The petitioners question the propriety of a decision by a Principal Commissioner of Income Tax to transfer the petitioning assessee's case to Kanpur.
A show-cause notice was issued to the petitioning assessee on August 25, 2015 requiring the assessee to indicate why the case should not be transferred to Kanpur upon a nexus between the petitioning assessee and one Frost International Group being discovered in connection with an investigation. The assessee was permitted a personal hearing on September 8, 2015.
It appears from file notings disclosed by the department that the petitioning assessee was represented by one of its directors and a chartered accountant and that they filed their written submission on September 8, 2015. The further notings in the file as disclosed by the department record as follows on September 8, 2015:
"Considered the submissions. I find that for the reason of coordinated investigation, it is required to centralise the jurisdiction over the present assessee, as proposed.
"Put up draft order u/s 127."
The petitioners claim that they were not favoured with a copy of any order of transfer, but they came to be aware of such order pursuant to a notice received under Section 142(1) of the Income Tax Act, 1961 from the Kanpur office. The petitioners claim that they obtained a copy of the order under Section 127 of the Act passed by the concerned Principal Commissioner on September 10, 2015 from the Kanpur office.
It is necessary to see the relevant order in its entirety except a schedule in the form of a table indicating the name of the assessee, its permanent account number, its present assessing officer and its transferred office:
"In exercise of the powers conferred by Section 127 of the Income Tax Act, Section 11 of the Wealth Tax Act, 1957 and all other powers enabling me in this behalf, I, the Pr. Commissioner of Income Tax-3, Kolkata, hereby transfer the following case, particulars of which are mentioned in column "2" and "3" of the schedule annexed hereunder from the Assessing Officers mentioned in column "4" to the Assessing Officers mentioned in column "5" thereof. The order is being passed following letter of Pr. C.I.T(Central) Kanpur dated 19.06.2015. A Search & Seizure operation under section 132(1) of the I. T. Act, 1961 was carried out in Frost Group of cases on 24.10.2013.
"This order is being passed in the interest of Revenue for coordinated and meaningful assessment based on examination of evidences & documents and crossreferences in this group of cases."
Section 127 of the Act permits certain classes of officials indicated therein to transfer a case upon affording the concerned assessee a reasonable opportunity of being heard, wherever it is possible to do so, and after recording the reasons for doing so. The provision does not expressly provide for a copy of the order to be made over to the assessee. The order of transfer is also not appellable under the said Act. However, insofar as the provision requires reasons to be recorded in writing, it cannot be said that such reasons would not be justiciable. In order that such condition of the provision is not reduced to a dead letter, it is desirable that orders passed under Section 127 of the Act for transferring a case should be forwarded to the concerned assessee, if only for the assessee to understand the circumstances in which the transfer takes place.
When a statute mandates reasons to be recorded while exercising an element of discretion, the purpose therefor is to ensure the application of the mind to the matters in issue and disclose what weighs in such assessment. When reasons are required to be indicated, they should reveal the link between the matters in issue and the conclusion reflected in the relevant order. Even though such reasons may not run into pages or even long paragraphs, the requirement for furnishing reasons cannot be dispensed with by using jargon as "for the purpose of coordination" or the like.
Tested on the anvil of what is required under Section 127 of the Act, the reasons indicated in the order impugned dated September 10, 2015, or the complete lack thereof, do not pass muster. Accordingly, the order of transfer dated September 10, 2015 is set aside and the concerned official is requested to reconsider the matter upon affording the petitioning assessee a further opportunity of hearing. The further order of the official should disclose the reasons in brief that would indicate the application of the mind to the matters in issue so that the conclusion reflected therein appeals to the senses.
The department complains that since the order of transfer was made in September, a lot of things done may have now to be undone.
Regrettably, that is the unavoidable consequence of a statutory act not performed in accordance with the mandate of the provision.
WP 26799(W) of 2015 and CAN 3006 of 2016 are allowed as above, but without any order as to costs.
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.