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Shantilal Hiralal and Co. and Others Vs. K.S. Ramamurti, First Income-tax Officer, C-v Ward and Others - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberMiscellaneous Petitions Nos. 1392, 1393 and 1629 of 1979
Judge
Reported in(1984)42CTR(Bom)366; [1985]152ITR236(Bom); [1984]17TAXMAN189(Bom)
ActsIncome Tax Act, 1961 - Sections 127(1)
AppellantShantilal Hiralal and Co. and Others
RespondentK.S. Ramamurti, First Income-tax Officer, C-v Ward and Others
Excerpt:
direct taxation - transfer of case - section 127 (1) of income tax act, 1961 - order transferring cases from income tax officer (ito) bombay to ito delhi challenged - impugned order passed in exercise of powers conferred by section 127 (1) - said power cannot be exercised without giving assessee reasonable opportunity of being heard in matter - petitioners not served with notice and were denied opportunity of being heard before passing of impugned order - respondents unable to produce acknowledgments of notices served on petitioners - impugned order required to be set aside - central board of direct taxes open to pass fresh orders under section 127 (1) after service of proper notice. - .....any case from one or more of the following officers subordinate to him, namely : - (a) any income-tax officer or income-tax officers; (b) any income-tax officer or income-tax officers having concurrent jurisdiction with the inspecting assistant commissioner,to any other income-tax officer or income-tax officers (whether with or without concurrent jurisdiction with the inspecting assistant commissioner) also subordinate to him and the board may similarly transfer any case from -(i) any income-tax officer or income-tax officers, or (ii) any income-tax officer or income-tax officers having concurrent jurisdiction with the inspecting assistant commissioner, to any other income-tax officer or income-tax officers (whether with or without concurrent jurisdiction with the inspecting.....
Judgment:

Pendse, J.

1. All these three petitions filed under art. 226 of the Constitution of India can be conveniently disposed of by a common judgment, because each of the petitioners is challenging the legality of the order dated November 15, 1978, passed by the Under Secretary, Central Board of Direct Taxes, transferring their cases from the ITO, Bombay, to the ITO, New Delhi.

2. The impugned order was passed by the Under Secretary, Central Board of Direct Taxes, in exercise of powers conferred by sub. s. (1) of s. 127 of the I.T. Act. 1961, and the transfer of cases was said to be effected in the interest of proper investigation, Section 127(1) of the said Act reads as under :

'127. (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 one or more of the following officers subordinate to him, namely : -

(a) any Income-tax Officer or Income-tax Officers;

(b) any Income-tax Officer or Income-tax Officers having concurrent jurisdiction with the Inspecting Assistant Commissioner,

to any other Income-tax Officer or Income-tax Officers (whether with or without concurrent jurisdiction with the Inspecting Assistant Commissioner) also subordinate to him and the Board may similarly transfer any case from -

(i) any Income-tax Officer or Income-tax Officers, or

(ii) any Income-tax Officer or Income-tax Officers having concurrent jurisdiction with the Inspecting Assistant Commissioner,

to any other Income-tax Officer or Income-tax Officers (whether with or without concurrent jurisdiction with the Inspecting Assistant Commissioner) : '

3. Miss Patel, learned counsel appearing on behalf of the petitioners, submitted that the power under s. 127(1) of the I.T. Act, 1961, cannot be exercised by the Commissioner without giving the assessee a reasonable opportunity of being heard in the matter and in all these three petitions, the petitioners were not served with any notice and were denied the opportunity of being heard before the passing of the impugned order of transfer. In answer to the petition, Shri B. S. Verma, the ITO has filed his return sworn on October 25, 1982, in Miscellaneous Petition No. 1395 of 1979. The respondents claim that the cases of the petitioners' groups were needed to be centralised for proper investigation as a result of search and seizure operation, and notices under s. 127(1) of the said Act were served through the Commissioner of Income-tax, Delhi-1, Delhi, on the petitioners at Delhi, giving an opportunity of hearing before the Member (Income-tax) on, November 6, 1978, at 4 p.m. The respondents further claim that one Shri D. C. Jain attended on behalf of the assessee and filed written arguments and after consideration of the same, the decision was taken to transfer the cases of the said group in the interest of proper investigation.

4. The learned counsel for the petitioners points out that no notices were served on any of the petitioners and the petitioners in all these three petitions had not engaged or authorised Shri D. C. Jain to appear on their behalf. The respondents are unable to produce before me the acknowledgments of notices served on the petitioners or any record to indicate that Shri D. C. Jain had an authority to represent the petitioners. In these circumstances, the contention of the petitioners that they were denied a reasonable opportunity of being heard before the passing of the impugned order is required to be upheld and the impugned order is required to be set aside as far as the petitioners in these three petitions are concerned. It is open to the Central Board of Direct Taxes to pass fresh orders, if so advised, under s. 127(1) of the I.T. Act, 1961, after service of proper notice.

5. Accordingly, rule in each of the petitions is made absolute in terms of prayers (a). In the circumstances of the case, there will be no order as to costs in all three petitions.


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