Case Law Details
G.A.No.81 of 2010, WP No. 1229 of 2009
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
KUSUM GOYAL Plaintiff/ Petitioner/ Applicant Versus
THE INCOME TAX OFFICER & ORS Defendant/ Respondent For Petitioner : Mr. R.N. Dutta, Advocate with Mrs. S. Roychowdhury, Advocate. For Defendant : Mr. Dipak Shome, Senior Advocate with Mr. R. Sinha, Advocate. BEFORE:
The Honourable JUSTICE SOUMITRA PAL
Date : 5th April, 2010.
The Court : Affidavit-of-service filed in Court today be kept with the records.
In this writ petition the petitioner, an assessee, has challenged the letter/ notice dated 30th July, 2009 issued by the Income Tax Officer, Ward 54(2), Kolkata, the respondent no.1 and the letter/ notice dated 21st October, 2009 issued by the Deputy Commissioner of Income Tax, Circle 54, Kolkata, respondent no.2 on several grounds. It appears from the petition that the 2 petitioner whose principal source of income is commission as an insurance agent filed the return of income for the assessment year 2006-07 disclosing a total income of Rs. 4,56,649/- from all sources. In respect of the assessment years 2007-08 and 2008-09 she had filed returns disclosing total income of Rs. 12,55,330/- and Rs. 15,66,993/- respectively. The assessments for the assessment years 2007- 2008 and 2008- 2009 are yet to be completed. On or about 5th May, 2008 the petitioner made an application before the Commissioner of Income Tax-XII intimating that as she is an insurance agent her Assessing Officer would be Income Tax Officer Ward54(2)/GP, Kolkata and therefore files are required to be transferred from the Assessing Officer, Ward 35(3) having jurisdiction of the petitioner’s assessment records to the said Assessing Officer. Pursuant thereto, the Commissioner of Income Tax, Kolkata- XII in exercise of powers conferred by section 127(2) of the Income Tax Act, 1961 (for short “the Act”) read with sub-section (3) thereof by an order dated 19th September, 2008 transferred the files of the petitioner from ITO, Ward 35(3), Kolkata to ITO, Ward 54(2), Kolkata which took effect from 19th September, 2008. Thereafter, the respondent no.1 by letter dated 3rd October, 2008 intimated that by order dated 19th September, 2008 the jurisdiction of the case of the petitioner had been transferred to him and he had decided to proceed with the case for assessment year 2006-07. After assumption of the jurisdiction, on 20th July, 2009 the respondent no.1 completed the assessment for the year 2006-07. Being aggrieved with the said assessment made under section 143(3) of the Act and the 3 demand notice issued under section 156 of the Act, writ petition being W.P.No.753 of 2009 was filed.
Thereafter, by letter dated 14th July, 2009 the learned advocate of the petitioner intimated the respondent no.1 that in course of the assessment proceedings for the assessment year 2006- 07 the said respondent had admitted that he had no jurisdiction to assess any assessee whose income was over Rs. 10 lakhs and therefore, as the income for the assessment years 2007- 2008 and 2008- 09 exceeded Rs. 10 lakhs no proceeding could be initiated for the said assessment years by the said respondent as any action would be without jurisdiction. During the pendency of the writ petition being W.P.No. 753 of 2009, the respondent no.1 by letter dated 30th July, 2009, which is under challenge, intimated that as for the assessment years 2007- 08 and 2008- 09 the returned income was more than Rs. 10 lakhs, on 29th July, 2009 the assessment records including the records of the earlier years had been transferred to the respondent no.2 who is holding jurisdiction over the cases whose returned income was Rs. 10 lakhs and above. Pursuant thereto the learned advocate for the petitioner by letter dated 11th August, 2009 requested the respondent nos.1 and 2 to communicate the order of transfer dated 29th July, 2009 passed by the appropriate authority. Since, no reply was forthcoming, a reminder dated 20th October, 2009 was issued. Thereafter, the reply dated 21st October, 2009 was issued by the respondent no.2 which is also the subject matter of challenge. Learned advocate appearing on behalf of the petitioner has submitted that the letter dated 30th July, 2009 issued by the respondent no.1 is illegal since order dated 19th September, 2008 passed by the Commissioner of Income Tax, Kolkata-XII could not relate to the assessment records for the assessment years prior to 2007-08. Further the letter/notice dated 21st October, 2009 issued by the respondent no.2 that since the income exceeded Rs. 10 lakhs for the assessment for the assessment year 2007-08, the assessment records gets automatically transferred and no order is required, is per se illegal and thus invalid since section 127 of the Act postulates that an order is required to be passed by the competent authority. In support of his submission reliance has been placed on the judgement of the Supreme Court in Kashiram Aggarwalla v. Union of India & Ors: 56 ITR 14 and of the High Courts in S.L.Singhania & Ors. v. Assistant Commissioner of Income-Tax/Wealth-Tax: 193 ITR 275 (Delhi) and Subhas Chandra Bhaniramka v. Assistant Commissioner of Income Tax: (2010) 320 ITR 349 (Cal).
