Murliwala Agrotech Private Limited, Through Its Director - Rakesh Gupta V. Union Of India, Through The Secretary To The Government Of India, Ministry Of Finance, Department Of Revenue, New Delhi and Principal Commissioner Of Income Tax, 3rd Floor, Aayakar Bhawan, Subcity Centre, Udaipur and The Assistant Commissioner Of Income Tax, Circle-2, Income Tax Department, Udaipur and Deputy Commissioner Of Income-Tax, Central Circle 14, New Delhi, 354, 3rd Floor, Income Tax Building, E-2, ARA Centre, Jhandewalan Extension, New Delhi

CW/6847/2021

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Murliwala Agrotech Private Limited, through its director Rakesh Gupta, filed a writ petition challenging the transfer of its assessment file from Udaipur to New Delhi by the Principal Commissioner of Income Tax, Udaipur. The petitioner argued that the transfer was made without providing an opportunity of hearing, violating Section 127(1) of the Income Tax Act, which requires such an opportunity unless it is not possible for reasons to be recorded in writing. The respondents contended that the faceless nature of current assessment proceedings rendered the transfer inconsequential. The court, referencing several precedents, held that the principles of natural justice must be upheld, and the transfer was declared invalid due to the lack of a hearing opportunity.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 697842 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 20-07-2022
• Assessment Year: misc
• Other Referred Cases: Smt. Jeewan Kumari Vs. Union of India & Ors. (1979) 118 ITR 573 (Raj.), Noorul Islam Educational Trust Vs. Commissioner of Income Tax (2017) 291 CTR (SC) 230, Advantage Strategic Consulting (P.) Ltd. Vs. Principal Commissioner of Income Tax, Chennai [2021] 430 ITR 1 (Madras)
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K K BISSA
• Assessee Lawyers: ANJAY KOTHARI
• Keywords: Faceless Proceedings; Natural Justice; Transfer order; Assessment file
• Section: 127

