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AutofIn Ltd. Vs. Commissioner of Income-tax and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition No. 82 of 1973
Judge
Reported in[1977]106ITR638(AP)
ActsIncome Tax Act, 1961 - Sections 127; Constitution of India - Article 226
AppellantAutofIn Ltd.
RespondentCommissioner of Income-tax and anr.
Appellant AdvocateB.K. Seshu, Adv.
Respondent AdvocateP. Rama Rao, Adv.
Excerpt:
.....file of second respondent rejected - application filed under article 226 - refusal of transfer not prime facie perverse held, court would not interfere under article 226 with discretion exercised by commissioner under section 127. - - seshu, the learned counsel for the petitioners, contended that the commissioner did not deal with the petitioner's application for transfer, and that it is the income-tax officer (headquarters) (s & p), hyderabad, that communicated the order and the commissioner failed to exercise the power vested in him under section 127 of the income-tax act, 1961 (as amended in 1967) (hereinafter called 'the act '). 6. but there is no merit in this submission. the commissioner, on a consideration of the representation of the petitioners, and the reports of the..........that section 127 of the act confers on the commissioner of income-tax to suo motu exercise the power of transfer, and that no right is conferred on an assessee to make an application to the commissioner to exercise the power of transfer.12. but i find it difficult to accept this submission. section 127 of the 1961 act, as substituted by the finance (no. 2) act of 1967, replaced the earlier section 5(7a) of the 1922 income-tax act. section 5(7a) of the old income-tax act also conferred a similar power on the commissioner and the board to transfer cases from the file of one income-tax officer to another. section 5(7a) of the act reads as follows:'5. (7a) the commissioner of income-tax may transfer any case from one income-tax officer subordinate to him to another, and the central board.....
Judgment:

Ramachandra Rao, J.

1. This is an application filed under Article 226 of the Constitution, to issue a writ of certiorari calling for the records relating to the proceedings in S & P No. 31/72-73, dated October 20, 1972, of the Commissioner of Income-tax, Andhra Pradesh, Hyderabad, and to quash the same.

2. The first petitioner, M/s. Autofin Ltd., is a company registered under the Companies Act, and the second petitioner is the managing director of the said company. The company is an assessee under the Income-tax Act, and the second petitioner is assessed in two capacities---as an individual, and also as karta of a Hindu undivided family. The assessments of the company are pending from the year 1970-71. The assessments of the Hindu undivided family are also pending from the said year (1970-71), whereas the assessments in the individual case are pending from 1972-73. These assessment proceedings are pending before the Income-tax Officer, 'A' Ward, Company Circle, Hyderabad (2nd respondent). On September 30, 1972, the 2nd petitioner filed a petition before the 1st respondent alleging that the 2nd respondent was calling for information from him on phone and insisting that the same should be given to him then and there, that about two months prior to the filing of the said petition, the 2nd respondent wanted the Bin Cards of the spare parts of the company on phone and required the information to be furnished on the same day, though the 2nd petitioner stated that it was not possible to do so, that the 2nd respondent lost his temper and threatened that he would post the case every day and make the petitioner sit till the end of the day and that he would continue the procedure till the close of the financial year and that he would complete the case on the material available on record. The 2nd petitioner stated that the 2nd respondent was using very harsh language, that he issued attachment notice to the company regarding his (2nd petitioner's) personal income-tax arrears, that even after the arrears were cleared off on August 11, 1972, he did not vacate the attachment, that he was bent upon teasing and harassing the 2nd petitioner and the company, and, therefore, the 2nd petitioner apprehended that he would be denied justice in the hands of the 2nd respondent, and prayed that the cases should be transferred from the file of the said Income-tax Officer.

3. The Commissioner of Income-tax called for the reports of the 2nd respondent, and the Inspecting Assistant Commissioner of Income-tax, who submitted their reports on October 7, 1972, and October 11, 1972, respectively. After the receipt of the reports, the Commissioner passed an order that transfer could not be effected at that stage, and the 2nd respondent should go ahead with the assessments. This order was communicated to the 2nd petitioner, and it reads as follows :

'The Commissioner of Income-tax has observed that it is not possible to transfer your cases from the Income-tax Officer, A-Ward, Company Circle, Hyderabad, to any other Income-tax Officer at Hyderabad at this stage as arrear assessments are pending which have to be completed expeditiously. You are requested to co-operate with the Income-tax Officer in the expeditious completion of these assessments. If you experience any difficulties, you may please contact the Inspecting Assistant Commissioner, Range-IV, Hyderabad.'

