Transfer orders under Section 127 of the Income Tax Act must comply with principles of natural justice, including providing an opportunity for the assessee to be heard.

Order :

AVNEESH JHINGAN, J.

1. This petition is filed seeking quashing of order dated 17.11.2017 passed by the Principal Commissioner of Income-tax, Jaipur-2 under Section 127 of the Income Tax Act, 1961 (for short ‘the Act’) transferring the case of assessment of the assessee from Jaipur to ACIT, Central Circle-Bikaner (hereinafter referred to as ‘ACIT’).

2. The grievance raised in the present petition is that the order passed is in violation of principles of natural justice and without following the procedure prescribed u/s 127 of the Act. Reliance is placed upon decision of the Supreme Court in case of Ajantha Industries and Ors. vs. Central Board of Direct Taxes, New Delhi and Ors. reported in AIR 1976 SC 437 .

3. Learned counsel for the respondents submits that ACIT, Bikaner has passed the assessment order against which petitioner preferred an appeal. Argument is that transfer order has been acted upon by the department.

4. The petitioner raised objection before the ACIT that the order of transferring jurisdiction was not communicated to the petitioner and that the order was passed without providing an opportunity of hearing. The objections were noted but ACIT proceeded to pass assessment order stating that jurisdiction has been bestowed by transfer order dated 17.11.2017. While issuing notice of motion on 27.02.2018, operation of the provisional attachment order dated 13.12.2017 and assessment order dated 26.12.2017 passed by the ACIT was stayed.

5. There is no provision in the Act for challenging the transfer orders passed u/s 127 by way of filing an appeal or revision. The contention of the counsel for the respondents that the appeal is pending against the assessment order passed by the ACIT does not oust the petitioner from assailing legality and validity of the transfer order in writ jurisdiction.

6. Section 127 of the Act empowers transfer of cases and prescribes procedure to be followed. The authorized officer can transfer the cases after providing reasonable opportunity of being heard to the assessee and by passing a reasoned order. Exception for not granting opportunity of hearing is in sub-section (3) i.e. in cases where transfer is from one assessing authority to another situated in the same city.

7. In the present case, the case of the petitioner was transferred from Jaipur to Bikaner, different districts. It is undisputed that no opportunity of hearing was granted to the petitioner before passing the impugned order.

8. From perusal of the impugned order, it is forthcoming that it is bereft of reasons. The principles of natural justice have been included in Section 127 of the Act yet were not complied with.

9. The Supreme Court in case of Ajantha Industries (supra) set aside the transfer orders in case where reasons for transfer were available on record but were not communicated to the assessee. It is not the case of the department that reasons were ever recorded. Be that as it may, no opportunity of hearing was granted to the petitioner. The impugned order dated 17.11.2017 qua petitioner and proceedings consequent thereto are quashed.

10. The writ petition is allowed.

11. The department shall be at liberty to proceed in accordance with law.