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 6847/2021 Murliwala Agrotech Private Limited, Through Its Director - Rakesh Gupta, Aged About 49 Years, G-240-245, RIICO Industrial Area, Gudi, Udaipur - 313001, Rajasthan. ----Petitioner Versus 1. Union Of India, Through The Secretary To The Government Of India, Ministry Of Finance, Department Of Revenue, New Delhi. 2. Principal Commissioner Of Income Tax, 3rd Floor, Aayakar Bhawan, Subcity Centre, Udaipur. 3. The Assistant Commissioner Of Income Tax, Circle-2, Income Tax Department, Udaipur. 4. Deputy Commissioner Of Income-Tax, Central Circle 14, New Delhi, 354, 3rd Floor, Income Tax Building, E-2, ARA Centre, Jhandewalan Extension, New Delhi. ----Respondents For Petitioner(s) : Mr. Anjay Kothari For Respondent(s) : Mr. K.K. Bissa HON'BLE MR. JUSTICE SANDEEP MEHTA HON'BLE MR. JUSTICE KULDEEP MATHUR Order 20/07/2022 The instant writ petition has been preferred by the petitioner being aggrieved of the transfer order dated 21.11.2019 (Annexure-7), passed by the respondent Principal Commissioner of Income Tax Department, Udaipur under Section 127 of the Income Tax Act and the notices issued in pursuance thereof. The grievance of the petitioner is that by order Annexure-7, the assessment file of the petitioner has been transferred to the (2 of 5) [CW-6847/2021] Deputy/ACIT, Central Circle-14, New Delhi, without providing any opportunity of hearing. Shri Anjay Kothari, learned counsel representing the petitioner, referred to Section 127 (1) of the Income Tax Act, which reads as below :- “127. (1) The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or 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.” and urged, that a plain reading of the Section would make it clear that case can be transferred without opportunity of being heard to the assessee only in a situation where, the competent authority is of the opinion, for reasons to be recorded in writing, that it is not possible to provide such opportunity to the assessee. He submits that in the case at hand, neither any situation existed wherein, it was not possible to provide opportunity of hearing to the petitioner, nor did the competent authority record any reasons for not providing opportunity of hearing to the petitioner before transferring its case from Circle Udaipur to Circle New Delhi. In support of his contentions, Shri Kothari placed reliance on (1.) Smt. Jeewan Kumari Vs. Union of India & Ors. reported (3 of 5) [CW-6847/2021] in (1979) 118 ITR 573 (Raj.) and (2.) Noorul Islam Educational Trust Vs. Commissioner of Income Tax reported in (2017) 291 CTR (SC) 230. He, thus, urged that the impugned transfer order dated 21.11.2019 (Annexure-7) and the subsequent proceedings sought to be taken in furtherance thereof, do not stand to scrutiny as being in violation of statutory provision and so also, the principles of natural justice and hence, the same deserves to be quashed. On the other hand, Shri K.K. Bissa, learned counsel representing the respondents, placed reliance on the Division Bench judgment rendered by High Court of Madras in the case of Advantage Strategic Consulting (P.) Ltd. Vs. Principal Commissioner of Income Tax, Chennai reported in [2021] 430 ITR 1 (Madras), and urged that the assessment proceedings have now become faceless and as such, no prejudice would be caused to the petitioner by the transfer of its case from Udaipur to New Delhi. He, thus, submitted that no interference is called for in the impugned order and the subsequent notices. We have given our thoughtful consideration to the submission advanced at bar and have gone through the impugned order, the statutory provision and the judgments cited at bar. At the outset, we may state here that Section 127(1) of the Income Tax Act, which deals with powers of the competent authority to transfer the assessment proceedings, is framed with the salutary objective of adherence to the principle of natural justice, which is fundamental to any proceeding of adversarial nature. It cannot be denied that the assessment/ reassessment proceedings under the Income Tax Act, would be adversarial to (4 of 5) [CW-6847/2021] the assessee and hence, adherence to the principles of natural justice, is sine qua non. Whenever it is proposed to transfer the case of assessee from one assessing authority to another, providing opportunity of hearing to the assessee is essential and can be circumvented only if the competent authority feels, for reasons to be recorded in writing, that it is not possible to do so. In the present case, the respondents have neither setup any such case that it was not possible to provide opportunity of hearing to the assessee, nor any reasons to do so were recorded before taking the decision to transfer the case from Circle Udaipur to Circle New Delhi. Notwithstanding the fact that the assessment proceedings under the Income Tax Act, have now become faceless, it cannot be denied that the assessee would be entitled to engage Counsel/ Advisors of his choice to defend himself even in the faceless proceedings and thus, the requirement of following the principles of natural justice cannot be evaded in a casual manner. In the case of Advantage Strategic Consulting (P) Ltd. (supra), relied upon by counsel Shri Bissa, the factual situation was totally different because transfer had been made from one Circle to another in the same city. Furthermore, during pendency of the proceedings, the assessment order had been passed. In that situation, Hon’ble Division Bench went on to hold that proceedings before the High court, had become infructuous. In the present case, the transfer order and the notices issued in furtherance thereof, have been stayed by this Court and as such, the facts of the case at hand are totally distinguishable. (5 of 5) [CW-6847/2021] A Division Bench of this Court in the case of Smt. Jeewan Kumari (supra), has held that as per Section 127(1) of the Income Tax Act, it was incumbent for the Board to have provided opportunity of hearing to the assessee before ordering transfer of her case. Similar view was taken by Hon’ble the Supreme Court in the case of Noorul Islam Educational Trust (supra). Consequently, we are of the opinion that the impugned transfer order dated 21.11.2019 (Annexure-7) and the notices (Annexure-2, Annexure-6 and Annexure-12), as a consequence thereof, do not stand to scrutiny and hence, the same are declared invalid and set aside. The respondents are permitted to resume the proceedings from the stage former to the transfer order (Annexure-7) dated 21.11.2019, was passed. If it is still proposed to transfer the case of the petitioner, opportunity of hearing shall be provided to it and thereafter, proceedings shall be continued and concluded as per law within a period of three months from today. The writ petition is allowed in these terms. No order as to cost. (KULDEEP MATHUR),J (SANDEEP MEHTA),J 75-/Devesh Thanvi/- "