or without concurrent jurisdiction) and the offices of
all such officers are situated in the same city, locality or place.
(4) The transfer of a case under
sub-section (1) or sub-section (2) may be made at any stage of the proceedings,
and shall not render necessary the reissue of any notice already issued by the
Assessing Officer or Assessing Officers from whom the case is transferred.
Explanation : In section 120 and
this section, the word “case”, in relation to any person whose name is specified
in any order or direction issued thereunder, means all proceedings under this
Act in respect of any year which may be pending on the date of such order or
direction or which may have been completed on or before such date, and includes
also all proceedings under this Act which may be commenced after the date of
such order or direction in respect of any year.]”
KEY NOTE
1. Substituted by the Direct Tax Laws
(Amendment) Act, 1987, with effect from 01.04.1988.
2. Inserted by the Finance (No. 2) Act,
2014, with retrospective effect from 01.06.2013.
Purpose of Centralisation
The
purpose of centralisation is to ensure that all cases directly connected with
the Group searched are assessed at one place to prevent any loss of revenue and
to facilitate a proper assessment. But this does not necessarily mean that the
related parties are also to be centralized.
All
the assessees related to issues pointed out in Appraisal Report may be
centralized and their assessments should be completed in a nameless/faceless
manner, where the assessees as well as Assessing Officers are not aware of each
other’s identities, to ensure transparency in the assessments.
As
per the CBDT instruction no. 8, dated 14.08.2002 and para No. 6.45 to 6.48 of
Search and Seizure Manual, the search cases shall be centralized in central
charges to facilitate coordinated and sustained investigations and to facilitate
in-depth examination of issues pointed out in investigation to make the
assessment more effective. As far as possible, the assessments should be taken
up group-wise to ensure a holistic approach as well as to ensure that no income
remains un-assessed due to any confusion or doubt regarding the hands in which
it is to be assessed.
Centralised assessment of searched group covering all
the related assessees
All
search cases are generally centralised in central circles to facilitate
co-ordinated and sustained investigations However, the DGIT
(Investigation)/CCIT (Central) may in exceptional situations take a decision
not to centralise a search case in a central charge because of heavy work load
in central charges and/or low investigation potential/ low tax impact. If there
is no central charge in a region, the concerned DGIT (Investigation) and the
concerned CCIT may after suitable deliberations, decide whether to centralise
search cases in a central charge of another region or with the Assessing
Officer having jurisdiction over core cases of the group or with any other
Assessing Officer. 6.46 The DIT (Investigation) should initiate the proposal
for centralisation within one month of the date of initiation of search. The
process should be completed within two months of the initiation of search.142
This involves the following main steps:
(1)
Soon
after the search in a case or a group of cases, the Additional/Joint DIT
(Investigation) should submit a proposal for centralisation to the DIT
(Investigation), indicating, inter alia, the following:
(i)
names,
addresses, status and PAN of the persons/concerns of the group of cases
proposed to be centralised;
(ii)
date(s)of
search, survey or other action taken in their cases;
(iii)
their
relationship with the main person(s)/concern(s) of the group;
(iv)
whether
the person/concern is an existing income-tax assessee;
(v)
the
assessment unit where the person is assessed or assessable to tax and the
corresponding Range, CIT charge and CCIT/ DGIT region;
(vi)
the
likely tax potential of the cases and the complexity of investigations
involved;
(vii)
nature
and extent of tax-evasion and other tax violations established or likely to be
established;
(viii)
particulars
of the assessment units, Range, CIT charge and CCIT/DGIT region from where the
cases are proposed to be transferred out;
(ix)
particulars
of the assessment units, Range, CIT charge and CCIT/DGIT region where the cases
are proposed to be centralised; and
(x)
reasons
for suggesting centralisation of the cases.
(2)
The
DIT (Investigation) should forward the proposal referred to at S.No. (1) above
to the (a) CCIT’s/DGIT’s and CIT’s from whose region and charge the cases are
proposed to be transferred out and (b) CCIT’s/DGIT’s and CIT’s in whose
region/charge the cases are proposed to be centralised. He should also give his
comments/recommendations on the proposal.
(3) On receipt of the proposal, the concerned
CIT’s should take a decision in the matter within a reasonable period of time.
Where the concerned CITs are not in agreement or where both of them agree not
to accept the said proposal, the matter should be referred to the concerned
CCITs/DGITs for decision. If they too are not in agreement, the matter should
be referred to the Board for decision.
(4) Once a decision for centralisation has been
taken, all follow-up actions should be taken with out delay. Some such actions
are:
(i) The transferor CIT should, keeping in view
the relevant statutory provisions and the views taken by the Courts in various
cases in this regard, pass suitable order under section 127, indicating, inter
alia, the date from which the order is effective.
(ii) After the order referred to at S.No. (i)
above has been passed, the transferor Assessing Officer should transfer all the
assessment records, records of other proceedings and matters relating to the
transferred cases to the transferee Assessing Officer before the date from
which the order under section 127 is effective. He should also send a list of
all pending (including pending time-barring) actions, proceedings, outstanding
demands, etc. to the transferee Assessing Officer.
(iii) The appropriate authority should take
appropriate action for transfer of PAN.
(iv) The transferor CIT should transfer the
following to the transferee CIT:
(a) In case the transferee CIT has a separate
PDA, the transferor CIT should transfer the seized money relating to the case
lying in his PDA to that of the transferee CIT.
(b) Confidential files relating to search
including copies of the appraisal reports, if already received and Control
Chart maintained in his office.
(c) Other records relating to the case(s)
maintained in his office, like matters relating to sections 273A, 264,
grievance petitions, TEPs, etc.
(v) The CCIT/DGIT from whose region
the cases have been transferred to another region should transfer all records
of such cases maintained in his office to the CCIT/DGIT in whose region the
cases have been centralised.
It
should be ensured that all the above actions are taken promptly. The aforesaid
time-limit of two months laid down for the completion of the centralisation
process should be strictly adhered to. Search related assessments are required
to be completed within the time-limit laid down in the Act and any delay in
centralisation may affect the quality of investigation by the Assessing
Officer.
Time
schedule for centralisation in the Investigation wing
Following
time-schedule should be strictly followed for completing centralisation work
from the date of initiation of search:
|
1 |
Initiation
of proposal for centralisation |
One
month |
|
2. |
Completion
of centralisation work, including orders under section 127, etc. |
Two
months |
Centralisation
of Cases [ITBA-Investigation Instruction No. 5, dated: 12.03.2018]
(i).
Facility has been provided to DDIT/ ADIT/ ITO (Inv.) to request for
centralisation of cases relating to any Search/ Survey proceedings. This
facility is provided in respect of cases relating to those Search/ Survey
Proceedings only which have been entered in ITBA system.
Refer
ITBA-Investigation Instruction No. 4 for details
(ii).
The following is the path to navigate to this facility in ITBA.
Investigation
Module >> Menu >> Search and Survey >> Initiate
Centralisation
(iii).
The process will facilitate the DDIT/ ADIT/ ITO (Inv.) to select PANs and
proposed jurisdiction for centralisation. User will initiate the request for
centralisation of cases, which will be reviewed by Addl. DIT/JDIT. After
review, Addl. DIT/ JDIT will forward the proposal to the PDIT(Inv.). If the
cases are to be centralised in multiple PCIT/CIT charges, then separate
proposal should be sent for each charge.
(iv).
PDIT(Inv.) will have the provision to recommend or not recommend any case and
forward the proposal for approval by DGIT (Inv.).
(v).
DGIT(Inv.) will have the facility to approve or reject proposal in any case.
