DECIDED BY: HIGH COURT OF GAUHATI, IN THE CASE OF: Anil Kumar Kothari Vs. UOI, APPEAL NO: WP(C) 4487/2009, DECIDED ON April 28, 2010
9. I have considered the submissions made by the learned counsel for the parties as well as the materials on record. In the rejoinder affidavit, the petitioner has submitted that he being a permanent resident of Guwahati and having regard to his background and root in Guwahati, it is unbelievable that the authority was unable to serve notice on him. Further, ; stand of the petitioner is that since the requirement of assigning reasons as contemplated in Section 127 (1) of the Act has also not been complied with, the impugned order is liable to be set aside and quashed.
10. In Ajanta Industries (supra), the Apex Court dealing with the requirement of assigning reasons in the order has made the following observations:
“6. …The reason for recording or reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under Art. 226 of the Constitution or even this Court under Art. 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question.
7. We are clearly of opinion that the requirement of recording reasons under s. 127() is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee.
Mr. Sharma drew our attention to a decision of the Delhi High Court in Sunanda Rani Jain Vs. Union of India (1975) CTR (Del) 135: (1975) 99 ITR 391 (Del): TC 69R. 693, where the learned single Judge has taken a contrary view, for the reasons, which we have given above, we have to hold that the said decisions is not correct.
The appellant drew our attention to a decision of this Court in Shri Pragdas Umer Vaishya vs. Union of India (1967) 12 MPU 868, where r. 55 of the Mineral Concession Rules, 1960, providing (or exercise of revisional power by the Central Government was noticed. It was held that under r. 55 the Central Government in disposing of the revision, application must record its reason and communicate these reasons to the parties affected thereby. It was further held that the reasons could not be gathered from the nothings in the files of the Central Government. Recording of reasons and disclosure thereof is not a mere formality.
Mr. Sharma drew our attention to a decision of this Court in Kashiram Aggarwalla vs. Union of India (1965) 56 ITR 14 (SC): TC 69R. 660. It is submitted that this Court took the view that orders under s. 127(1) are held in that decision to be “purely administrative in nature” passed for consideration of convenience and no possible prejudice could be involved in the transfer. It was also held therein that under the proviso to s. 127(1) it was not necessary to give the appellant an opportunity to be heard and there was consequently no need to record reasons for the transfer. This decision is not of any assistance to the Revenue in the present case since that was a transfer from the ITO to another I TO in the same city, or, as stated in the judgment itself “in the same locality” and the proviso to s. 127(1), therefore, applied.
When the law requires reasons to be recorded in a particular order affecting prejudicially the interest of any person, who can challenge the order in Court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated.
8. Mr. Sharma also drew our attention to a decision of this Court in S. Narayanappa vs. CIT (1967) 63 ITR 219 (SC) : TC 51 R. 651, where this Court was dealing with s. 34 of the old Act. It is clear that thee is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the CIT to accord sanction to proceed under s. 34 must just also, become need not communicate to the assessee the reasons which led him to initiate the proceedings under s. 34. The case under s. 34 is clearly distinguishable from that of a transfer order under s. 127(1) of the act.
When an order under s. 34 is made the aggrieved assessee can agitate the matter in appeal against the assessment order, but an assessee against whom an order of transfer is made has no such remedy under the Act to question the order of transfer. Besides, the aggrieved assessee on receipt of the notice under s. 34 may even satisfy the ITO that there were no reasons for reopening the assessment. Such an opportunity is not available to an assessee. under s. 127(1) of the Act. The above decision, is therefore, clearly distinguishable.”
11. In the case of Vijay Ssanthi Investments (supra), the Andhra Pradesh High Court has observed thus:
“8. From the aforesaid decisions, it is clear that, in the matter of the transfer of a case under s. 127 of the Act, it is necessary that the authority which proposes to transfer the case must, wherever it is possible to do so give the assessee a reasonable opportunity of being heard with a view to enable him to effectively show-cause against the proposed transfer. The notice must also propose to give a personal hearing. It is also necessary to mention in the notice the reasons for the proposed transfer so that the assessee could make an effective representation with reference to the reasons set out. It is not sufficient merely to say in the notice that the transfer is proposed “to facilitate detailed and co-ordinated investigation”. The reasons cannot be vague and too general in nature but must be specific and based on material facts. It is again not merely sufficient to record the reasons in the file but it is also necessary to communicate the same to the affected party.”
12. In Naresh Kumar Agarwal (supra), the Calcutta High Court also observed thus:
“8. So far as the notice is concerned though it has been mentioned that the proposed transfer is for assessment”, it does not mention any specific reasons for transfer. Merely stating that transfer is for “co-ordinated investigation and assessment” is not at all sufficient as the assess should be intimated about the reasons in a comprehensive manner in order to enable him to make effective representation.”
13. Section 127 mandats that assessee must be given a reasonable opportunity of being heard while exercising the power to transfer cases. Although a rider “wherever it is possible to do so” is also there, it is not the case of the respondents that it is not possible to do so. Further, the and that order is to be passed after recording reasons for ‘ doing so. Apart from the fact that the petitioner was not provided with any opportunity of being heard in the matter, the reasons assigned in the order which was “administrative convenience and for co-ordinating effective investigation” also could not be said to be the reasons as envisaged in Section 127(1) of the Act. It is in this context, Mr. Kapoor, learned counsel for the petitioner has referred to the aforesaid two decisions rendered by Andhra Pradesh High court and Calcutta High Court. In both the decisions, the High Courts have emphasized on the need to assign detailed reasons while holding that it is not sufficient merely to show in the notice that the transfer is proposed to “facilitate the detail and coordinated investigation”. In the Andhra Pradesh High Court decision the said quoted portion, was assigned to be the reasons, which did not find favor of the court.
In view of the above, the writ petition succeeds on both counts, i.e. non issuance of notice to the petitioner and non-furnishing of reasons for transferring the matter from Guwahati to New Delhi. Consequently, the impugned order dated 01.08.07 (Annexure-B) stands set aside and quashed. The writ petition is allowed, however, without any order as to costs.