Murliwala Agrotech Private Limited Vs Union of India (Rajasthan High Court)
The Rajasthan High Court, in the case of Murliwala Agrotech Private Limited vs. Union of India, set aside an order by the Principal Commissioner of Income Tax (PCIT) transferring the petitioner company’s assessment file from Udaipur to New Delhi. The Court held that the transfer order, issued under Section 127 of the Income Tax Act, 1961, was invalid because the assessee was not given a reasonable opportunity of being heard, and the competent authority failed to record reasons for dispensing with such an opportunity.
Factual Background and Petitioner’s Grievance
Murliwala Agrotech Private Limited filed a writ petition challenging a transfer order dated November 21, 2019, passed by the Principal Commissioner of Income Tax, Udaipur, which shifted its assessment file to the Deputy/ACIT, Central Circle-14, New Delhi. The petitioner contended that the transfer was carried out without adherence to the mandatory provision of Section 127(1) of the Income Tax Act, which requires giving the assessee a reasonable opportunity of being heard.
The petitioner’s counsel, Shri Anjay Kothari, referred to the text of Section 127(1):
“The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or 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…”
Kothari argued that the opportunity of hearing could only be bypassed if the competent authority formed an opinion, for reasons recorded in writing, that providing such an opportunity was not possible. In the present case, he asserted that neither did such a situation exist, nor were any reasons recorded for omitting the pre-transfer hearing, thus violating the statutory provision and the principles of natural justice.