Learned senior advocate appearing on behalf of the Revenue referring to section 127 of the Act has submitted that since section 127(3) neither postulates grant of opportunity of hearing nor there is any requirement of recording of reason and as it does not speak of an order to be passed, transfer of records is purely an administrative step. Since such step under 127(3) does not cause any prejudice, no formal order is required to be passed. Submission is since the step taken is in accordance with the procedure laid down in the Handbook issued by the Income Tax Department of which the petitioner is aware, action taken is just and proper. In support of his submission he has relied on the judgement in M.A.E.K.K. Verma and ors. v. Central Board of Direct Taxes: 129 ITR 31 (A.P.).
The question which falls for consideration is whether under section 127 of the Act an Assessing Officer on his own can transfer an income tax file to another officer and whether an order is required to be passed. In order to appreciate the issue it is necessary to refer to the relevant provisions in section 127 of the Act which is as under :
“127. (1) The Director General or Chief 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 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.
(2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner –
(a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred 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, pass the order;
(b) Where the Directors General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. (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 other 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.”
(Emphasis supplied )
From a reading of the language of section 127(3) it is evident that when a file is transferred from one assessing officer to another whose offices are located in the same city, locality or place, though other statutory formalities are required to be complied with, the opportunity of hearing as postulated in section 127 (1) and (2) in case of inter city transfer, is not required. Now keeping the position of law in mind let the letter/notice dated 21st October, 2009 issued by the respondent no.2 be examined. In order to appreciate the issue it is necessary to refer to the relevant portion of the impugned intimation issued by the respondent no.2 which is as under : 7
“Since your income has exceeded minimum threshold limit of Rs.10 lac for the assessment year 2007-2008, the jurisdiction to/of your case automatically gets vested with the Jurisdictional DCIT-Circle-54, Kolkata as per above Directives.
You are kindly informed hereby that no order u/s 127 of the Income Tax Act 1961 by the Ld. Commissioner of Income Tax XIX, WB is required to be passed for getting the assessment records transferred from ITO Ward-54(2), Kolkata to DCIT Circle-54, Kolkata by virtue of the provisions of sub-section 3 of section 127 of the Income Tax Act, 1961. For your ready reference the provisions of the said section is appended below.
Section 127 sub-section (3) of the Income Tax Act, 1961 states/reads as: ..
From the foregoing provisions it is clear that the Commissioner of Income Tax is not required to pass any order transferring the case from/to any Assessing Officer(s) if “the offices of all such officers are situated in the same city, locality or place.”
(Emphasis supplied )
It is evident that the respondent no.2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated 21st October, 2009 is patently illegal since it has been held in this judgement that in case of transfer within the same city, locality or place although the opportunity of hearing as postulated in section 127(1) and (2) has 8
been dispensed with, other statutory formalities which includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007- 2008, 2008- 2009 and the earlier years as intimated in the letter/ notice dated 30th July, 2009 issued by the respondent no.1 is also bad in law. The argument of the respondents that in case of intra city transfer no order is required to be passed, cannot be accepted in view of the settled position of law in Kashiram Aggarwalla (supra) and in S.L. Singhania (supra) wherein the validity of the orders were under challenge, meaning thereby an order recording transfer has to be on the records. The judgement in Subhas Chandra Bhaniramka (supra) where it has been held that in case of transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgement in M.A.E.K.K. Verma (supra) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under Wealth Tax Act, 1957 and Gift Tax Act, 1956. Therefore, since it has been held in this judgement that it is imperative on part of the respondents to issue order under section 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dated 6th January, 2010 regarding the penalty proceedings under section 271(1)(c) for the assessment year 2006-07 is also set aside and quashed. The application being G.A.No. 81 of 2010 is also allowed.
No order as to costs.
(SOUMITRA PAL, J.)
Later:
After the judgement and order is delivered Mr. Sinha, learned advocate appearing on behalf of the Revenue prays for stay. Prayer is considered and is allowed. Let there be stay till 30th April, 2010.
All parties concerned are to act on a signed copy of the minutes of the operative part of this order on the usual undertakings. Urgent photostat certified copy of this order, if applied for, be furnished to the appearing parties on priority basis.
(SOUMITRA PAL, J.)
ssaha
AR(C.R.)
