High Court Of Calcutta
Kusum Goyal vs. Income Tax Officer & Ors.
Section 127, 127(3)
Asst. Year 2006-07, 2007-08, 2008-09
Soumitra Pal, J.
GA No. 81 of 2010 and Writ Petn. No. 1229 of 2009
5th April, 2010
Counsel Appeared : R.N. Dutta with Mrs. S. Roychowdhury, for the Petitioner : Dipak Shome with R. Sinha, for the Respondents
JUDGMENT
SOUMITRA PAL, J. :
Affidavit-of-service filed in Court today be kept with the records. In this writ petition the petitioner, an assessee, has challenged the letter/notice dt. 30th July, 2009 issued by the ITO, Ward 54(2), Kolkata, the respondent No. 1 and the letter/notice dt. 21st Oct., 2009 issued by the Dy. CIT, Circle 54, Kolkata, respondent No. 2 on several grounds. It appears from the petition that the petitioner whose principal source of income is commission as an insurance agent filed the return of income for the asst. yr. 2006-07 disclosing a total income of Rs. 4,56,649 from all sources. In respect of the asst. yrs. 2007-08 and 2008-09 she had filed returns disclosing total income of Rs. 12,55,330 and Rs. 15,66,993 respectively. The assessments for the asst. yrs. 2007-08 and 2008-09 are yet to be completed.
On or about 5th May, 2008 the petitioner made an application before the CIT-XII intimating that as she is an insurance agent her AO would be ITO Ward-54(2)/GP, Kolkata and therefore files are required to be transferred from the AO, Ward 35(3) having jurisdiction of the petitioner’s assessment records to the said AO. Pursuant thereto, the CIT, Kolkata-XII in exercise of powers conferred by s. 127(2) of the IT Act, 1961 (for short “the Act”) r/w sub-s. (3) thereof by an order dt. 19th Sept., 2008 transferred the files of the petitioner from ITO, Ward 35(3), Kolkata to ITO, Ward 54(2), Kolkata which took effect from 19th Sept., 2008. Thereafter, the respondent No. 1 by letter dt. 3rd Oct., 2008 intimated that by order dt. 19th Sept., 2008 the jurisdiction of the case of the petitioner had been transferred to him and he had decided to proceed with the case for asst. yr. 2006-07. After assumption of the jurisdiction, on 20th July, 2009 the respondent No. 1 completed the assessment for the year 2006-07. Being aggrieved with the said assessment made under s. 143(3) of the Act and the demand notice issued under s. 156 of the Act, writ petition being Writ Petn. No. 753 of 2009 was filed. Thereafter, by letter dt. 14th July, 2009 the learned advocate of the petitioner intimated the respondent No. 1 that in course of the assessment proceedings for the asst. yr. 2006-07 the said respondent had admitted that he had no jurisdiction to assess any assessee whose income was over Rs. 10 lakhs and therefore, as the income for the asst. yrs. 2007-08 and 2008-09 exceeded Rs. 10 lakhs, no proceeding could be initiated for the said assessment years by the said respondent as any action would be without jurisdiction. During the pendency of the writ petition being Writ Petn. No. 753 of 2009, the respondent No. 1 by letter dt. 30th July, 2009, which is under challenge, intimated that as for the asst. yrs. 2007-08 and 2008-09 the returned income was more than Rs. 10 lakhs, on 29th July, 2009 the assessment records including the records of the earlier years had been transferred to the respondent No.
2 who is holding jurisdiction over the cases whose returned income was Rs. 10 lakhs and above. Pursuant thereto the learned advocate for the petitioner by letter dt. 11th Aug., 2009 requested the respondent Nos. 1 and 2 to communicate the order of transfer dt. 29th July, 2009 passed by the appropriate authority. Since, no reply was forthcoming, a reminder dt. 20th Oct., 2009 was issued. Thereafter, the reply dt. 21st Oct., 2009 was issued by the respondent No. 2 which is also the subject-matter of challenge.
Learned advocate appearing on behalf of the petitioner has submitted that the letter dt. 30th July, 2009 issued by the respondent no.1 is illegal since order dt. 19th Sept., 2008 passed by the CIT, Kolkata-XII could not relate to the assessment records for the assessment years prior to 2007-08. Further the letter/notice dt. 21st Oct., 2009 issued by the respondent No. 2 that since the income exceeded Rs. 10 lakhs for the assessment for the asst. yr. 2007-08, the assessment records gets automatically transferred and no order is required, is per se illegal and thus invalid since s. 127 of the Act postulates that an order is required to be passed by the competent authority. In support of his submission reliance has been placed on the judgment of the Supreme Court in Kashiram Aggarwalla vs. Union of India & Ors. (1965) 56 ITR 14 (SC) and of the High Courts in S.L. Singhania & Ors. vs. Asstt. CIT (1991) 100 CTR (Del) 199 : (1992) 193 ITR 275 (Del) and Subhas Chandra Bhaniramka vs. Asstt. CIT (2009) 226 CTR (Cal) 84 : (2010) 320 ITR 349 (Cal).
