Shri M M Padmanabha V. The Commissioner of Income Tax

WP/33036/2011

AI Insights

The case involves writ petitions filed by Shri M M Padmanabha against the Commissioner of Income Tax, challenging the transfer of his case from Shimoga to Pune under Section 127(2) of the Income Tax Act, 1961. The petitioner argued that the transfer order was not preceded by a proper notice, which hindered his ability to make an effective representation. The court examined the notice and found it lacking as it did not provide any reasons for the transfer, leading to the decision to set aside the transfer order and the subsequent assessment notices.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 794358 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-07-2012
• Assessment Year: misc
• Other Referred Cases: Y.Moideen Kunhi and Co. v. I.T.O., Mr. S.N.Sinha vs. The State of Kar.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M V SESHACHALA
• Assessee Lawyers: CHYTHANYA K
• Keywords: Case transfer; Income Tax; Natural Justice; Notice; Writ petition
• Section: 127(2)

Judgement Text

"- 1 - WP No.33036/2011 AND WP.Nos.34885-889/2011 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 20TH DAY OF JULY 2012 BEFORE THE HON'BLE MR. JUSTICE H.G.RAMESH WP.No.33036/2011 & WP.Nos.34885-889/2011 (T-IT) BETWEEN : SHRI M M PADMANABHA AGED 51 YEARS S/O LATE MUDDAIAH R/AT NO.313 1ST CROSS, BASAVANAGUDI SHIMOGA 577 201 … PETITIONER (BY SRI. CHYTHANYA K K, ADV.) AND : THE COMMISSIONER OF INCOME TAX 284/1, PARK VIEW BUILDING P J EXTENSION 4TH MAIN, DAVANAGERE 577 002 … RESPONDENT (BY SRI. M V SESHACHALA, ADV.) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED ORDER U/S 127(2) OF THE INCOME TAX ACT, 1961 VIDE F.NO.7/CIT/DVG/2011-12 DATED 25.7.11, ENCLOSED AS ANNEXURE-A AND ETC. THESE WRIT PETITIONS ARE COMING ON FOR PRL. HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: - 2 - WP No.33036/2011 AND WP.Nos.34885-889/2011 O R D E R H.G.RAMESH, J. (Oral): These writ petitions are directed against the order dated 25.07.2011 (Annexure-A) passed by the respondent under Section 127(2) of the Income Tax Act, 1961 transferring the case relating to the petitioner from DCIT, Circle-1, Shimoga to DCIT, Central Circle- 1(2), Pune. The petitioner has also challenged the assessment notices at Annexures-B1 to B6. 2. I have heard Sri Chythanya K.K., learned counsel for the petitioner and Sri M.V.Seshachala, learned counsel for the respondent and perused the impugned order. 3. The sole contention urged by the learned counsel for the petitioner is that the impugned transfer order at Annexure-A was not preceded by a proper notice. Therefore, the petitioner was not able to effectively - 3 - WP No.33036/2011 AND WP.Nos.34885-889/2011 make his representation. He also referred to the contents of the impugned order and submitted that no reasons are given for transfer of the case from Shimoga to Pune. On the contrary, Sri. M.V.Seshachala, learned counsel for the respondent tried to support the impugned order. 4. Now the only question that falls for determination in these writ petitions is as to whether the impugned transfer order at Annexure-A was preceded by a proper notice? 5. In support of the writ petitions, the learned counsel for the petitioner referred to a judgment of this Court in Y.Moideen Kunhi and Co. v. I.T.O. ([1993] 204 I.T.R. 29 (KAR)]. He specifically invited my attention to the following observations made therein at page 40: “Whenever the Commissioner orders transfer of the files of a group from one - 4 - WP No.33036/2011 AND WP.Nos.34885-889/2011 city to another, tax evasion or misdemeanour by all or several of the parties constituting the group is assumed. Before such a stigma is cast, it is necessary that the affected parties should be notified of the reason for the proposed transfer in the show-cause notice so that they can effectively explain why such a course is not necessary. Similarly, it is necessary that the order communicated should also contain the reasons for making the order of transfer. Thus, where the transfer is to another city, then mere mention of stock phrases like ”to facilitate co-ordinated investigation” or variations thereof will not be in compliance with the mandatory requirement of section 127(1) and contrary to the principles enunciated by the Supreme