S. L. SINGHANIA AND OTHERS vs ASSISTANT COMMISSIONER OF Income Tax/WEALTH-TAX.

B. N. KIRPAL J. - In this writ petition, the challenge is to the order passed u/s 127 on May 7, 1990, by the Commissioner of Income Tax, Central-I, who has transferred the cases of the petitioners from one Assistant Commissioner of Income Tax under his jurisdiction, namely, Central Circle-18, to another Assistant commissioner of Income Tax also under his jurisdiction being central Circle-20.

Interestingly enough, both the transferor and the transferee-offices are situated on the same floor, in the same building and in the same city. This writ petition which seeks to challenge this order of transfer and the consequent assessment orders passed in respect of petitioners Nos. 2 and 4 appears to be a desperate effort to avoid being assessed by the transferee Officer. The challenge in this writ petition, as we shall presently see, has been made despite the fact that legal contentions sought to be raised before us are squarely covered by an authoritative pronouncement of a Constitutional Bench of the Supreme Court of India in the case of Kashiram Agarwala Vs. Union of India (UOI) and Others, .

As is evident, the petitioners are five in number and belong to the same family known as "Singhania family", and are being, presumably, assessed as group, and where dealt with by the Assistant Commissioner of Income Tax, Central Circle-18.

After the order of May 7, 1990, was passed by the Commissioner of Income Tax, Central Circle-1, transferring the cases to the Assistant Commissioner of Income Tax Central Circle-20 with effect from May 10, 1990. The order dated May 7, 1990 according to the petitioner, was not communicated to it. This averment is made even though, at the bottom of the order dated May 7, 1990, a copy of the same is endorsed to the assessed. Be that as it may, there no denying the fact, and this is admitted in the writ petition, that vide a letter dated January 24, 1991, the Assessing Officer enclosed a copy of the said order dated May 7, 1990.

Prior to the filing of the present writ petition, assessment orders were passed by the transferring Officer in respect of petitioners Nos. 2 and 4.

It is submitted by learned counsel for the petitioners before us that the Commissioner of Income Tax did not communicate the reasons for the transfer to the petitioners. Relying on Ajantha Industries and Others Vs. Central Board of Direct Taxes, New Delhi and Others, , Manoj Didwania Vs. Union of India and others, , Saptagiri Enterprises Vs. Commissioner of Income Tax and Others, , Vijayasanthi Investments Pvt. Ltd. Vs. Chief Commissioner of Income Tax and Others, Vasudeo Vishwanath Saraf Vs. New Education Institute and Others, and K. Joseph Jacob Vs. Agricultural Income Tax Officer and Another, three contentions have been raised by learned counsel for the petitioner. The First contention is that the reasons for transfer should have been communicated. The second contention is that the order dated May 7, 1990, was not served on the assessed by the Commissioner of Income Tax and, lastly, it is contended that the order of transfer is effective only from the date when it was communicated to the petitioners. In this connection, it is submitted that any action taken prior to the communication of the order is invalid.

We find no force or substance in any of these contentions. Section 127, sub-sections (1) and (3) of which are relevant, read as follows :

"S. 127 (1) The Director General or Chief Commissioner or Commissioner may, after giving the assessed 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 Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him...

(3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place."

It is evident from reading of the aforesaid provisions that when an order is sought to be passed transferring the cases from the assessing Officer to another, ordinarily, the provision of sub-section (1) of section 127 applies. The requirements of the section 127 (1) are that, where ever possible, an Opportunity of be heard should be granted and thereafter reasons for effecting the transfer of the case should be recorded. Sub-section (3) is, however an exception sub-section (1), this sub-section is analogous to the original proviso to section 127 (1) and it provides that an opportunity of hearing is not requited to be granted when the transfer the transfer is from one Assessing Officer to another the two offices are situated in the same city, locality or place. It is not in dispute that, in the instant case, the transfer is from one assessing Officer who has his office on the fifth floor of Mayur Bhawan, New Delhi, to another assessing officer having his office on the same floor in the same building. Sub-section (3) of section 127 is, Therefore clearly applicable there is no requirement of giving an opportunity to the assessed to be heard before effecting the transfer.

Relying upon Ajantha Industries and Others Vs. Central Board of Direct Taxes, New Delhi and Others, it is submitted that even though an opportunity of being heard need not be granted, nevertheless reasons had to be recorded and communicated to the petitioners. learned counsel overlooks the fact that Ajantha Industries and Others Vs. Central Board of Direct Taxes, New Delhi and Others, arose when an order was passed u/s 127 (1), and the proviso to that sub-section, which is analogous to section 127(3), as it now exists, was not applicable in Ajantha Industries and Others Vs. Central Board of Direct Taxes, New Delhi and Others, assessments were transferred from Nellore to Hyderabad. On behalf of the Revenue, reliance had been placed on the decision of Kashiram Agarwala Vs. Union of India (UOI) and Others, but the supreme court observed that (at p. 286) "this decision is not of any assistance to the revenue in the present case since that was a transfer from one income tax Officer to another Income Tax Officer in the same as city, or, as stated in the judgment itself, in the same locality and the proviso to to section 127 (1), Therefore, applied."

