Delhi H.C : This decision is not of any assistance to the Revenue in the present case since that was a transfer from one ITO to another ITO in the same city, or, as stated in the judgment itself, ‘in the same locality’ and the proviso to s. 127(1), therefore, applied

High Court Of Delhi

S.L. Singhania & Ors. vs. Assistant Commissioner Of Income Tax Etc.

Sections 127, 127(1), 127(2), 127(3)

B.N. Kirpal & Arun Kumar, JJ.

Civil Writ No. 321 of 1991

8th October, 1991

Counsel Appeared

R. Santhanam & Sanat Kumar, for the Applicants : Rajendra with R.N. Verma, for the Respondents

B. N. KIRPAL, J.:

In this writ petition, the challenge is to the order passed under s. 127 on 7th May, 1990, by the CIT, Central-I, who has transferred the cases of the petitioners from one Asstt. CIT under his jurisdiction, namely, Central Circle-18, to another Asstt. CIT also under his jurisdiction being Central Circle- 20.

2. Interestingly enough, both the transferor and the transferee-offices are situated on the same floor, in the same building and in the same city. This writ petition which seeks to challenge this order of transfer and the consequent assessment orders passed in respect of petitioners Nos. 2 and 4 appears to be a desperate effort to avoid being assessed by the transferee- officer. The challenge in this writ petition, as we shall presently see, has been made despite the fact that the legal contentions sought to be raised before us are squarely covered by an authoritative pronouncement of a Constitutional Bench of the Supreme Court of India in the case of Kashiram Aggarwalla vs. Union of India (1965) 56 ITR 14 (SC) : TC 69R.660.

As is evident, the petitioners are five in number and belong to the same family known as “Singhania family”, and are being, presumably, assessed as a group, and were being dealt with by the Asst. CIT, Central Circle18. After the order of 7th May, 1990, was passed by the CIT , Central Circle-1, transferring the cases to the Asstt. CIT, Central Circle-20, the petitioners were informed by a letter dt. 8th May, 1990, by the transferor-officer that the cases have been transferred to Central Circle-20 w.e.f. 10th May, 1990. The order dt. 7th May, 1990, according to the petitioner, was not communicated to it. This averment is made even though, at the bottom of the order dt. 7th May, 1990, a copy of the same is endorsed to the assessee. Be that as it may, there is no denying the fact, and this is admitted in the writ petition, that vide a letter dt. 24th Jan., 1991, the AO enclosed a copy of the said order dt. 7th May, 1990. Prior to the filing of the present writ petition, assessment orders were passed by the transferring officer in respect of petitioners Nos. 2 and 4.

3. It is submitted by learned counsel for the petitioners before us that the CIT did not communicate the reasons for the transfer to the petitioners. Relying on Ajantha Industries vs. CBDT 1976 CTR (SC) 79 : (1976) 102 ITR 281 (SC) : TC 69R.638, Manoj Didwania vs. Union of India (1987) 63 CTR (Del) 207 : (1987) 167 ITR 177 (Del) : TC 69R.696, Saptagiri Enterprises vs. CIT (1991) 189 ITR 705 (AP) : TC 69R.682, Vijayasanthi Investments Pvt. Ltd. vs. Chief CIT (1991) 91 CTR (AP) 36 : (1991) 187 ITR 405 (AP) : TC 69R.677, Vasudeo Vishwanath Saraf vs.

New Education Institute (1986) 57 CTR (SC) 100 : (1986) 161 ITR 835 (SC) : TC 56R.1300 and K. Joseph Jacob vs. Agrl. ITO (1991) 190 ITR 464 (Ker), three contentions have been raised by learned counsel for the petitioner. The first contention is that the reasons for the transfer should have been communicated. The second contention is that the order dt. 7th May, 1990, was not served on the assessee by the CIT and, lastly, it is contended that the order of transfer is effective only from the date when it was communicated to the petitioners. In this connection, it is submitted that any action taken prior to the communication of the order is invalid.

4. We find no force or substance in any of these contentions. Sec. 127, sub-ss. (1) and (3) of which are relevant, read as follows : “Sec. 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 AO’s subordinate to him (whether with or without concurrent jurisdiction) to any other AO or AO’s (whether with or without concurrent jurisdiction) also subordinate to him … (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.”