Court in Ajanta Industries' case [1976] 102 ITR 281......................... ….......................................................... In this case, the transfer is ordered from Mangalore to Bangalore. Neither the - 5 - WP No.33036/2011 AND WP.Nos.34885-889/2011 show-cause notice nor the order of transfer disclosed any reason for transfer. The official memorandum which is stated to be the basis of the order of transfer also does not contain any valid reason. The transfer is not for convenience but is alleged to be for countering evasion of tax. This reason is disclosed for the first time in the statement of objections filed in the writ proceedings. If true, the said reason will be a valid reason for transfer. But the petitioners were not given an opportunity to counter or explain the said reason. Hence the order is contrary to section 127(1).” 6. It is also relevant to refer to another judgment of this Court in Mr. S.N.Sinha vs. The State of Kar. (ILR 2012 KAR 448) wherein this Court at para 4 has observed as follows: “4.................................................... ...................When a notice can be said to - 6 - WP No.33036/2011 AND WP.Nos.34885-889/2011 be valid in law? The term ‘Notice’ originated from the Latin word ‘Notitia’ which means ‘being known’. It is equivalent to information, intelligence or knowledge. Notice is the starting point of any hearing. The right to fair hearing covers every stage through which an administrative adjudication passes, starting from notice to final determination. Notice embodies rule of fairness and must precede an adverse order. It should clearly state the reason as to why a party is required to appear and/or his reply is required. The party concerned should be apprised of the evidence on which the case against him is based and be given an opportunity to rebut the said evidence. A notice, to be valid in law, should be clear and precise so as to give the party concerned adequate information of the case he has to meet. The adequacy of notice is a relative term and must be decided with reference to each case. The - 7 - WP No.33036/2011 AND WP.Nos.34885-889/2011 test of adequacy of notice will be whether it gives sufficient information so as to enable the person concerned to put up an effective defence. If a notice is vague or it contains unspecified or unintelligible allegations, it would imply a denial of proper opportunity of being heard. Natural justice is not only a requirement of proper legal procedure but also a vital element of good administration.” 7. Let me now refer to the notice issued to the petitioner prior to passing of the impugned order. The notice is produced at Annexure-C which reads as follows: “This office is in receipt of a proposal seeking centralization of jurisdiction over your case with the Deputy Commissioner of Income Tax, Central Circle-1(2), Pune. The Commissioner of Income Tax, desires to give you an opportunity of being heard before passing any orders in this regard. - 8 - WP No.33036/2011 AND WP.Nos.34885-889/2011 2. In this regard, you are requested to appear before the Commissioner of Income Tax, Davangere, either in person or through an authorised representative, on 10th June, 2010 at 11.30 AM.” 8. As could be seen from the above, no reason is stated for the proposed transfer except stating the receipt of such a proposal. In my opinion, this notice is no proper notice in law. This notice did not facilitate the petitioner to give an effective representation against the proposed transfer of the case. In the absence of a proper notice, the impugned order is unsustainable in law. Consequently, the assessment notices also will have to be set aside. 9. In view of the above, I make the following order: The impugned order dated 25.07.2011 (Annexure- A) and the consequent assessment notices dated 08.08.2011 at Annexures-B1 to B6 are set aside; - 9 - WP No.33036/2011 AND WP.Nos.34885-889/2011 however, the respondent is at liberty to issue a 'proper notice' to the petitioner and to take action in the matter in accordance with law. The writ petitions stand disposed of accordingly. In view of disposal of the writ petitions, I.A.I/2011 filed for vacating of interim stay does not survive for consideration; it stands disposed of accordingly. Petitions disposed of. Sd/- JUDGE hkh. "