DGIT(Inv.) will also have the provision to edit/change the proposed
jurisdiction for centralisation of cases.
(vi).
After approval, DGIT (Inv) will send the workitem to the CCIT (Central)/
PCIT(Central)/ any other DGIT(Inv.) (as per the user selected in proposed
jurisdiction) for further action. CCIT (Central)/ selected DGIT(Inv.) (if
selected) will forward the workitem to concerned PCIT (Central) in respect of
the approved centralisation requests.
(vii).
PCIT (Central) will send the request to PCIT (Jurisdictional) for initiating
the process of PAN Transfer in order to centralise the cases with the central
jurisdiction. In case PANs involved in the proposal belong to different
jurisdiction, separate request for PAN transfer will be sent to each PCIT
(Jurisidictional).
Once
the PCIT (Jurisdictional) accepts the proposal, the PAN transfer order will
need to be passed in PAN module. If PCIT (Jurisdictional) rejects the proposal,
reasons recorded for rejection will be shown in the workitem of PCIT (Central)
in Centralisation Details.
Note:
For detailed procedure of PAN transfer, users are advised to go through the
User Manual and FAQs of PAN module, available on the ITBA portal.
(viii).
Once all the cases are centralised i.e. PAN transfer is done/ rejected by PCIT
(Jurisdictional), PCIT (Central) will need to close the Centralisation workflow
(f).
De-Centralisation of Cases:
For
decentralisation of cases, users are required to use the PAN transfer
functionality available in PAN module.
For
detailed procedure of the above functionalities, the users are advised to go
through the User Manual and FAQs available on the ITBA portal.
Users
are advised to contact helpdesk in case of any issues in respect of the ITBA.
(a).
URL of helpdesk - http://itbahelpdesk.incometax.net
b.
Help desk number – 0120-2811200
(c).
Email ID – itba.helpdesk@incometax.gov.in
(d).
Help desk Timings – 8.30 A.M. to 7.30 P.M. (Monday to Friday)
Centralisation of search cases – CBDT’s Instruction
No. – F. NO. 286/88/ 2008-IT (Inv. II), dated 17.09.2008
Subject : Centralisation of search cases - Regarding
Instances have come to notice of the Board that search
cases are not being centralised promptly, thereby causing delay in initiation
of the search assessment proceedings, deferment of payment of taxes and finally
resulting in completion of search assessments at the fag end of the limitation
period.
2. In supersession of existing
Board’s Instruction No. 8/2002, dated 14th August, 2002 on above subject, I am
directed to inform that following procedure for early centralisation of search
cases should be followed:
(a) In regions where the central
charges exist, a copy of the Fax Report of search should be endorsed to CCIT
and CIT having jurisdiction over the assessee and DGI (Inv)/CCIT (C) in whose jurisdiction
the cases of the group would be centralised after the search. The CCIT/CIT
having jurisdiction should ensure that the assessment records of search cases
are kept in personal custody of the Assessing Officer. To avoid any
manipulation with the records.
(b) In regions where there are more
than one CIT (C), the DGIT (Inv)/CCIT (C) should identify the CIT (C) in whose
charge the cases will be centralised and inform the DIT (Inv) concerned as well
as the CIT (C) within seven days of initiation of search.
(c) In regions where there is no
central circle or the group is assessed in more than one CCIT region or
involving more than one CIT charges, then the DGIT (Inv.) should identify the
CIT charge in which the group searched will be centralised in consultation with
the CCIT in whose jurisdiction the main cases of the group are assessed to tax
within seven days of initiation of search.
(d) The ADIT (Inv) should send
proposal for centralisation through the Addl. DIT (Inv) to the DIT (Inv), who
in turn should send the proposal to the CIT(C) or the CIT as mentioned in (c)
above, as the case may be, within 30 days of initiation of search.
In ‘Sagarmal Spinning and
Weaving Mills Limited v. CBDT, the Madhya Pradesh High Court held that on a
plain reading of section 127 of the Income Tax Act, 1961, two things are
absolutely necessary, namely:—
(a)
A reasonable opportunity of being heard in the matter wherever it is possible
to do so; and
(b)
The recording of reasons for transferring a case.
Where the transfer of jurisdiction only involves
Assessing Officers situated in the same city [Section 127(3)]
Section 127(3) makes it clear that
no opportunity is required to be given in respect of transfer of jurisdiction
within the same city.
It was held that the mandatory requirement
of recording reasons was not to be applicable, as the transfer orders were in
the same city and only wards were changed but the Court did observe about the
nature of transfer orders under section 127. - [Kashiram Aggarwalla v. Union
of India and others (1965) 56 ITR 14 (SC)]
Where case of assessee partnership firm was transferred
from ITO, Delhi to Commissioner, Faridabad for coordinated investigation as one
of partners of assessee was residing in Faridabad and also cases of other concerns in which said partner was a
director were also centralized at Faridabad, said transfer of case of assessee was justified
Place of residence - Pursuant to a search conducted upon
assessee partnership firm, case of assessee was transferred under section
127 from ITO, Delhi to Commissioner,
Faridabad for coordinated investigation as one of partners of assessee, namely,
DKG was residing at Faridabad. It was noted that said partner of assessee was
also director in other concerns whose cases were also centralized at Faridabad. Faridabad was within Delhi-NCR
region and in close proximity with Delhi. On facts, impugned transfer of case of assessee from ITO, Delhi to Commissioner,
Faridabad was to be upheld. – [Dev Wines Sales Corporation v. PCIT (2021)
279 Taxman 342 : 126 taxmann.com 168 (Del.)]
Transfer order passed under section 127 is more in nature
of an administrative order rather than quasi-judicial order and assessee cannot
have any right to choose his assessing authority, as no prejudice can be said
to have been caused to assessee depending upon which authority of Department
passes assessment order
On account of centralisation of search and seizure cases, assessment proceedings of
assessee were transferred from one assessing authority to another parallel
authority. On writ, Single Judge did not find any ground to interfere with said
consolidation and transfer of cases from
one Assessing Officer to another and, therefore, dismissed writ petition.
During pendency of writ petition, as assessment was getting time-barred, Single
Judge, by interim order, had given liberty to revenue, to conclude assessment
proceedings, with a caveat, that it would not be given effect to till further
orders.Accordingly revenue passed assessment order and after dismissal of writ
petition sought to serve same upon assessee. However, assessee filed writ
appeal against transfer order passed under section 127 and requested assessing authority to withdraw
assessment order on account of pendency of said appeal. Writ appeal had become
infructuous in view of assessment order having been passed by assessing
authority in pursuance of impugned transfer order under section
127. Further transfer order passed under section
127 is more in nature of an administrative
order rather than quasi-judicial order and assessee cannot have any right to
choose his assessing authority, as no prejudice can be said to have been caused
to assessee depending upon which authority of department passes assessment
order. [In favour of revenue] (Related Assessment year : 2014-15) – [PCIT v.
Advantage Strategic Consulting (P) Ltd. (2021) 277 Taxman 512 : 124 taxmann.com
511 (Mad.]
SLP dismissed against High Court ruling that where
assessee challenged order of transfer of its case on ground that its
Chartered Accountant was 85 years old and it would cause hardship for assessee
if its case was transferred,
such grievance of assessee was imaginary because Income-tax returns were now
filed online, thus, order of transfer of case was to be upheld
A search under section 132
was conducted upon assessee company and its directors during which
incriminating materials tending to show huge tax evasions were recovered. Pr.
