SMITA PATTANAYAK V. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX,BBSR

WP(C)/18612/2016

AI Insights

The case revolves around the administrative decision to transfer the jurisdiction of income tax assessments from one geographical location to another within the state of Orissa. Smita Pattanayak, the petitioner, challenged the transfer of her case from Rourkela to Sambalpur, arguing that it was done without providing her an opportunity to be heard and without a proper notice of the order under Section 127 of the Income Tax Act, 1961. The Income Tax Department defended the transfer as part of a broader restructuring aimed at centralizing and streamlining the handling of certain cases. The court examined the procedural validity of the transfer and the substantive reasons provided by the tax authorities for such a decision.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 749804 (HC-CUTTACK)
• Appeal Type: Others
• Pronouncement Date: 15-12-2016
• Assessment Year: misc
• Other Referred Cases: Kashiram Aggarwalla Vrs. Union of India and Others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SANJAYA ACHARYA
• Assessee Lawyers: PRAKASH SETHI; S PATTNAIK; A K MOHANRA
• Keywords: Administrative convenience; Centralization of Cases; Income Tax; Jurisdiction transfer; Restructuring
• Section: 142(1); 127; 153(A)

Judgement Text

"HIGH COURT OF ORISSA: CUTTACK. W.P.(C) No.18612 of 2016 In the matter of applications under Articles 226 and 227 of the Constitution of India. --------- Smita Pattanayak …… Petitioner - Versus- Principal Chief Commissioner of Income-Tax and others …… Opposite Parties. Counsel for Petitioner :M/s. Prakash Ch.Sethi & S.Pattnaik and A. K. Moharana. Counsel for Opp.Parties : Sanjaya Kumar Acharya, Sr. Standing Counsel for Income Tax Department PRESENT: THE HONOURABLE KUMARI JUSTICE SANJU PANDA & THE HONOURABLE SHRI JUSTICE SUJIT NARAYAN PRASAD --------------------------------------------------------------------------------------- Date of hearing and judgment : 15.12.2016 --------------------------------------------------------------------------------------- S. N. Prasad, J. The relief sought for by the petitioner – assessee is against the order dated 12th December, 2014 (Annexure-6) whereby and where under the Commissioner of Income Tax, Sambalpur has passed an order in exercise of power conferred by Sub-section (2) of Section 127 of the Income Tax Act, 1961 as per instruction of the Director General of Income Tax (Investigation), Hyderabad, assigning the jurisdiction over the cases assessed to tax by the ACIT, Circle-2(1), Sambalpur as per the details given in column 4 to the Assistant Commissioner of Income Tax (Central Circle), Sambalpur as 2 mentioned in column 5 with immediate effect and the order dtd.22.08.2016 which has subsequently been passed after providing an opportunity of being heard, affirming the decision dtd.12th December, 2014. 2. The brief fact of the case of the petitioner – assessee is that she having been assessed to income tax by the Income-tax Officer, Ward-4, Rourkela, a notice U/s.153(A) of the Income Tax Act has been issued on 4.2.2015 to the petitioner for filing returns of income for the financial year 2007-08 to 2012-13, relevant to the assessment years 2008-09 to 2013-14, and another notice U/s.142(1) of the Income Tax Act was also issued calling for the return of the income for the financial year 2013-14, relevant to the assessment year 2014-15. The opposite party no.5 has intimated the petitioner that the jurisdiction of the cases has been transferred to opposite party no.5 by virtue of order passed U/s.127(2) of the Act by opposite party no.2 on 12.12.2014. After receiving the intimation, the petitioner had submitted to the opposite party no.5 that the copy of the order U/s.127(2) of the Act passed by opposite party no.2 has not been provided to her and as such, she is not in a position to put forth her grievances and challenging the same she has made representations before opposite party no.5 to provide copy of the order passed by opposite party no.2. The petitioner in response to the notice U/s.153(A) / 142(1) of the Act has submitted that she has not received the copy of the change of jurisdiction order and as such, she is not in a position to submit the return. Opposite party no.5, thereafter has passed order on 22.08.2016 directing the petitioner to appear and to satisfy the authority with respect to the decision 3 taken U/s.127 of the Income Tax Act. The opposite parties have passed an order affirming the decision of transfer of jurisdiction from Rourkela to Sambalpur which is under challenge in these writ petitions. The petitioner – assessee while challenging the decisions / orders of the authorities of Income Tax has raised the ground that the order U/s.127 of the Income Tax has been passed without providing an opportunity of being heard and without assigning any reason. 