4. The petitioners have thereupon filed the writ petition to quash the aforesaid proceedings of the Commissioner refusing to transfer their cases from the file of the 2nd respondent.

5. Sri B.K. Seshu, the learned counsel for the petitioners, contended that the Commissioner did not deal with the petitioner's application for transfer, and that it is the Income-tax Officer (Headquarters) (S & P), Hyderabad, that communicated the order and the Commissioner failed to exercise the power vested in him under Section 127 of the Income-tax Act, 1961 (as amended in 1967) (hereinafter called ' the Act ').

6. But there is no merit in this submission.

7. Sri P. Rama Rao, learned counsel for the income-tax department, has produced before me the file which shows that the Commissioner himself passed the order on the petition on October 19, 1972, after the receipt of the reports from the Income-tax Officer and the Inspecting Assistant Commissioner. The Commissioner exercised the power under Section 127 of the Act, and passed orders which were communicated by the Income-tax Officer (Headquarters) (S & P) to the petitioners.

8. It is next contended by the learned counsel for the petitioners that the petitioners were not given an opportunity to make their representations before the impugned order was passed. Section 127 of the Act was substituted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1967, for the previous Section 127. The section, as amended in 1967, reads as follows:

'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 any Income-tax Officer or Income-tax Officers subordinate to him to any other Income-tax Officer or Income-tax Officers also subordinate to him 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 deemed to require any such opportunity to be given where the transfer is from any Income-tax Officer or Income-tax Officers to any other Income-tax Officer or Income-tax Officers and the offices of all such Income-tax Officers are situated in the same city, locality or place: Provided further that where any case has been transferred from any Income-tax Officer or Income-tax Officers to two or more Income-tax Officers, the Income-tax Officers to whom the case is so transferred shall have concurrent jurisdiction over the case and shall perform such functions in relation to the said case as the Board or the Commissioner (or any Inspecting Assistant Commissioner authorised by the Commissioner in this behalf) may, by general or special order in writing, specify, for the distribution and allocation of the work to be performed.' (The other portion of the section omitted as not relevant for purposes of this case).

9. It will be seen that the main Sub-section (1) provides for giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and reasons should be recorded for transfer of the case from any Income-tax Officer or Income-tax Officers subordinate to him (the Commissioner) to any other Income-tax Officer or Income-tax Officers also subordinate to him. A similar power could also be exercised by the Board. Bat the proviso to the said Sub-section (1) of Section 127 states that such an opportunity need not be given where the transfer is from any Income-tax Officer or Income-tax Officers to any other Income-tax Officer or Income-tax Officers and the offices of all such Income-tax Officers are situated in the same city, locality or place.

10. In the instant case, the Commissioner did not transfer the cases of the petitioners from the file of the 2nd respondent to the file of any other Income-tax Officer. Therefore, the question of giving an opportunity of being heard or giving reasons in the matter as required by Section 127(1) does not arise.

11. Sri P. Rama Rao, learned counsel for the department, raised a contention that Section 127 of the Act confers on the Commissioner of Income-tax to suo motu exercise the power of transfer, and that no right is conferred on an assessee to make an application to the Commissioner to exercise the power of transfer.

12. But I find it difficult to accept this submission. Section 127 of the 1961 Act, as substituted by the Finance (No. 2) Act of 1967, replaced the earlier Section 5(7A) of the 1922 Income-tax Act. Section 5(7A) of the old Income-tax Act also conferred a similar power on the Commissioner and the Board to transfer cases from the file of one Income-tax Officer to another. Section 5(7A) of the Act reads as follows:

'5. (7A) The Commissioner of Income-tax may transfer any case from one Income-tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income-tax Officer to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Income-tax Officer from whom the case is transferred.'

13. In Devi Dayal Marwah v. Commissioner of Income-tax : [1964]52ITR829(AP) an application for transfer was made by the assessee under Section 5(7A) of the Income-tax Act, 1922, to the Central Board of Revenue and transfer was effected. This shows that the assessee also could move either the Commissioner or the Board for transfer of his case. No doubt, the question was not directly raised or decided in the aforesaid decision. But in the course of the judgment, it was stated that the petitioner therein had made an application to the Central Board of Revenue for transfer of the case under Section 5(7A) of the Income-tax Act, 1922, and after correspondence between the representative of the petitioner with the Board, the Board instructed the Commissioner of Income-tax, Bihar and Orissa, Patna, to cancel the assessment already made and to transfer the records of the case to the Commissioner of Income-tax, Delhi, Rajasthan, Ajmer and Madhya Bharat, Delhi, for the purposes of making a fresh assessment. This shows that the Central Board of Revenue did exercise the power of transfer conferred by Section 5(7A) of the old Act on the application made by the assessee.