Commissioner, Madurai transferred case of
assessee from Tiruneveli to Madurai for reason that detailed, coordinated and
centralized investigation was necessary. Assessee contended that there was no
clear reasons provided for transfer of its case. It further contended that its Chartered Accountant was
stationed at Tirunelveli and that he was 85 years old and it would cause
hardship for assessee if its case would
be transferred to Madurai - It was noted that show cause notice had clearly
spelt out reasons for proposed transfer of case of assessee - Further, grievance of assessee that
its Chartered Accountant was an elderly person was also imaginary because
Income-tax returns were now filed online. High Court by impugned order held
that, on facts, order of transfer of case was to be upheld. Special leave petition filed against impugned
order was to be dismissed. [In favour of revenue] - [V.V. Minerals v. CIT (2021) 276
Taxman 279 : (2020) 122 taxmann.com 83 (SC)]
Where case of assessee
was transferred from one Assessing Officer to another Assessing Officer within
same city, in view of provisions of sub-section (3) of section 127, there was
no statutory requirement for notice or prior intimation to be given to assessee
before order of transfer
Section 127 - Power to transfer cases (Prior intimation of
transfer) - Where case of assessee was transferred from one Assessing Officer
to another Assessing Officer within same city, in view of provisions of
sub-section (3) of section 127, there was no statutory requirement for notice
or prior intimation to be given to assessee before order of transfer [In favour
of revenue] (Related Assessment years : 2009-10 to 2011-12) - [Jaswantlal J. Shah v. ACIT(C) (2021) 128 taxmann.com 378 (ITAT Mumbai)]
Where
ITO passed a reassessment order under section 147/143(3) and
thereafter case of assessee was transferred under section127 from ITO to
Dy. CIT, impugned reassessment order under section 263/143(3)
passed by ITO giving effect to order of Pr. CIT requiring to set aside said
reassessment order under section 147/143(3) originally framed
by ITO was without jurisdiction and same was to be quashed
ITO passed a
reassessment order under section 147/143(3)
in case of assessee by making an addition of certain amount as
against assessee's returned income of lesser amount - Thereafter, case of assessee
was transferred under section127 from ITO to DCIT. Later on,
Pr. CIT invoked his revisionary jurisdiction under section 263
requiring to set aside such reassessment order originally framed by ITO
under section 147/143(2). ITO giving effect to order of Pr. CIT set
aside such earlier order passed by him under section 147/143(3)
and framed reassessment under section 263/143(3). It was noted that
from plain reading of order under section127 it was found that
transfer of jurisdiction over assessee's case from charge
of ITO to Dy. CIT was absolute and without reserving any right of concurrent
jurisdiction over assessee to ITO. Therefore, ITO had no jurisdiction to frame
impugned revisional assessment under section 263 as jurisdiction
vested in him had already been transferred under section127 to DCIT,
thus, such revisional order under section 263/143(3) was to be quashed.
[In favour of assessee] (Related Assessment year : 2008-09) - [OSL
Developers (P) Ltd. V. ITO (2021) 125 taxmann.com 98 (ITAT Kolkata)]
Power to transfer cases - Assessee
was given opportunity to be heard- Order for transfer is valid—Notice sent by
post to correct address of assessee—Presumption that notice had been served
Dismissing the petitions the Court
held that prior to sending the notice there was an agreement between the
Director General of Income-tax (Inv), Kochi and the Principal Chief
Commissioner of Income-tax, NER, Guwahati belonging to the two jurisdictions.
Assessee was given an opportunity to be heard. Notice was sent by post to
correct address of assessee, Presumption that notice had been served. Order for
transfer is valid. - [M. K. Rajendran Pillai v. CIT (2020) 421
ITR 274 (Gau.)]
Power to transfer cases – Transfer
for purposes of co-ordinated investigation - Mode of investigation need not be
disclosed - Notice to transfer implies that both the Commissioners are in
agreement – Manner of agreement need not be recorded - Transfer is held to be
valid – Writ is held to be not maintainable
Reasons for transfer - Assessee
company was engaged in business of providing point of sale technology
infrastructure to banks and consumer service providers. A survey under section
133A was conducted at office premises of assessee at Chennai in which certain
documents were impounded. Pursuant to said survey, case of assessee was
transferred by Principal Commissioner from Chennai to Bangalore for
centralisation for co-ordinated investigation with other related parties. It
was noted that purpose of centralisation of cases was to investigate
transactions among various related entities and to assess income of all persons
concerned. Dismissing the petition the Court held that, transfer for purposes
of coordinated investigation and mode of investigation need not be disclosed. Court
also held that notice to transfer implies that both the Commissioners are in
agreement. Manner of agreement need not be recorded. Accordingly, the transfer
is held to be valid and Writ is held to be not maintainable. [In favour of
revenue]- [MRL Posnet (P) Ltd. v. PCIT (2019) 418 ITR 349 : 112 taxmann.com
317 : (2020) 268 Taxman 343 (Mad.)]
Where
assessee-company and others were connected with accused in Augusta Westland
scam and scam was Investigated by ED and CBI, transfer of assessment of
assessee from Chandigarh to Delhi was proper
Following a survey
conducted in case of
assessee-company and others, assessment of assessees had been transferred from
ACIT, Circle-5(1), Chandigarh to DCIT/ACIT, Central Circle-05, New Delhi -
Assessees filed instant petition alleging that impugned orders of transfer
of cases were completely cryptic and no reasons had been assigned.
Revenue submitted that assessee-company and others were closely linked and had
close connection with Gautam Khaitan Group and that involvement of assessees in
Augusta Westland scam and Gautam Khaitan Group cases were being
probed by Enforcement Directorate and Central Bureau of Investigation (CBI).
Since a perusal of pleadings and documents on record revealed that assessee had
full and complete knowledge of reasons which had weighed with competent
authority while passing order of centralization of cases, and moreover
there was no categoric denial to averment that assessees were connected in some
manner to Augusta Westland case and to Gautam Khaitan Group of companies,
instant petition was liable to be dismissed. [In favour of revenue] – [IDS
Infotech Ltd. v. PCITI, Delhi (2020) 120 taxmann.com 426 (P&H)]
Power to transfer cases - Reasons
must be recorded – Objections must be considered - Order of transfer is held to
be not valid
Allowing the petition the Court
held that the Principal Commissioner had only stated in his order that he was
of the opinion that the objections raised by the assessee could not be the
basis for not centraliza the case and the materials which were seized and
impounded needed to be further investigated. The notice issued to the assessee
stated some reasons. But at the same time, when such reasons were opposed and a
reply was filed by the assessee objecting to the transfer, the Principal
Commissioner had to necessarily record his reasons with certain facts and
circumstances warranting the transfer and to justify that centraliz or
co-ordinated investigation was required. The order of transfer was not valid.—[MRL
Postnet (P) Ltd. v. CIT (2019) 416 ITR 407 (Mad.)]
Power to transfer cases - Co-ordinated
investigation - Recorded reasons and opportunity of hearing was given - Transfer
is held to be valid
Dismissing the petition the court
held that the transfer of case is done for co-ordinated investigation.
Commissioner recorded the reasons and opportunity of hearing was given.