3. Learned counsel representing Income-tax department has submitted that the jurisdiction has been shifted from Rourkela to Sambalpur on the ground of a general decision that situation arose due to re-structuring in the Income Tax Department in November, 2014, by which a Central Range was created at Bhubaneswar under the administrative control of Commissioner of Income Tax (Central), Visakhapatnam and Director General of Income-tax (Investigation), Hyderabad. Subsequently, a Central Circle was created at Sambalpur in Orissa. The Director General of Income Tax (Investigation), Hyderabad vide letter dated 20th November, 2014 had proposed centralization of the cases in central circles where searches were conducted in the financial year 2013-14 and 2014-15, the same was proposed in terms of Board’s Circular in letter No.286 /88 /2008-IT (Investigation-II) dtd.17.9.2008 as per which the search cases have to be centralized. Accordingly, the Director General of Income Tax (Investigation) has proposed centralization of 11 groups of cases where searches were conducted in financial year 2013-14 and 5 groups of cases in financial year 2014-15. Dr. Monu Pattanayak and group which was searched in the financial year 2013-14 was proposed to be 4 centralized with Deputy Commissioner of Income Tax / Assistant Commissioner of Income Tax, Central Circle, Sambalpur. The Director General of Income Tax (Investigation) had requested the Principal Chief Commissioner of Income Tax, Bhubaneswar, Orissa for giving necessary direction to the jurisdictional Commissioner of Income Tax for centralization of the cases by issue of notification U/s.127 of the Income Tax Act, 1961. Dr. Monu Pattanayak and groups who were being assessed by the Assessing Officers at Rourkela were falling under the territorial jurisdiction of the Principal Chief Commissioner of Income Tax, Sambalpur and in terms of the letter of the Director General of Income Tax (Investigation) dtd.20.11.2014 the then Commissioner of Income Tax, Sambalpur assigned the jurisdiction in the cases of Dr. Monu Pattnayak and four others to Assistant Commissioner of Income Tax Central Circle, Sambalpur vide order passed U/s.127 dtd.12.12.2014. It has been submitted that as the representative of the assessees had submitted that they had neither received copy of the order nor served with any notice before transfer of jurisdiction to Central Circle, Sambalpur and as such to rectify the technical defects it was proposed to modify the jurisdiction order by issue of corrigendum after giving an opportunity to the assessees concerned, in view thereof the letters were issued to the assessees of the group vide letter dtd.06.11.2015 informing them about the transfer of jurisdiction to Assistant Commissioner of Income Tax, Central Circle, Sambalpur, which was duly served upon them, the case was fixed for hearing at Sambalpur on 20.11.2015, the authorized representative of the assessees appeared and filed 5 written submission objecting to the letter issued by the Principal Commissioner of Income Tax, Sambalpur on the ground that before taking such decision they have not been provided with an opportunity of being heard and no notice has been given in this regard. The other ground taken that the Principal Commissioner of Income Tax has got no jurisdiction to review his own order since no provision has been made under the Income Tax Act, 1961 in this regard. The authorities concerned after hearing the parties and considering the same has passed the order stating therein that the cases of the groups were centralized with the Deputy Commissioner of Income Tax / Assistant Commissioner of Income Tax, Central Circle, Sambalpur, pursuant to the proposal received from the Director General of Income Tax (Investigation) Hyderabad and communication received from the office of the Chief Commissioner of Income Tax, Orissa, by virtue of policy decision taken by the Apex Authority. The Commissioner has also passed an order considering the fact that the representative of the assessees in his submission has submitted that after passing the order U/s.127 of the Act, all the connected records of the assessees were transferred from Rourkela to the Deputy Commissioner of Income Tax / Assistant Commissioner of Income Tax, Central Circle, Sambalpur and as such it was within their knowledge. The authorities have taken into consideration the grievance of the assessees that in case of any inconvenience in travelling to Sambalpur for 6 attending the hearing, opportunity has been given to them to request the Assessing Officer in the Central Circle for hearing of the cases at Rourkela camp. In the light of these submissions it has been submitted that merely on the ground of opportunity having not been given at the initial stage, the decision taken by the authority U/s.127 of the Income Tax Act cannot be said to be illegal for the reason that the assessees have to show what prejudice has been caused to them in case of non-issuance of notice prior to the decision taken by them, although opportunity has been provided to them after passing of the order on 12th December 2014 (Annexure-6) wherein their grievance has already been taken into consideration. He further submitted that merely on the ground of technicality, the decision taken by the authorities U/s.127 of the Act cannot be said to be vitiated in the eye of law, rather the assessees have to show as to what prejudice has been caused to them. He further submitted that even the provision U/s.127 of the Income Tax Act, 1961 stipulates that the opportunity of hearing is to be given wherever it is possible to do so and after recording the reasons for doing so, order has been passed taking into consideration this provision, and hence, there is no illegality in the same. He further submits that these writ petitions have been filed only to linger the matter and as such, the writ petitions are to be dismissed at the thresh-hold. 4. We have heard learned counsels for the parties and perused the documents available on record. 