It is clear from the above that the supreme court was not laying down the law with regard to the cases covered by the section 127 (3). The other decisions are relied on by learned counsel for the petitioners are also those where the transfers were from one city to another. What is relevant in our opinion, is a decision of the supreme court in Kashiram Agarwala Vs. Union of India (UOI) and Others, where the transfer had been effected from two Income Tax Officers in Calcutta to a third income tax officer in Calcutta itself. the transfer had been ordered by the Central Board of Direct Taxes and that had been challenged on the ground that no opportunity of being heard had been granted. The Supreme Court went further and also observed that where the provisions of the proviso to section 127 apply, it may not even be necessary to give reasons for the transfer. It was observed by the Supreme Court as follows (pp. 16, 17) :

"But, on the other hand, the provision that nothing sub-section (1) shall be deemed to require any opportunity to be given is worded in an emphatic form; and that fact has to borned in mind in considering the effect of the proviso Besides, it would not be unreasonable to assume that the recording of the reasons prescribed by section 127 (1) would be appropriate where a transfer is being made otherwise than in the manner prescribed by the proviso. In such a case, normally, the assessed has to be given a reasonable opportunity to be heard; and the natural corollary of this requirement is that his objections to the transfer should be considered as reason given why the transfer is made despite the objection of the assessed. In other words, the requirement as to the recording of reasons flows as a natural consequence and corollary of the requirement that reasonable opportunity should be given to the assessed. If, however, a reasonable opportunity is not given to the assessed on the ground that is not possible to do so, section 127 (1) requires that the transfer being of a category were reasonable opportunity should be given to the assessed, the Authority should record its reasons for making the transfer, even though no opportunity was in fact given to the assessed. If that be the true position it is not easy to understand why the proviso should be so construed as to require reasons to be given for the transfer, even though no opportunity to the assessed is required to be given. That is one aspect of the matter which has to be borned in mind in determining the true scope and effect of the proviso."

Reference may also be made to the following observations in Kashiram Agarwala Vs. Union of India (UOI) and Others, which dealt with a question of the notice of transfer (pp. 17, 18) :

"This provision clearly indicates that where a transfer is made under the proviso to section 127 (1) from one Income Tax Officer to Another in the same locality, it merely means that instead of one Income Tax Officer who is competent to deal with the case, another Income Tax officer has been asked to deal with it. Such an order is purely in the nature of an administrative order passed for considerations of convenience of the Department and no possible prejudice can be involved in such a transfer. Where, as in the present proceedings assessment cases pending against the appellant before an Officer in one ward are transferred to an Officer in another ward in the same place, there is hardly any occasion for mentioning any reasons as such, because such transfers are invariably made on grounds of administrative conventions, and that show that on principle in such cases neither can the notice be said to be necessary, nor would it be necessary to record any reasons for the transfer."

Lastly, it was observed by the Supreme Court at page 19 as follows :

"On the other hand if the obvious object of the proviso is taken into account and relevant previous background is borned in mind, it would also seen reasonable to hold that, in regard to cases falling under the proviso, an opportunity need not be given to the assessed, and the consequential need to record reasons for the transfer is also unnecessary, and this view is plainly consistent with the scheme of the provision and the true intent of its requirements. We would accordingly hold that the impugned orders cannot be challenged on the ground that the board has not recorded reasons in directing the transfer of the cases pending against the assessed from one Income Tax Officer to another in the same locality."

From the aforesaid, it is clear that the order passed u/s 127 (3), as the said provision now exists, in merely an administrative order and even reasons for ordering the transfer need not be recorded nor is there any requirement that the reasons be given to the assessed. In our opinion, the aforesaid decision of Kashiram Agarwala Vs. Union of India (UOI) and Others, , is a complete answer to the all contentions raised by the petitioner before us. In view of this, we need not go into the submissions of learned counsel for the respondent that the provisions of section 124 (3) of the Income Tax Act were attracted in the present case and the petitioners did not raise the question of jurisdiction within the time prescribed by the said provisions.

We have no doubt in our mind that there can be no question of any prejudice caused to the petitioners by the impugned order which has been passed. That apart, the petitioners has been informed by the transferor Officer that the petitioners cases have been transferred on January 27, 1991. Admittedly, the petitioners have received formal orders of transfer.

If the petitioner had any grievance, though in our opinion, the petitioners have no justified grievance, the petitioners should have approached this Court at an early date and certainly before the assessments were completed. In any case no illegality has been committed in the present case and this writ petition is devoid of any merit. The writ petition is, accordingly, dismissed with costs. Counsel fee Rs. 500.