Transfer is held to be valid. (Related Assessment year : 2017-18)—[Soma
Enterprise Ltd. v. CIT (2019) 414 ITR 374 : 309 CTR 396 : 180 DTR 79
(Telangana)]
Non-application of mind
– Reason must disclose that patently, logic and prudence has been applied
before passing the order – Decentralisation of central charges cannot
constitute sufficient reason to transfer the cases
Recording of reason – Assessee’s case was transferred from one jurisdiction to another
jurisdiction – Reason assigned for transferring jurisdiction was
‘decentralisation of cases from central charges’. Assessee filed writ
petition challenging validity of transfer order on ground that reason assigned
did not constitute sufficient reason for transferring jurisdiction of assessee’s case. Where High Court accepted assessee’s plea that
reason assigned for transfer of its case from one jurisdiction to
another jurisdiction i.e. ecentralization of cases from
central charges, did not constitute sufficient reason and thus, impugned
transfer order passed by Assessing Officer was not sustainable, SLP filed
against said order was to be dismissed
[In favour of assessee] – [PCITI v. Rohtas Project Ltd. (2019) 260
Taxman 94 : (2018) 100 taxmann.com 384 (SC)]
Power to transfer cases –
Opportunity of hearing – Assessee’s case was transferred from one Assessing
Officer to another Assessing Officer having offices in different localities/
places, notice had to be given to assessee – Order is held to be void ab
initio and barred by limitation
The assessee, individual, filed his
return declaring certain taxable income. The return was processed under section
143(1) and subsequently, the case was selected for scrutiny under CASS.
Thereafter, the Addl. CIT, Kurnool, transferred the files to Addl. CIT (IT-II)
Hyderabad, stating that the jurisdiction of the case vested with the Assessing
Officer, Hyderabad since the assessee was a non-resident. Assessing Officer
issued a notice under sections 143(2) and 142(1) and completed the assessment
under section 143(3). The assessee preferred an appeal before the Commissioner
(Appeals) challenging the jurisdiction of the Assessing Officer at Hyderabad on
making the assessment and also the additions made by the Assessing Officer.
Tribunal held that, where assessee’s case was transferred from one Assessing
Officer to another Assessing Officer having offices in different
localities/places, notice under section 127(1) had to be given to assessee and
it was only Principal Director General or Principal Commissioner who could
transfer case under section 127. Order is held to be void ab initio and
barred by limitation. (Related Assessment year : 2011-12)—[Vijay Vikram
Dande Kurnool v. ADIT (2019) 178 ITD 139 (ITAT Hyderabad)]
Where assessee’s case was
transferred from one Assessing Officer to another Assessing Officer having
offices in different localities/places, notice under section 127(1) had to be
given to assessee
Opportunity of hearing - In terms of
sub-section (3)
of section 127, provisions of sub-sections (1) and (2) are not applicable
and no opportunity is to be given to assessee, where transfer is from one
Assessing Officer to another Assessing Officer where offices of both officers
are situated in same city, locality or place. Where assessee's case was transferred
from one Assessing Officer to another Assessing Officer having offices in
different localities/places, notice under section 127(1) had to be
given to assessee and it was only Principal Director General or Principal
Commissioner who could transfer case under section 127.
[In favour
of assessee] (Related Assessment year : 2011-12) – [Vijay Vikram Dande
Kurnool v. Assistant Director of Income-tax (International Taxation) (2019) 107
taxmann.com 452 (ITAT Hyderabad)]
Transfer for centralization of cases
within city is valid, it is neither necessary to record the reasons nor
opportunity of hearing is to be given
Dismissing the petition the Court
held that, Transfer for centralization of cases within city is valid, it is
neither necessary to record the reasons nor opportunity of hearing is to be
given. (Related Assessment year : 2012-13) —[Advantage Strategic Consulting
(P) Ltd. v. PCIT (2018) 400 ITR 405 : 300 CTR 151:253 Taxman 11 :161 DTR 108
(Mad)]
Where assessee’s case was
transferred from one place to another without agreement being reached by
officers of equal rank as required under section 127(2), impugned
transfer order was to be set aside.
Agreement between
officers) - Assessee filed instant petition challenging order passed by
respondent No.1 under section
127(2)
transferring his case from Kolhapur to Mumbai. According to assessee, he was
informed that a meeting of Centralisation Committee was conveyed wherein it was
decided to centralise cases relating to ‘P’ Group to DCIT/ACIT, Mumbai.
It was further convyed that since assessee's case belonged to
said group, same was being transferred from Kolhapur to Mumbai. Assessee raised
a plea that impugned order did not refer to any agreement being reached by
officers of equal rank at Mumbai and Kolhapur as required under section
127(2) and,
thus, it was not sustainable. It was undisputed that Centralisation Committee
was not authority, envisaged under section 127(2). Moreover,
revenue had not placed anything on record to show, that Commissioner, Pune, had
given a consent to request to Commissioner, Mumbai so as to constitute
agreement as a pre-condition for invoking powers under section 127.
On facts,
mere ‘Absence of dissenting notice’ from officers of equal rank who had to
agree to proposed transfer, would not constitute agreement, as envisaged
under section 127(2)(a). Therefore, impugned order was to be set aside. [In
favour of assessee] - [Herambh Anandrao Shelke v. M.L. Karmakar, PCIT,
Kolhapur (2018) 257 Taxman 487 : 96 taxmann.com 308 (Bom.)]
CIT(A) cannot cancel order under section 127
transferring jurisdiction from one Assessing Officer to another
An order passed under section 127
of the Act is not appealable before the ld. CIT(A). Since the first appellate
authority has no jurisdiction to decide the validity or otherwise of an order
passed under section 127, transferring the jurisdiction from one Assessing
Officer to another, it is, but, natural that he cannot declare any order passed
under section 127 as invalid and consequently set aside the assessment order.
Adverting to the facts of the instant case, it is observed that the ld. CIT(A)
crossed his jurisdiction in declaring the order under section 127 of the Act as
invalid and as a fortiori, quashing the assessment. The impugned order is,
therefore, overturned and the matter is restored to the file of ld. CIT(A) for
deciding the appeal on merits, after allowing a reasonable opportunity of
hearing to the assessee. (Related Assessment Year : 2004-05)—[DCIT v. Shri
Subhash Gandhi - Date of Judgement : 21.02.2018 (ITAT Amritsar)]
Case was aptly
transferred to Meerut city as money of assessee was seized from property of her
in-laws located in Meerut city
Petitioner being daughter-in-law was living at residence of her
in-laws in Meerut - Said premises was covered under search and seizure
operation – Petitioner’s case was ordered to be transferred from Kanpur to
Meerut for integrated assessment. Transfer order stated that in above search
operation, cash amount was found from petitioner’s room and same was seized.
High Court by impugned order held that such reason could not be said to be
irrelevant or not germane to issue and that was valid and cogent reason.
Special Leave Petition filed against impugned order was to be dismissed. [In
favour of revenue] - [Preeti Elhence v.