7 Before appreciating the argument advanced on behalf of the parties, we thought it proper to have a discussion of the provisions as contained in Section 127 of the Income Tax Act, 1961 which is being reproduced hereunder as:- “127. Power to transfer cases. (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. (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 [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner,— (a) where the [Principal Directors General or] Directors General or [Principal Chief Commissioners or] Chief Commissioners or [Principal Commissioners or] Commissioners to whom such Assessing Officers are subordinate are in agreement, then the [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [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 [Principal Directors General or] Directors General or [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 [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [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 re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. 8 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.” The object of Section 127 of the Act is to empower the officers at the level of Director General or Chief Commissioner or Commissioner with the power to transfer the assessee’s file from one or more Assessing Officers to any other Assessing Officer or Assessing Officers both being subordinate to him. This power of transfer is given by the statute for the administrate convenience and the power is one which is exercisable quite apart from and independent of the requirements U/s.124 of the Act, which deals with jurisdiction of the Assessing Officers. The Commissioner has jurisdiction to transfer cases only within his jurisdiction whereas the power of the Board is wider and it can transfer the cases from one jurisdiction of one Commissioner to another. The exercise of power by the Commissioner does not exhaust the power of the transfer by the Board and the Board has independent power U/s.127 of the Act to transfer cases. The provision further provides that opportunity of hearing where it is possible is stipulated under sub-section (1) of Section 127 and it also mandates recording of reasons for transfer of cases from one Assessing Officer to another, whether or not having concurrent jurisdiction. It is further evident that the provision of section 127 is procedural in nature and even in the pending proceeding it will be applicable. 9 The Hon’ble Apex Court in the case of Kashiram Aggarwalla Vrs. Union of India and Others, reported in 1965 56 ITR 14 (Supreme Court) while discussing the scope and object of Section 127(1) of the Income Tax Act, 1961 has been pleased to observe 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 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 Hon’ble Apex Court while discussing the case where the fact was that the cases were transferred from one Income Tax Officer to another whose offices are situated in the same locality and so, the point to consider was, what would be the effect of this proviso and while answering the issue, it has been laid down 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 10 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 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. From going through the judgment it is evident that the whole purpose for providing opportunity of being heard is to consider the objection for passing the reason of transfer, so that the assessee may know the reason. 5. We in the light of this statutory provision have examined the order passed U/s.127 in this case whereby and where under it is found that the authorities in view of the facts that the Director General of Income Tax (Investigation) Hyderabad has issued an instruction on 20.11.2014 by which it has been communicated that due to restructuring of the Income Tax 11 Department in November, 2014 a Central Range was created at Bhubaneswar under the Administrative control of the Commissioner of Income Tax (Central), Visakhapatnam and Director General of Income-tax (Investigation), Hyderabad, in consequence thereof a Central Circle was created at Sambalpur in Orissa and as such the Director General of Income Tax (Investigation), Hyderabad had proposed centralization of the cases in central circles where searches were conducted in the financial year 2013-14 and 2014-15 which was in terms of Board’s Circular in letter No.286/ 88 /2008-IT (Investigation-II) dtd.17.9.2008 by which such cases have to be centralized and accordingly the Director General of Income Tax (Investigation) has proposed centralization of 11 groups of cases where searches were conducted in financial year 2013-14 and 5 groups of cases in financial year 2014-15. In view thereof, the authorities, in exercise of power conferred U/s.127 of the Act, has passed an order on 22.8.2016 transferring the cases in order to assess by the Deputy Commissioner of Income Tax / Assistant Commissioner of Income Tax, Central Circle, Sambalpur as per the detail given in the said letter. 