14. Section 127 of the Act no doubt confers the power on the Commissioner to effect transfer of any case but there is no reason why the power should be exercised only suo motu and not on the application of an assessee. In my opinion, Section 127 is intended to confer a right also on the assessee to move the Commissioner or the Board in appropriate cases on the ground of convenience or other relevant ground for transfer of his case from the file of one Income-tax Officer to another, and the Commissioner is bound to exercise the power of transfer in accordance with the said section, if proper grounds are made out.

15. In Board of Revenue v. Raj Brothers Agencies : [1973]3SCR492 it was contended that under Section 34 of the Madras General Sales Tax Act (Act No. 1 of 1959), the assessee had no right to make an application to the Board to exercise the power of revision conferred by Section 34 of the Act, and that it is only the Board that could exercise the power suo motu. Section 34(1) of the Madras General Sales Tax Act confers on the Board of Revenue suo motu power to call for and examine an order passed or proceeding recorded by the appropriate authorities under some of the provisions of that Act. Though the section expressly states that only suo motu powers were conferred on the Board to call for and examine the orders passed by the appropriate authority, their Lordships of the Supreme Court held that the assessee could also invoke the jurisdiction of the Board to exercise its revisional power. At page 437, their Lordships made the following observations which are apposite :

'It was contended on behalf of the State that the assessee had no right to invoke the jurisdiction of the Board to exercise its revisional power. This contention too has to be rejected. The power is conferred on the Board to remedy any injustice. It is open to an assessee or the revenue to bring to the notice of the Board any error made by the subordinate authorities. It is up to the Board to consider whether the case is a fit case for exercising its revisional jurisdiction. If the Board had gone into the case and come to the conclusion that there was no justification for exercising its jurisdiction under Section 34, then in the absence of any vitiating circumstance recognised by law, the High Court would not have interfered with the discretion of the Board. But what has happened in this case is that the Board had refused to exercise its jurisdiction under the erroneous view that in view of the dismissal of the assessee's appeal it was not competent to entertain the petition. The decision of the Board was vitiated by an error apparent on the face of the record. Hence, the High Court was justified in interfering with that decision. Whether the case is a fit one for exercising jurisdiction of the Board or not is entirely a matter for the Board to consider and decide.'

16. In the instant case also, Section 127 of the Income-tax Act, 1961, as amended in 1967, confers power on the Commissioner and the Board to effect transfer of cases from the file of an Income-tax Officer to another in appropriate cases. In my opinion, this power is exercisable by the Board not only suo motu, but also at the instance of an assessee. An assessee can bring to the notice of the Commissioner or the Board by filing an application that his case should be transferred, and it is for the Commissioner or the Board to consider and decide whether the case is a fit one for exercising the jurisdiction conferred by Section 127 of the Act. Therefore, I am unable to agree with the submission of the learned counsel for the department that the petitioners cannot file an application under Section 127 for transfer of their cases.

17. The only question then for consideration is, whether in the circumstances of the case, this court can interfere under Article 226 of the Constitution with the order passed by the Commissioner refusing to transfer the asses. The question whether the circumstances warrant transfer or not is a matter for consideration and decision by the Commissioner. The Commissioner, on a consideration of the representation of the petitioners, and the reports of the Income-tax Officer and the Inspecting Assistant Commissioner, was satisfied that it is not a fit case for transfer. This court will be reluctant to interfere under Article 226 of the Constitution with the discretion exercised by the Commissioner unless there is a patent error of law or error apparent on the face of the record.

18. It is contended by the learned counsel for the petitioners that assessments would not be made in a fair and impartial manner by the 2nd respondent. But this plea was not accepted by the Commissioner in view of the reports submitted by the 2nd respondent and the Inspecting Assistant Commissioner. This court would not, under Article 226 of the Constitution, normally interfere with the discretion exercised by the Commissioner under Section 127 of the Act, unless the order is ex facie perverse or vitiated by any patent error. In the present case, I do not think the discretion of the Commissioner in refusing to transfer the case of the petitioners from the file of the 2nd respondent is vitiated by any such error which warrants interference under Article 226 of the Constitution.

19. In the result, the writ petition fails and is dismissed with costs.


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