Learned senior advocate appearing on behalf of the Revenue referring to s. 127 of the Act has submitted that since s. 127(3) neither postulates grant of opportunity of hearing nor there is any requirement of recording of reason and as it does not speak of an order to be passed, transfer of records is purely an administrative step. Since such step under s. 127(3) does not cause any prejudice, no formal order is required to be passed. Submission is since the step taken is in accordance with the procedure laid down in the handbook issued by the IT Department of which the petitioner is aware, action taken is just and proper. In support of his submission he has relied on the judgment in M.A.E.K.K. Varma & Ors. vs. CBDT (1981) 129 ITR 31 (AP).
The question which falls for consideration is whether under s. 127 of the Act an AO on his own can transfer an income-tax file to another officer and whether an order is required to be passed. In order to appreciate the issue it is necessary to refer to the relevant provisions in s. 127 of the Act which is as under :
“127.—(1) The Director General or Chief CIT or CIT 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 AOs subordinate to him (whether with or without concurrent jurisdiction) to any other AO or AOs (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the AO or AOs from whom the case is to be transferred and the AO or AOs to whom the case is to be transferred are not subordinate to the same Director General or Chief CIT or CIT— (a) where the Directors General or Chief CITs or CITs to whom such AOs are subordinate are in agreement, then the Director General or Chief CIT or CIT 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 Directors General or Chief CITs or CITs aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief CIT or CIT as the Board may, by notification in the Official Gazette, authorise in this behalf. (3) Nothing in sub-s. (1) or sub-s. (2) shall be deemed to require any such opportunity to be given where the transfer is from any AO or AOs (whether with or without concurrent jurisdiction) to any other AO or AOs (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place.”
(Emphasis, italicized in print, supplied)
From a reading of the language of s. 127(3) it is evident that when a file is transferred from one AO to another whose offices are located in the same city, locality or place, though other statutory formalities are required to be complied with, the opportunity of hearing as postulated in s. 127(1) and (2) in case of inter city transfer, is not required. Now keeping the position of law in mind let the letter/notice dt. 21st Oct., 2009 issued by the respondent No. 2 be examined. In order to appreciate the issue it is necessary to refer to the relevant portion of the impugned intimation issued by the respondent No. 2 which is as under : “Since your income has exceeded minimum threshold limit of Rs. 10 lac for the asst. yr. 2007-08, the jurisdiction to/of your case automatically gets vested with the jurisdictional Dy. CIT-Circle-54, Kolkata as per above directives. You are kindly informed hereby that no order under s. 127 of the IT Act, 1961 by the learned CITXIX, WB is required to be passed for getting the assessment records transferred from ITO Ward-54 (2), Kolkata to Dy. CIT Circle-54, Kolkata by virtue of the provisions of sub-s. (3) of s. 127 of the IT Act, 1961. For your ready reference the provisions of the said section is appended below. Sec. 127 sub-s. (3) of the IT Act, 1961 states/reads as :…………
From the foregoing provisions it is clear that the CIT is not required to pass any order transferring the case from/to any AO(s) if “the offices of all such officers are situated in the same city, locality or place.”
(Emphasis, italicized in print, supplied)
10. It is evident that the respondent No. 2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under s. 127 is required to be passed. In my view, the letter/notice dt. 21st Oct., 2009 is patently illegal since it has been held in this judgment that in case of transfer within the same city, locality or place although the opportunity of hearing as postulated in s. 127(1) and (2) has been dispensed with, other statutory formalities which includes issuing an order are required to be complied with. Similarly transfer of files for the asst. yrs. 2007-08, 2008-09 and the earlier years as intimated in the letter/notice dt. 30th July, 2009 issued by the respondent No. 1 is also bad in law. The argument of the respondents that in case of intra city transfer no order is required to be passed, cannot be accepted in view of the settled position of law in Kashiram Aggarwalla (supra) and in S.L.Singhania (supra) wherein the validity of the orders was under challenge, meaning thereby an order recording transfer has to be on the records. The judgment in Subhas Chandra Bhaniramka (supra) where it has been held that in case of transfer of file under s. 158BD resort has to be made to s. 127 also applies in the instant case. The judgment in M.A.E.K.K. Verma (supra) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under WT Act, 1957 and GT Act, 1956. Therefore, since it has been held in this judgment that it is imperative on part of the respondents to issue order under s. 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dt. 6th Jan., 2010 regarding the penalty proceedings under s. 271 (1)(c) for the asst. yr. 2006-07 is also set aside and quashed. The application being GA No. 81 of 2010 is also allowed.
No order as to costs.
After the judgment and order is delivered Mr. Sinha, learned advocate appearing on behalf of the Revenue prays for stay. Prayer is considered and is allowed. Let there be stay till 30th April, 2010.
[Citation : 329 ITR 283]