CIT, Kanpur (2017) 248 Taxman 82 : 81 taxmann.com 426 (SC)]
Transfer of case for the purpose of
administrative convenience was held to be valid
Transfer of the case of the
assessee from Delhi to Ludhiana was valid as the case was transferred for the
purpose of centralisation of assessments after the search and seizure
operation. The High Court held that the transfer of the case of the assessee
from Delhi to Ludhiana was valid as no fault can be found with the reason of
transfer as stated in transfer order under section 127 which is for the purpose
of centralisation of assessment as a result of search and seizure operation
carried out and that following the decision of the Delhi High Court in the case
of Surya Pharmaceuticals Ltd. v. ITO (2007) 295 ITR 427 : (2008) 171 Taxman
163 (Delhi), it was held that the transfer which was made for the purpose
of administrative convenience was valid.— [Ravneet Takhar v. CIT (2017) 145
DTR 435 : (2016) 76 taxmann.com 210 (Del)]
KEY NOTE
SLP of assessee was dismissed as the petition was
withdrawn.—[Ravneet Takhar v. CIT (2017) 250 Taxman 92 (SC)]
Transfer from one Assessing Officer
to another under two different jurisdictions – Agreement between two
jurisdictional Commissioners – Absence of disagreement not same as agreement –
Positive state of mind required – The transfer of the income-tax assessment
file of the assessee from Assessing Officer, Tamil Nadu to the Assessing
Officer, Kerala was not justified
Where the assessee’s case is
transferred from one Assessing Officer to another and the two are not
subordinate to the same Commissioner, under section 127(2)(a) of the Income-tax
Act, 1961, an agreement between the Commissioners of the two jurisdictions is
necessary. Section 127(2)(a) contemplates a positive state of mind of the two
jurisdictional Commissioners. Held accordingly, that as the file of the
assessee had been transferred from an Assessing Officer in Tamil Nadu to an
Assessing Officer in Kerala and the two Assessing Officers were not subordinate
to the same Director General or Chief Commissioner or Commissioner, under
section 127(2)(a) of the Act, an agreement between the Director General, Chief
Commissioner or Commissioner, as the case may be, of the two jurisdictions was
necessary. The counter affidavit filed on behalf of the Department did not
disclose that there was any such agreement. In fact, it had been consistently
and repeatedly stated in the counter affidavit that there was no disagreement
between the two Commissioners. Absence of disagreement was not tantamount to agreement
as visualised under the section. The transfer of the income-tax assessment file
of the assessee from Assessing Officer, Tamil Nadu to the Assessing Officer,
Kerala was not justified or authorised under section 127(2)(a) of the Act and
was to be set aside.—[Noorul Islam Educational Trust v. CIT (2016) 388 ITR
489 : 243 Taxman 519 : (2017) 291 CTR 230 (SC)]
Transfer of case was done after
giving a reasonable opportunity of hearing and by passing reasoned order hence
transfer of case was held to be valid
Dismissing the petition of the
assessee, the Court held that: transfer of case from Ahmedabad to Moradabad was
done after giving a reasonable opportunity of hearing and by passing reasoned
order, hence transfer of case was held to be valid.—[Genus Electrotech Ltd.
v. UOI (2017) 250 Taxman 550 : (2018) 162 DTR 103 (Guj)]
Where cases of assessee
were transferred to another place due to restructuring of department, merely
because an opportunity of being heard was not provided, transfer order could
not become illegal unless assessee shows it to be prejudicial
Income-tax authorities without providing an opportunity of
being heard transferred assessment cases of assessee
from Rourkella to Sambalpur. By another order, authorities while taking into
consideration assessee's grievance provided reasons for transfer as
restructuring of department. It was found that even if an opportunity of being
heard was provided, there would not be any possibility of change of situation.
Decision of transfer could not become illegal unless and until assessee showed
as to how assessee was prejudiced by not giving an opportunity of being heard.
[In favour of revenue] (Related Assessment years : 2008-09 to 2013-14) – [Dr.
Monu Pattanayak (HUF) v. Principal Chief Commissioner of Income-tax
(2017) 77
taxmann.com 321 (Ori.)]
Where pursuant to search proceedings in assessee’s group
companies, Commissioner passed an order under section
127 proposing
to centralise all cases, since there was reasoning and public interest was
discernable, order so passed did not require any interference
None of the assessees voiced any prejudice at the stage when
they were issued notices. The record shows that all of them responded to the
notice and gave their own justification why the final order under section127
should not be made. The assessee has no doubt relied upon the authority to say
that this omission does not stop it from contending that the notices were void
at the same time; the Court is not unmindful of the fact that two stages are
separate. The substantiality of prejudice for lack of reasons or otherwise has
to be independently considered given the fact of each cases.
In the present case it is not as if the notice did not
contain the reasons at all. The assessees' contentions that the notice did not
contain reasons is fallacious, the reference to search and seizure operations
and the proposal to centralize the cases in Ghaziabad cannot be considered no
reasons. If these had been omitted, the assessees would have been within their
rights that the notices did not contain reasons. The assessees were fully aware
of the search and seizure operations and the fact that its premises in
Ghaziabad too were subject to such proceedings. Having regard to all these
facts, the first contention that the ingredients of the notice did not exist
when the proposal to transfer was first notified to these assessee, is
rejected.
As far as the rationale to transfer, i.e., conduct of
co-ordinated post search investigation and meaningful assessment goes, in the
case of first contention, the assessees have failed here as well. The kind of
reasoning required by an order under section 127 cannot be compared or likened
to a quasi judicial order that has adverse consequences. One can understand if
additions are made on sketchy or bare minimum reasons, they cannot be upheld.
However, what is proposed by an order under section127 is the transfer of one or
several assessments from one circle to another, to that extent inconvenience
undoubtedly ensue; however, to say that this leads to grave prejudice if
detailed reasoning were not given is something that the Court cannot
countenance.
The consequence would only be that the assessees' contentions
would have to be taken into account by another Assessing Officer who would also
have before him or her all other related assessments. In these circumstances,
it can not be held that the brief reasons relied upon by the revenue does not
amount to reasons at all or that they are vague. In such exercise in every case
where an order under section 127 is challenged, there are two interests. Those
of the assessees who invariably plead inconvenience and hardship and that of the
revenue which would inevitably cite public interest. The Court's task is to
unravel whether in fact the revenue's contentions are correct and if so reject
the assessees' contentions. On the other hand, if there is no real public
interest and if there are no reasons even the briefest one, the order cannot be
sustained. Conversely, if there is reasoning and the public interest is
discernable, as in this case, the only result can be rejection of the
assessees’ contentions. In view of the forgoing, these petitions have no
merits; they are accordingly dismissed. – [Chaudhary Skin Trading Co. v.
PCIT (2016) 290 CTR 533 : 76 taxmann.com 169 (Del.)]
Where Commissioner by an order passed under section
127 transferred case of assessee
from Assessing Officer, Ahmedabad to Assessing Officer, Surat without affording
opportunity of hearing, in true sense, compliance of section 127 was not
made by Commissioner and, therefore, impguend order deserved to be quashed
From wordings of statutory provisions contained in section
127, in
unequivocal terms, it is clear that reasonable opportunity be given to a person
before passing an order. Assessee was regularly assessed with Assessing
Officer, Ahmedabad. Commissioner, in exercise of his powers under section
127(2),
issued on assessee a notice informing that on account of a search carried out
on one H, Surat, it was proposed to transfer assessee's case from
Ahmedabad to Surat for purpose of effective and coordinated investigation and
assessment and fixed date of hearing on 26.10.2015. Assessee received said
notice on 27.10.2015. Thereafter he prepared reply and submitted same before
Commissioner on 30.10.2015. But by that time Commissioner informed assessee
that order of transfer of case from Ahmedabad to Surat had already been
passed on 27.10.2015. Snce no opportunity in actual terms was afforded to
assessee before passing impugned order dated 27.10.2015, compliance of section
127 was
not made by Commissioner. Therefore, impugned order deserved to be quashed. [In
favour of assessee] - [Lalabhai Kamabhai Bharwad v. PCIT (2016) 289 CTR
36 : 72 taxmann.com 184 (Guj.)]
