Administrative authorities cannot exercise the power to transfer assessment proceedings in a repetitive manner. Once a transfer order is invalidated, any subsequent attempt to transfer the same case without a material change in circumstances or a cogent, non-arbitrary justification is legally unsustainable.

Order

REPORTABLE

PER, HON’BLE MR. RAVI CHIRANIA, J.

1. The present petition is the second round of litigation. In the earlier round, petitioner approached this Court with the similar grievance challenging the notice issued under Section 127 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’ for short). The co-ordinate Bench of this Court, in the previous round of litigation of the petitioner, passed a reasoned order dated 20.07.2022. The relevant paragraphs of the order dated 20.07.2022 passed in D.B. Civil Petition No.6847/2021 titled as ‘Murliwala Agrotech Pvt. Ltd. Vs. Union of India & Ors.’ are as under:

“We have given our thoughtful consideration to the submission advanced at bar and have gone through the impugned order, the statutory provision and the judgments cited at bar.

At the outset, we may state here that Section 127(1) of the Income Tax Act, which deals with powers of the competent authority to transfer the assessment proceedings, is framed with the salutary objective of adherence to the principle of natural justice, which is fundamental to any proceeding of adversarial nature. It cannot be denied that the assessment/ reassessment proceedings under the Income Tax Act, would be adversarial to the assessee and hence, adherence to the principles of natural justice, is sine qua non.

Whenever it is proposed to transfer the case of assessee from one assessing authority to another, providing opportunity of hearing to the assessee is essential and can be circumvented only if the competent authority feels, for reasons to be recorded in writing, that it is not possible to do so. In the present case, the respondents have neither setup any such case that it was not possible to provide opportunity of hearing to the assessee, nor any reasons to do so were recorded before taking the decision to transfer the case from Circle Udaipur to Circle New Delhi.

Notwithstanding the fact that the assessment proceedings under the Income Tax Act, have now become faceless, it cannot be denied that the assessee would be entitled to engage Counsel/ Advisors of his choice to defend himself even in the faceless proceedings and thus, the requirement of following the principles of natural justice cannot be evaded in a casual manner.

In the case of Advantage Strategic Consulting (P) Ltd. (supra), relied upon by counsel Shri Bissa, the factual situation was totally different because transfer had been made from one Circle to another in the same city. Furthermore, during pendency of the proceedings, the assessment order had been passed. In that situation, Hon'ble Division Bench went on to hold that proceedings before the High court, had become infructuous.

In the present case, the transfer order and the notices issued in furtherance thereof, have been stayed by this Court and as such, the facts of the case at hand are totally distinguishable.

A Division Bench of this Court in the case of Smt. Jeewan Kumari (supra), has held that as per Section 127(1) of the Income Tax Act, it was incumbent for the Board to have provided opportunity of hearing to the assessee before ordering transfer of her case. Similar view was taken by Hon'ble the Supreme Court in the case of Noorul Islam Educational Trust (supra).

Consequently, we are of the opinion that the impugned transfer order dated 21.11.2019 (Annexure-7) and the notices (Annexure-2, Annexure-6 and Annexure-12), as a consequence thereof, do not stand to scrutiny and hence, the same are declared invalid and set aside.

The respondents are permitted to resume the proceedings from the stage former to the transfer order (Annexure-7) dated 21.11.2019, was passed. If it is still proposed to transfer the case of the petitioner, opportunity of hearing shall be provi