It is evident from a reading of the aforesaid provisions that when an order is sought to be passed transferring the cases from one AO to another, ordinarily, the provisions of sub-s. (1) of s. 127 applies. The requirements of s. 127 (1) are that, wherever possible, an opportunity of being heard should be granted and thereafter reasons for effecting the transfer of the case should be recorded. Sub-s.(3) is, however, an exception to sub-s. (1). This sub-section is analogous to the original proviso to s. 127(1) and it provides that an opportunity of hearing is not required to be granted when the transfer is from one AO to another and the two offices are situated in the same city, locality or place. It is not in dispute that, in the instant case, the transfer is from one AO who has his office on the fifth floor of Mayur Bhawan, New Delhi, to another AO having his office on the same floor in the same building. Sub-s. (3) of s. 127 is, therefore, clearly applicable. There is no requirement of giving an opportunity to the assessee to be heard before effecting the transfer. Relying upon Ajantha Industries’ case (supra), it is submitted that even though an opportunity of being heard need not be granted, nevertheless reasons had to be recorded and communicated to the petitioners. Learned counsel overlooks the fact that Ajantha Industries’ case (supra) arose when an order was passed under s. 127(1) and the proviso to that sub-section, which is analogous to s. 127(3), as it now exists, was not applicable. In Ajantha Industries’ case (supra), assessments were transferred from Nellore to Hyderabad. On behalf of the Revenue, reliance had been placed on the decision of Kashiram Aggarwalla (supra), but the Supreme Court observed that (at p. 286) “this decision is not of any assistance to the Revenue in the present case since that was a transfer from one ITO to another ITO in the same city, or, as stated in the judgment itself, ‘in the same locality’ and the proviso to s. 127(1), therefore, applied.”

It is clear from the above that the Supreme Court was not laying down the law with regard to the cases covered by s. 127(3). The other decisions relied on by learned counsel for the petitioners are also those where the transfers were from one city to another. What is relevant, in our opinion, is the decision of the Supreme Court in Kashiram Aggarwalla’s case (supra), where the transfer had been effected from two ITO in Calcutta to a third ITO in Calcutta itself. The transfer had been ordered by the CBDT and that had been challenged on the ground that no opportunity of being heard had been granted. The Supreme Court went further and also observed that where the provisions of the proviso to s. 127 apply, it may not even be necessary to give reasons for the transfer. It was observed by the Supreme Court as follows (pp. 16, 17) : “But, on the other hand, the provision that nothing in sub-s.(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 s. 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 this requirement is that his objections to the transfer should be considered and reason 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, s. 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.”

Reference may also be made to the following observations in Kashiram Aggarwalla’s case (supra), which dealt with a question of the notice of transfer (pp. 17, 18) : ” This provision clearly indicates that where a transfer is made under the proviso to s. 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 present proceedings, assessment cases pending against the appellant before an officer in one ward are 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.”

Lastly, it was observed by the Supreme Court at page 19 as follows : “On the other hand, if the obvious object of the proviso is taken into account and the relevant previous background is borne in mind, it would also 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. We would accordingly hold that the impugned orders cannot be challenged on the ground that the Board has not recorded reasons in directing the transfer of the cases pending against the assessee from one ITO to another in the same locality.”

From the aforesaid, it is clear that the order passed under s. 127(3), as the said provision now exists, is merely an administrative order and even reasons for ordering the transfer need not be recorded, nor is there any requirement that the reasons be given to the assessee. In our opinion, the aforesaid decision of Kashiram Aggarwalla’ case (supra), is a complete answer to all the contentions raised by the petitioner before us. In view of this, we need not go into the submissions of learned counsel for the respondent that the provisions of s. 124(3) of the IT Act were attracted in the present case and the petitioners did not raise the question of jurisdiction within the time prescribed by the said provisions.

We have no doubt in our mind that there can be no question of any prejudice caused to the petitioners by the impugned order which has been passed. That apart, the petitioners had been informed by the transferor officer that the petitioners’ cases have been transferred on 27th Jan., 1991. Admittedly, the petitioners have received formal orders of transfer. If the petitioners had any grievance, though, in our opinion, the petitioners have no justified grievance, the petitioners should have approached this Court at an early date and certainly before the assessments were completed. In any case, no illegality has been committed in the present case and this writ petition is devoid of any merit. The writ petition is, accordingly, dismissed with costs. Counsel fee Rs. 500.

[Citation : 193 ITR 275]

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