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High Court Of Delhi
SUNANDA RANI - Appellant
Versus
UNION OF INDIA - Respondent
Civil 1331 of 1971
Decided On : 08/12/1974
INCOME TAX - Transfer of case - Section 127(1) of the Income Tax Act, 1961 - Show cause notice - Recording of reasons - Administrative convenience - Mala fide - Validity of transfer order.
Fact of the Case:
The petitioner, a partner in a firm, challenged the transfer of her income tax case from Faridabad to Delhi by the Commissioner of Income Tax. The transfer was made after giving the petitioner a show cause notice and hearing her objections. The petitioner contended that the transfer was not in accordance with the show cause notice, that it violated the territorial jurisdiction fixed under section 124 of the Act, and that it was made mala fide to harass her.
Finding of the Court:
The court held that the transfer was valid. It found that the Commissioner had complied with the requirements of section 127(1) by giving the petitioner a show cause notice and recording reasons for the transfer. The court also found that the transfer was made for administrative convenience and that there was no mala fide intention on the part of the Commissioner.
Issues: 1. Whether the transfer of the petitioner's case was in accordance with the show cause notice? 2. Whether the transfer violated the territorial jurisdiction fixed under section 124 of the Act? 3. Whether the transfer was made mala fide to harass the petitioner?
Ratio Decidendi: 1. The court held that the transfer was in accordance with the show cause notice. It found that the Commissioner had clearly stated in the show cause notice that the proposed transfer was on the ground of administrative convenience. The court also found that the petitioner had been given an opportunity to object to the transfer and that she had done so. 2. The court held that the transfer did not violate the territorial jurisdiction fixed under section 124 of the Act. It found that the Act of 1961 does not proceed on the basis of any right of the assessee to be assessed by the I.T.O. of a place where he either resides or carries on business. The court also found that the Income Tax Officers derive their jurisdiction to deal with the cases not only on the basis of the areas where they are to function but also in respect of persons or classes of persons or of such incomes or classes of incomes as the Commissioner may direct. 3. The court held that the transfer was not made mala fide to harass the petitioner. It found that there was no evidence to support the petitioner's allegations of malafide against the Income Tax officials.
Final Decision: The court dismissed the petition.
( 1 ) THE facts leading to this petition, which has been filed under Articles 226 and 227 of the Constitution may be briefly stated. The petitioner is a partner of the firm known as M/s. Auto and Metal Engnieers having its factory on industrial plot No. 4 and parts of plots No. 3 and 5, NH 5, Faridabad and its office on a part of plot No. P/37-C, Faridabad. The firm is also registered under the Partnership Act. The two partners, namely, Smt. Sunanda Rani Jain and Smt. Karuna Jain are the wives of V. K. . Jain and S. K. Jain, respectively. On 24th April, 1971 three, raiding parties consisting of Income Tax authorities conducted raid on the residential- cum-ofiice premises of the petitioner, the factory premises of M; s. Auto and Metal Engineers and the residential premises of Mr. and Mrs. S. K. Jain at Faridabad. In connection with the said raids three other Writ Petitions have been filed and heard along with this petition.
( 2 ) ON 28th October, 1971, a notice was received by the petitioner from the Commissioner of Income Tax, Haryana and Himachal Pradesh, Delhi III, New Delhi informing her that it had been proposed to transfer this case from the Income Tax Officer, Faridabad to the Income Tax Officer, District III (9), New Delhi on account of administrative convenience and that if they had any objection it may be sent to reach on or before 8th November, 1971. A reply was sent objecting to the transfer; the assessee was further informed that the assessee should appear before the Commissioner on the 17th November 1971. Shri V. K. . Jain, General Manager of the petitioner s firm. appeared along with the counsel and reiterated the objections sent earlier. By order dated 24th November, 1971 the Commissioner transferred the petitioner s case from the Income Tax Officer, Faridabad, not to the Income Tax Officer, District III (9 ). New Delhi, as originally stated, but to the Income Tax Officer, District II (5), New Delhi in exercise of the powers conferred under section 127 (1) of the Income Tax Act, 1961. The circumstances under which the transfer was effected are stated in the affidavit filed by Shri R. L. Malhotra, the then Commissioner of Income Tax. The case was not transferred to the Income Tax Officer, District lli (9), New Delhi because after the show cause notice was issued he had ceased to hold jurisdiction over District III (9) ; instead a new range was assigned to him which included several Income Tax Officers, including Income Tax Officer, District II (5 ). The transfer was made because it was his intention to transfer the case of the petitioner from the Income Tax Officer, Faridabad to any one of the other I. T. Os in his jurisdiction having his office located in Delhi itself.
( 3 ) THE said transfer has been impugned on the following main grounds:
(1) There has been no compliance with the provisions of section 127 (1) of the Income Tax Act since no reason has been mentioned in the order of transfer. The order of transfer was not passed in accordance with the show cause notice given to the petitioner. (2) The order violated section 124 of the Income Tax Act which fixes the territorial jurisdiction in respect of the petitioner s case. (3) The order of transfer was made mala fide to harass the petitionsr pursuant to the above searches Points (1) and (2) :
( 4 ) IT would be necessary to read section 127 (1) of Act XL III of 1961;
"power to transfer cases.- (1) The 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 any Income-tax O. ficer or Income-tax Officers subordinate to him to any other Income-tax Officer or Income-tax Officers also subordinate to r)im and the Board may similarly transfer any case from any Income-tax Officer or Income-tax Officers to any other Income-tax Officer or Income-tax Officers : Provided that nothing in this sub-section shall be deeme
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