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2006 Supreme(All) 593
ALLAHABAD HIGH COURT
A.K.Yog, Prakash Krishna, JJ.
R.K.Agarwal
Versus
Commissioner of Income Tax
Civil Misc.Writ Petn. 57 of 2006
Decided On : 23 February 2006
Civil Misc. Writ Petn. 57 Of 2006
ASHOK KUMAR, BHARAT JI AGRAWAL, R.S.AGRAWAL, Ravi Kant,
Headnote:
Transfer - Income Tax - Section 127(2) of the IT Act, 1961 - The court discussed the provisions of Section 127(2) of the IT Act, 1961 and the requirement of recording reasons for transfer orders. The court emphasized the need for communicating the reasons for transfer to the assessee and highlighted the mandatory nature of recording reasons under the law.
Fact of the Case:
The petitioners challenged the transfer of their case from Kanpur to New Delhi under Section 127(2) of the IT Act, 1961. They contended that they had no connection with the Shikhar Gutkha Group and their case should not be transferred.
Finding of the Court:
The court found that the impugned transfer order suffered from manifest error apparent on the face of the record as it did not disclose reasons for the transfer and failed to consider the petitioner's contention of no connection with the Shikhar Gutkha Group.
Issues: The issues revolved around the legality of the transfer order, the requirement of communicating reasons for transfer to the assessee, and the need for the authority to consider the petitioner's contentions before passing the transfer order.
Ratio Decidendi: The court emphasized the mandatory nature of recording reasons for transfer orders and the requirement to communicate these reasons to the assessee. It held that the transfer order should not be passed mala fide, arbitrarily, or on irrelevant considerations.
Final Decision: The impugned transfer order was set aside, and the respondents were directed to pass fresh orders in accordance with the law, with a clarification that the time consumed from the date of filing the reply till the decision of the writ petition shall not be reckoned for the purpose of limitation to complete an assessment proceeding.
( 2 ) THE above writ petitions are decided finally as all the respondents are represented by the standing counsel representing the Department. Initially the respondents did not file counter-affidavit, on the understanding that these writ petitions are to be decided on the basis of three documents, i. e. , notice dt. 26th Oct. , 2005/annex. 2, reply of the assesses/annex. 3 dt. 27th oct. , 2005 and the impugned order of transfer dt. 16th Dec. , 2005/annex. 4 to the writ petition, the authenticity of which was not disputed before the Court.
( 3 ) PETITIONERS have approached this Court through aforementioned writ petitions under Article 226 of the Constitution of India and seek to challenge transfer of their case by a common order dt. 16th Dec. , 2005 passed by CIT-I, Kanpur in exercise of powers, vested under Section 127 (2), it Act, 1961 (called the act) from Kanpur to AO at. New Delhi (Annex, 4 to the leading writ petition ).
( 4 ) FOR convenience we refer to the facts leading Writ Petn. No. 55 of 2006 R. K. Agarwal v. CIT and Ors. According to the petitioner, he is engaged in the business of sale of printing-paper and board. He is, besides Smt. Rekha Agrawal (wife of his brother) and Shri, Mayank Agrawal (brother of the petitioner) partner in the firm M/s Malay Enterprises.
( 5 ) IN paras 4 and 5, it is pleaded that the petitioner and his firm "has got absolutely no connection with the company known as M/s Trimurti Fragrances (P) Ltd. He is neither a shareholder nor director of the aforesaid concern. " Petitioner has however, admitted that he is married to the sister of Pradeep Agarwal (sic) of the directors of M/s Trimurti Fragrances (P) Ltd. In para 6 of the writ petition, it is stated that petitioner is an income-tax payer for the last several years.
( 6 ) A search and seizure operation under Section 132 of the Act was conducted on 2nd July, 2003 within the residential and business-premises belonging to the partners/directors of the said firms/units called shikhar Gutkha Group.
( 7 ) CIT served a show-cause notice on the subject titled "transfer of your case record from kanpur to New Delhi". Relevant contents of the said show-cause notice dt. 26th Oct. , 2005/annex. 2 to the writ petition are reproduced below : please refer to the notice under Section 127 (2) of the IT Act, 1961 dt. 20th Sept. , 2005 above.
2. Consequent upon the search and seizure operation under Section 132 on 2nd July, 2003 in the shikhar Gutka Group, a number of cases connected with Shikhar Gutka have already been centralized with Dy. CIT, Central Circle-9, New Delhi. A search operation was also conducted at your residential premises along with the Shikhar Gutka Group. Since your case is also found to be connected with Shikhar Gutka Group, it is proposed to transfer your cases to Dy. CIT, Central circle-9, New Delhi, for the purpose of co-ordinated and effective investigation.
3. In this regard a notice dt. 20th Sept. , 2005 was issued to you in terms of Section 127 (2) of the it Act, 1961 by learned CIT-I, Kanpur fixing the date of hearing at 27th Sept. , 2005 which was duly served on you.
4. In this connection I am directed to intimate that one more opportunity of being heard is being provided to you in terms of Section 127 (2) of the IT Act, 1961 in respect of proposed transfer of your case to the jurisdiction of Dy. CIT, Central Circle-9, New Delhi under Central Range-4 of cit (Central)-II, New Delhi. The date of hearing in this regard is fixed at 12. 00 p. m. on 31st oct. , 2005.
( 8 ) PETITIONER submitted reply dt. 27th Oct. , 2005/annex. 3 through speed post. For ready reference, relevant paragraphs of the aforesaid reply are reproduced below : with reference to your notice dt, 26th Oct. , 2005 firstly I have to inform your honour that my co