Where Commissioner, vide order dated 31.08.2012 passed
under section 127,
transferred case of assessee from Mumbai to Hyderabad and Bombay High
Court dismissed writ petition filed by assessee on 11.02.2013 holding that in
view of conduct of assessee in not challenging order of transfer at earliest
and letting all believe that order of transfer was acceptable to assessee,
there was no reason to entertain petition, SLP filed against order of High
Court was to be dismissed
Commissioner, vide order dated 31.08.2012 passed under section
127,
transferred case of assessee from Mumbai to Hyderabad - Assessee received
impugned order on 07.12.2012 - Thereafter assessee filed writ petition on
11.02.2013 challenging order of transfer, but he did not move court to seek any
stay on transfer of case - In meantime Deputy Commissioner, Hyderabad
issued on assessee four notices under section 148 dated
23.07.2013 seeking to reopen his assessments for assessment years 2009-10 to
2012-13 - Thereupon assessee moved Court and sought permission to amend
petition and also sought ad interim stay of impugned notices dated 23.07.2013.
High Court held that in view of conduct of assessee in not challenging order of
transfer dated 31.08.2012 at earliest and letting all believe, particularly
Deputy Commissioner, Hyderabad, that order of transfer was acceptable to
assessee, there was no reason to entertain petition and accordingly dismissed
same. SLP filed against order of High Court was to be dismissed subject to
observation that it would be open to assessee to make a representation before
Commissioner against transfer of proceedings from Mumbai to Hyderabad and it
shall be considered objectively. [In favour of revenue] (Related Assessment
years : 2009-10 to 2012-13) – [Patel KNR JV v. CIT (2016) 243 Taxman 440 :
76 taxmann.com 11 (SC)]
Transfer of assessee’s case for administrative
convenience is valid
Assessee in Delhi was subjected to search and seizure
proceedings under section 132. A
request was received from Commissioner (Central) Ludhiana/Jalandhar for
centralization of some of group cases in Ludhiana/Jalandhar and,
thus, for transfer of cases from New Delhi to CIT (Central),
Ludhiana/Jalandhar. Decision of transfer was based upon convenience of
income-tax authorities who conducted search in Ludhiana/Jalandhar. Materials on
record filed along with counter-affidavit supported this. It was further noted
that assessee was intimated about transfer and was also given an opportunity to
file his objections in this regard. Administrative convenience was a valid
ground for transfer of assessee’s case. [In favour of revenue] – [Ravneet
Takhar v. CIT (2016) 76 taxmann.com 210 (Del.)]
Power to transfer cases – Reasons – Assessee to be
given opportunity
Order passed without giving an
opportunity was liable to be set aside. The reasons for transferring the
assessee’s case from Mirzapur to Allahabad had to be spelt out in the order
which had been passed under section 127(2), which was not the case here.
Therefore, the order transferring the case of the assessee was to be set aside
and the assessee was to file her reply to the proposed transfer.—[Chandra
Prabha Kushwaha (Smt.) v. CIT (2014) 361 ITR 66 (All)]
As
per provisions of section 127(1) and (2), requirement of granting assessee a
reasonable opportunity of being heard, wherever it is possible to do so is
mandatory
The question came up for
consideration in this writ petition was whether the requirement under section
127(1) and (2) of granting an assessee a reasonable opportunity of being heard,
wherever it is possible to do so is mandatory.
Held : The introduction
in section 127(1) and (2) indicates the legislative intent of providing an
assessee a reasonable opportunity of being heard in cases falling under
sub-sections (1) and (2) thereof. The word ‘may’ in section 127 should be read
as ‘shall’. The requirement of giving an assessee a reasonable opportunity of
being heard wherever it is possible to do so, is mandatory. The discretion of
the authorities is only as to what is a reasonable opportunity in a given case
and on the question, whether it is possible in a given case to provide the
opportunity. In the instant case, the assessee had not been granted an
opportunity of hearing even if assessee’s case was transferred from one State
to another. Thus, in view of aforesaid discussion, impugned order transferring
assessee’s case was to be set aside. - [Sahara Hospitality Ltd. v. CIT (2012) 211 Taxman 15 : 25 taxmann.com 299
(Bom.)]
Opportunity of hearing
Order mandatory in the case of
intra city transfers, though opportunity of hearing as postulated in section
127(1) and 127(2) has been dispensed with other statutory formalities which
include issuing an order are required to be complied with; Assessing Officer on
his own could not transfer an income-tax file to another officer without an
order under section 127(3). (Related Assessment Years 2006-07 to 2008-09) - [Kusum
Goyal v. ITO (2010) 329 ITR 283 : 48 DTR 343 : (2011) 237 CTR 390 (Cal)]
Jurisdiction – Kanpur to Delhi for
Centralising case on basis of Search conducted in case of another assessee - In
view of the subsequent events, that the proceedings for the transfer of the
file of the appellant from Kanpur to Delhi for centralizing of case for
co-ordinated investigation and meaningful assessment had became infructuous,
and therefore, the order of transfer of the case of the appellant could not be
sustained
Assessee was running a
distillery and brewery company - Pursuant to a search conducted at premises of
‘R’ Ltd. it was found that some payments had been collected by U.P.
Distilleries Association for payment to public servants. As per result of said
search department initiated proceedings for transfer of assessee’s case from
Kanpur to Delhi for purpose of co-ordinated investigation and meaningful
assessment. It was found from records
that Assessing Officer had already passed an assessment order in
assessee's case after taking
into consideration said search and seizure proceedings and effect thereof and
amount allegedly paid by said association had been treated as unexplained
investment in assessment of 'R' Ltd.. Further, said ‘R’ Ltd. had also filed an
application before Settlement Commission and order passed therein in favour of
'R' Ltd. was subject-matter of challenge before High Court, at instance of
revenue. In view of above facts it could be said that proceedings for transfer
of assessee's file from Kanpur to Delhi, for purpose of centralizing cases for co-ordinated investigation and meaningful
assessment had become infructuous and were to be set aside. [In favour of
assessee] – [Unnao Distilleries and Braveries Ltd. v.
CIT (2009) 318 ITR 82 : 225 CTR 129 : (2010) 186 Taxman 47 (SC)]
Power to transfer of cases – Opportunity of being
heard
Condition for transfer order under
section 127 of the Act transferring the assessee’s case without affording him
opportunity of being heard and also without giving any reason for transfer of
case except for stating that the transfer was for administrative convenience,
in such case the requirements of section 127 of the Act were held to be not
fulfilled and the order transferring the case was liable to be quashed.—[Anand
Kumar Arya & Anr. v. CIT (2009) 314 ITR 324 : 26 DTR 12 (Cal)]
Effective
and coordinated investigation – Held valid.—[Shree Ram Vessel Scrap (P) Ltd.
v. CIT (2013) 91 DTR 235 (Guj)]
Coordinated
investigation – Transfer case was held to be valid.—[CIT v. UOI (Maa
Mahamaya Group and others) (2013) 358 ITR 341 : 216 Taxman 135 (Chhattisgarh)]
Merely mentioning that it is
necessary to transfer the case for coordinated investigation is not
sufficient.—[Global Energy (P) Ltd. v. CIT (2013) 356 ITR 502 : 215 Taxman
224 : 89 DTR 194 (Bom)]
Once nexus is established transfer
cannot be interfered with.—[Arrow Alloys (P) Ltd. v. UOI (2013) 351 ITR 259
: 215 Taxman 141 (Mag.) (Gauhati)]
Transfer of assessees’ cases from
Kolkata to Patna not for the purpose of co-ordinated and effective
investigation but for centralisation not valid
In connection with search and
seizure operations against the R group of companies, the Commissioner of
Income-tax after hearing the assessees passed a reasoned order directing
transfer of the cases of the assessees from the Income-tax Officers at Kolkata
to Patna.
On writ petitions challenging the
transfer of cases the High Court held that the notices proposing transfer did
not indicate that the transfer was for the purpose of co-ordinated and
effective investigation. The transfer as proposed was for the purpose of
centralisation.
