The reasons for the transfer of an assessee's case under section 127 (2) of the Income-tax Act, 1961, must be specific and intelligible, and the assessee must be given a reasonable opportunity to effectively show cause against the proposed transfer.

( 1 ) QUESTIONING the order passed by the Commissioner of Income-tax, Guntur, under section 127 (2) of the Income-tax Act, 1961, the present writ petitioner has been filed.

( 2 ) THE petitioner-firm is an assessee within the jurisdiction of the Income-tax Officer, Ward-I, Chittoor. By the impugned order dated Oct 5/10/1990, the Commissioner of Income-tax, Guntur, transferred the case of the petitioner to the Assistant Commissioner of Income-tax, Central Circle II (8), Madras. It is stated in the order that "this transfer is effected to faciliate detailed and co-ordinate investigation. " The order was preceded by the issuance of a show-cause notice on 4/09/1990. In the notice, it is indicated that "the transfer of the case is to facilitate co-ordinated investigation and enquire/restore the case to territorial ITO/a. C". Obviously, the inapplicable portion - "restore the case to territorial ITO/a. C". has not been deleted. It is not the case of the Department either in the counter or otherwise that any question of restoration of the case to the territorial ITO/a. C. arises. The petitioner sent a reply dated 10/09/1990. The petitioner contended that it will be convenient if the file is retained at Chittoor where the firm is having its establishment. It was also stated that the petitioner was prepared to answer any question or furnished any information which the Assistant Commissioner (Income-tax), Madras, may require at any time. After considering this reply, the impugned order came to be passed on 5/10/1990.

( 3 ) LEARNED counsel for the petitioner has urged before us that the petitioner does not have any business or establishment at Madras, that except using a stock phraseology, no specific reason has been mentioned in the show-cause notice or in the final order. Counsel argues that this amounts to denial of reasonable opportunity to the petitioner. Learned counsel relies upon the decision of this court in Vijayasanthi Investments (P.) Ltd. v. Chief CIT [1991] 187 ITR 405 to which one of us (P. Venkatarama Reddi J.) was a party.

( 4 ) IN the counter-affidavit filed by the Commissioner of Income-tax, it is stated that the writ petitioner is closely connection with the Odayar Group whose assessments are being dealt with by the Assistant Commissioner of income-tax, Central Circle-II (8), Madras, and that there are certain transactions of the petitioner linked with the said group of assessees. Inasmuch as the Odayar Group of cases are being handled at Madras, it is essential to transfer the petitioner s file also to the concerned circle at Madras for the purpose of facilitating detailed and co-ordinate investigation. It is submitted that the notice and order of transfer cannot be said to be vitiated merely because "they do not disclose all the reasons that weighted with the first respondent in effecting the transfer". It is also contended that disclosure of the relevant reasons in the order of transfer would militate against the interest of the Revenue as there is every possibility of such a course stifling the enquiry that has to be made.

( 5 ) IT is agreed by both the counsel that the judgment of this court in Vijayasanthi Investments P. Ltd. v. Chief CIT [1991] 187 ITR 405 squarely applies to the case on hand. After referring to the decided cases on the subject, it was observed therein at page 411 : "from the aforesaid decisions, it is clear that, in the matter of the transfer of a case under section 127 of the Act, it is necessary that the authority which proposes to transfer the case must, wherever it is possible to do so, give the assessee a reasonable opportunity of being heard with a view to enable to him effectively show cause against the proposed transfer. The notice must also propose to give a personal hearing. It is also necessary to mention in the notice the reasons for the proposed transfer so that the assessee could make an effective representation with reference to the reasons set out. It is not sufficient merely to

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