6. The petitioner as per the details given in order dtd.12.12.2014 has raised grievance by making an application before the Assessing Officer that the exercise taken U/s.127 of the I.T. Act, 1961 has been done without providing an opportunity of being heard and without supplying copy of the same, as would be evident from Annexurte-9 annexed to the writ petition. The concerned competent authority after taking into consideration the fact that the petitioner has not been provided with opportunity of being heard, has issued notice upon her to provide an opportunity of hearing. In view thereof, the 12 representative of the petitioner – assessee had appeared and represented her case, shown the reason not to transfer the cases from Rourkela to Sambalpur. The authorities after taking into consideration the submission and assigning the reason that decision has been taken to transfer the cases due to restructuring of Income Tax Department the cases have been transferred, being an administrative decision and as such, affirmed the decision taken by them on 12th December, 2014 which is under challenge in these writ petitions on the ground of not providing opportunity of being heard and the authorities who have passed the order on 22nd August 2016 has got no jurisdiction to review its own order. 7. So far as the first ground that opportunity has not been provided to the assessees, there is no denial about the fact that if any decision is taken, which is detrimental to the interest of the parties, a notice is required to be given on the principle that no man can be condemned without hearing him. The earlier concept was that in case of violation of principles of natural justice, the order will be said to be illegal, but subsequently the view has come that merely on the ground of not providing any opportunity of being heard, the decision taken by the authority cannot be said to be illegal, unless and until the party shows as to how he has been prejudiced by not providing an opportunity of being heard and further even if the opportunity of hearing would have been provided, then would there any possibility in the change of the situation and if there is no chance in change of situation, merely for the purpose of following the principles of natural justice, no order is required to be passed on the ground of principle of futile exercise and empty formality. 13 Moreover the underlying motive is to provide opportunity to know the reasons, we have found from the order dtd.12.12.2014 the reasons behind taking the decision of transfer, i.e. restructuring of the Department and even if the petitioners would have been provided an opportunity of being heard before taking the decision, no material change would have come. Further it is not that the case of the assessee – petitioner herein has only been transferred, rather by virtue of the policy decision, the cases of other assessees have also been transferred. Furthermore, there is no mala fide alleged against the authorities. The petitioner when came to know about the transfer of her case from Rourkela to Sambalpur, made representations before the authority that copy of the order be provided since decision has been taken without providing an opportunity of being heard. The authorities have taken into consideration this aspect of the matter and passed a well reasoned order showing the reason that due to the policy decision of re-structuring of the Income Tax Department in the area concerned, the decision has been taken to transfer the cases from Rourkela to Sambalpur and by this the petitioner – assessee is not going to be prejudiced in any way. We gathered from the record that the underlying object of the decision is equitable distribution of work and as such the order passed by the authorities is for administrative convenience. 9. We further find that the authorities have taken into consideration the grievance of the assessee that if she will feel any inconvenience, she may 14 make request before the authority to hear her matter at Camp Court, Rourkela in this way also the interest of the petitioner – assessee has been protected. 10. So far as the ground that the authorities while passing order on 22nd August, 2016 have reviewed its own order, which they cannot do and as such, the said order is per se illegal, but we find no force in this argument for the reason that this cannot be said to be review of the order, since there is no change in the orders, i.e. in the orders dtd.12.12.2014 and 22.8.2016, rather the grievance of the petitioner has been looked into and reasons of transfer of the cases has been communicated to her by reitering the reasons. 11. Taking into consideration these aspects of the matter, we find no reason to interfere with the decisions taken by the authority. Hence, the writ petition deserves to be dismissed and accordingly, the same is dismissed. …..……………… ….…………….…. S.N. Prasad, J. Sanju Panda, J. Orissa High Court, Cuttack, Dated the 15th December, 2016/MKP "