Where
the assessee vide its detailed reply objected to the show cause notice
proposing to transfer his case for a coordinate investigation and the Commissioner
passed an order under section 127(2) of the Act transferring the petitioner’s
case without considering the reply of the assessee, the impugned order passed
by the Commissioner was held to be in breach of principles of natural justice
and liable to be quashed. - [Dhoot Developers (P) Ltd. v. CIT & Ors.
(2011) 336 ITR 487 : (2010) 230 CTR 305 : 35 DTR 175 (Cal.)]
The assessees had made categorical
statements in their representations that they had no business connection with
their father, had no business at any place in Bihar, they managed their
businesses on their own and had no business link with R, their father, and had
no relation either in the business or otherwise in the R group of companies,
but the authorities had not rebutted the categorical statements made in the
written objections. Mere family connection cannot be a ground for transfer.
Onus is on the revenue to produce material evidence in support of their case
that assessee is with their father. Thus, as the order did not disclose any
nexus of the assessees with R or the R group of companies, the order was
without merit and could not be sustained. - [Dillip Kumar Agarwal v. CIT
(2009) 314 ITR 291 (Cal.)]
Power under section
127 can also be exercised in respect of
block assessment - Section 158BH which categorically states that all the other
provisions of the Act shall apply to assessment made under the said Chapter
An order of transfer is passed for the purpose of assessment of income.
It serves a larger purpose. Such an order has to be passed in public interest.
Only because in section 127 words ‘any case’ have been
mentioned, same would not mean that an order of transfer cannot be passed in
respect of cases involving more than one assessment year. It would
not be correct to contend that only because Explanation appended to section 127 refers to the word 'case', for
the purpose of the said section as also section 120, the
source of power for transfer of the case involving block assessment
is relatable only to section 120. It is a well-settled principle of
interpretation of statute that a provision must be construed in such a manner
so as to make it workable. When the Act was originally enacted, Chapter XI-VB
was not in the statute book. It was brought in the statute book only in the
year 1996.
The power of transfer, in effect, provides for a machinery provision.
It must be given its full effect. It must be construed in a manner so as to
make it workable. Even section 127 is a machinery provision. It
should be construed to effectuate a charging section so as to allow
the authorities concerned to do so in a manner wherefor the statute was
enacted.
Section 127, which falls under Chapter XIII, would mutatis mutandis apply to Chapter XIV-B, particularly
when the jurisdiction of the income-tax authorities, inter alia, relates to passing an order of
assessment. The word 'any' must be read in the context of the statute and for
the said purpose, it may, in a situation of this nature, mean ‘all’. The
principles of purposive construction for the said purpose may be resorted to.
Thus, in the context of a statute, the word 'any' may be read as 'all' in the
context of the Act for which the power of transfer has been conferred upon the
authorities specified under section 127. Thus, the power
under section 127 can also be exercised in respect of a block
assessment. Therefore, there was no merit in the instant appeal and same was to
be dismissed. (Block period : 1986-87 to 1996-97) - [K.P. Mohammed Salim v. CIT, Cochin
(2008) 300 ITR 302 : 216 CTR 97 : 207 Taxation 81 : 169 Taxman 465 (SC)]
Power to transfer cases –
Centralisation of group cases – Necessity of centralisation of cases for
coordinated and effective investigation is a valid ground for transferring
cases belonging to a particular group to a single Assessing Officer. - [Rathi
& Co. v. UOI (2004) 267 ITR 295 : 190 CTR 221 : 137 Taxman 300 (Gau)]
Power to transfer of cases –
Speaking order before transferring the case of an assessee, a notice containing
reasons for proposed transfer should be given to the assessee concerned, an
opportunity of hearing should be granted and thereafter a speaking order
considering the objections raised is to be passed. Besides, such an order has
to be communicated to the assessee concerned disclosing reasons for transfer.
The dicta laid down by the Apex Court in Ajantha Industries v. CBDT (1976)
102 ITR 281 (SC) prescribing the conditions to be fulfilled before
transferring case of an assessee, may have to be followed. - [Sarita Jain
(Smt.) v. CIT (2003) 261 ITR 499 : 179 CTR 543 : (2004) 134 Taxman 737 (Del)]
Requirement
of reasonable opportunity of hearing to an assessee before making an order of
transfer cannot but mean that assessee would be entitled to represent or object
to such proposed transfer which is not possible without disclosure of grounds
or reason for such proposal – In show-cause notice under section 127 grounds or
reason for proposed transfer was not indicated – Even then petitioner replied
to show cause and he was also given hearing – Fact that petitioner gave a reply
to show-cause notice expressing,inter alia, his personal inconvenience would
not amount to either waiver or estoppel against provision of reasonable
opportunity of hearing, same being mandatory and when it was possible to give
such hearing – Under such circumstances, for non-compliance of statutory
provision and denial of reasonable opportunity of hearing, entire proceeding of
transferring cases of petitioner was vitiated and same was liable to be set
aside
The petitioners were issued with a
show-cause notice proposing to transfer the case in exercise of power under
section 127. And each of the petitioners also replied to such show-cause notice
and was heard and was given a hearing. Thereafter, the cases were transferred.
On writ, the petitioners contended that in the show-cause notice where the
proposal was made for transfer, no reason was indicated for which such proposal
was made and that non-indication of reason for such proposal in the show-cause
notice prevented the petitioner from making an effective representation to the
same, and therefore, the principles of natural justice had been violated.
Held : When
section 127 requires the giving of a reasonable opportunity of hearing to an
assessee before passing an order of transfer, the same would obviously mean
that the assessee will be entitled to make his objection or representation
against the proposed order of transfer and such representation and objection
cannot be an effective one unless it is known to him for what reason or on what
grounds such proposal is being made. If such reason for proposal of such
transfer is not indicated in the show-cause notice the opportunity of the
petitioners to represent against such proposal would be entirely an illusory
and not effective one as it is well settled because of different judicial
decisions that personal inconvenience of an assessee cannot override a public
interest necessitating such transfer. Under such circumstances if the reason
was not indicated in the show cause notice it was not understood how the
assessee could represent against such proposal and against what he could
represent except expressing his personal inconvenience to be suffered for such
transferor such other matters which are held to be irrelevant considerations
for the purpose of such transfer. There is no straight jacket formula in
deciding what would be reasonable opportunity of hearing and the same may
differ under the facts and circumstances of different cases. But in a case of
the present nature the requirement of reasonable opportunity of hearing to an
assessee before making an order of transfer cannot but mean that the assessee
would be entitled to represent or object to such proposed transfer which was
not possible without disclosure of the grounds or reason for such proposal.
Admittedly, in the instant case, in
the show-cause notice the grounds or reason for proposed transfer was not
indicated. It was true that even then the petitioners replied to the show-cause
and they were also given hearing. That would not, however, absolve the
liability of the respondent in the matter of indicating the grounds or reasons
for such proposed transfer in the show-cause notice. Such a provision for
giving reasonable opportunity of hearing being mandatory and when it was not
the case of the respondent that it was not possible to give a hearing, it was
mandatory to indicate such grounds or reasons in the show-cause notice and
non-indication thereof certainly amounted to denial of reasonable opportunity
of hearing to the petitioners. The fact that the petitioners gave a reply to
the show-cause notice expressing inter alia, their personal inconvenience
would not amount to either waiver or estoppel, against provision of reasonable
opportunity of hearing, the same being mandatory and when it was possible to
give such hearing. Under such circumstances, for non-compliance of the
aforesaid provision of the statute and denial of reasonable opportunity of
hearing, the entire proceeding was vitiated and the same was liable to be set
aside. The writ petition was allowed accordingly. [In favour of assessee] – [Chotanagpur
Industrial Gases (P) Ltd. v. CIT (1998) 233 ITR
377 (1999) 151 CTR 180 (Cal.)]
While
making an order of transfer under section 127, requirement of recording reasons
is a mandatory direction under law and non-communication of same
to assessee would not be saved by showing that reasons existed in file although
not communicated to assessee
In the 1961 Act, section 127 replaced section 5(7A)
of the 1922 Act, where the legislature has introduced, inter alia, the requirement of recording reasons in
making the order of transfer. It is manifest that once an order is passed
transferring the case file of an assessee to another area the order
has to be communicated. Communication of the order is an absolutely essential
requirement since the assessee is then immediately made aware of the reasons
which impelled the authorities to pass the order of transfer. It is apparent
that if a case file is transferred from the usual place of residence
or office where ordinarily assessments are made to a distant area, a great deal
of inconvenience and even monetary loss is involved. That is the reason why
before making an order of transfer the legislature has ordinarily imposed the
requirement of a show-cause notice and also recording of reasons. As regards
the question as to whether the reasons were at all required to be communicated
to the assessee, it was submitted, on behalf of the revenue, that the very fact
that reasons were recorded in the file, although these were not communicated to
the assessee, fully met the requirement of section 127(1). There was no
merit in the said submission.
The reason for recording of reasons in the order and making these
reasons known to the assessee is to enable an opportunity to the assessee to
approach the High Court under its writ jurisdiction under article 226 of the
Constitution or even the Supreme Court under article 136 of the Constitution in
an appropriate case for challenging the order, inter alia, either on the ground that it is mala
fide or arbitrary or that it is
based on irrelevant and extraneous considerations.
The requirement of recording reasons under section 127(1) is a
mandatory direction under the law and non communication thereof would
not be saved by showing that the reasons existed in the file although not
communicated to the assessee.
When law requires reasons to be recorded in a particular
order affecting prejudicially the interests of any person, who can challenge
the order in court, it ceases to be a mere administrative order and the vice of
violation of the principles of natural justice on account of omission to
communicate the reasons is not expiated. Hence, non-communication of the
reasons in the order passed under section 127(1) was a serious infirmity
in the order for which the same was invalid. The judgment of the High Court was
to be set aside. The appeal was to be allowed and the orders of transfer were
liable to be quashed. [In favour of assessee] – [Ajantha Industries v. Central Board of Direct Taxes (1976) 102 ITR 281 (SC)]
Mandatory requirement of recording reasons was not to
be applicable, as the transfer orders were in the same city and only wards were
changed but the Court did observe about the nature of transfer orders under
section 127 - Impugned orders could not be challenged on ground that Board had not
recorded reasons in directing transfer of cases pending against assessee from
one Income-tax Officer to another in same locality
Two appeals arose out of
two writ petitions filed by the appellant, in the Punjab High Court,
challenging the validity of two orders passed by the Central Board of Revenue
in which they had directed that the income-tax proceedings then pending against
the appellant should be transferred from the ITO one ward to ITO of another.
The petitioner alleged that these two orders were invalid, because before
exercising its power under section 127(1), the Board had failed to comply with
a mandatory requirement prescribed by the said provision. These petitions were
dismissed summarily by the High Court.
Held : It was common ground that the impugned
orders did not record any reasons why the Board thought it necessary to
transfer the cases pending against the appellant from one ITO to the other; and
the argument was that section 127(1) imposes an obligation on the authority
exercising its power under the said section to record its reasons for directing
the transfer of a case from one ITO to another. It will be noticed that section
127(1) requires that where the power conferred by it is intended to be exercised,
an opportunity should be given to the assessee wherever it is possible to do
so, and reasons have to be recorded for making the order of the transfer. The
requirement that opportunity should be given, cannot be said to be obligatory,
because it has been left to the discretion of the authority to consider whether
it is possible to give such an opportunity to the assessee. It is, of course,
true that in coming to the conclusion that it is not possible to give the
required opportunity to the assessee, the authority must act reasonably and
bona fide; but if the authority comes to the conclusion that it is not possible
to give a reasonable opportunity to the assessee, that can be dispensed with.
That, however, is not so with regard to the requirement that reasons must be
recorded for making the transfer.
The provision that nothing in sub-section (1) shall
be deemed to require any opportunity to be given, is worded in an emphatic form
; and that fact has to be borne in mind in considering the effect of the proviso.
Besides, it would not be unreasonable to assume that the recording of reasons
prescribed by section 127(1) would be appropriate where a transfer is being
made otherwise than in the manner prescribed by the proviso. In such a case,
normally, the assessee has to be given a reasonable opportunity to be heard;
and the natural corollary of his requirement is that his objections to the
transfer should be considered and reasons given why the transfer is made
despite the objection of the assessee. In other words, the requirement as to
the recording of reasons flows as a natural consequence and corollary of the
requirement that a reasonable opportunity should be given to the assessee. If,
however, a reasonable opportunity is not given to the assessee on the ground
that it is not possible to do so, section 127(1) requires that the transfer
being of a category where a reasonable opportunity should be given to the
assessee, the authority should record its reasons for making the transfer, even
though no opportunity was in fact given to the assessee. If that be the true
position, it is not easy to understand why the proviso should be so construed
as to require reasons to be given for the transfer, even though no opportunity
to the assessee is required to be given. That is one aspect of the matter which
has to be borne in mind in determining the true scope and effect of the
proviso.
There is another consideration which is also
relevant. Section 124 of the Act deals with the jursidiction of ITO’s. Section
124(3) provides that within the limits of the area assigned to him, the ITO
shall have jurisdiction—
(a) in resect of any person carrying on a
business or profession, if the place at which he carries on his business or
profession is situate within the area, or where his business or profession is
carried on in more places than one, if the principal place of his business or
profession is situate within the area, and
(b) in respect of any other person residing
within the area.
This was provision clearly indicates that where a transfer
is made under the proviso to section 127(1) from one ITO to another in the same
locality, it merely means that instead of one ITO who is competent to deal with
the case, another ITO has been asked to deal with it. Such an order is purely
in the nature of an administrative order passed for considerations of
convenience of the department and no possible prejudice can be involved in such
a transfer. Where, as in the instant proceedings, assessment cases pending
against the appellant before an officer in one ward and transferred to an
officer in another ward in the same place, there is hardly any occasion for
mentioning any reasons as such, because such transfers are invariably made on
grounds of administrative convenience, and that shows that on principle in such
cases neither can the notice be said to be necessary, nor would it be necessary
to record any reasons for the transfer.
The propriety of giving an opportunity to an
assessee and the desirability of recording reasons had reference to cases where
transfers were intended to be made from an Income-tax Officer in one place to
the Income-tax Officer in another place; and they obviously had no reference to
transfers like the instant where instead of one officer dealing with the case,
another officer in the same place, is asked to deal with it.
If the obvious object of the proviso is taken into
account and the relevant previous background is borne in mind, it would seem
reasonable to hold that in regard to cases falling under the proviso, an
opportunity need not be given to the assessee, and the consequential need to
record reasons for the transfer is also unnecessary, and this view is plainly
consistent with the scheme of the provision and the true intent of its
requirements. It was accordingly held that the impugned orders could not be
challenged on the ground that the Board had not recorded reasons in directing
the transfer of the cases pending against the assessee from one ITO to another
in the same locality. The result was, the appeals failed and were dismissed.
- [Kashiram Aggarwalla v. Union of
India and others (1965) 56 ITR 14 (SC)]
