Case: Kashiram Agarwala Vs. Union of India &amp; Others

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 convenience, and that shows 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. The provisions contained in S, 124(3) of the Act deal with the same topic which was the subject-matter of S. 64(1) and (2) of the earlier Income-tax Act, 1922 (No. XI of 1922). There is, however, this difference between these two provisions that whereas Section 124 fixes jurisdiction, territorial or otherwise, of the Income-tax Officers, S. 64 fixed the place where an assessee was to be assessed.7. In this connection, it is also necessary to take into account the background of the provision contained in S. 127. In Pannalal Binjraj v. Union of India, 1957 SCR 233 : ((S) AIR 1957 SC 397 ) the validity of S. 5(7A) of the earlier Act of 1922 was challenged before this Court. The said Section had provided that the Commissioner of Income-tax may transfer any case from one Income-tax Officer subordinate to him to another; and the Central Board of Revenue may transfer any case from any one Income-tax Officer to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Income-tax Officer from whom the case is transferred. The argument which was urged before this Court in challenging the validity of this provision was that it infringed the citizens fundamental rights conferred by Articles 14 and 19(1)(g) of the Constitution. In support of this argument, reliance was placed on the fact that S. 64(1) and (2) conferred a right on the assessee to have his tax matter adjudicated upon by the respective officers mentioned in the said provisions; and since S. 5(7A) authorised the transfer of the assessees case from one Income-tax Officer to another, that involved infringement of his fundamental rights guaranteed by Articles 14 and 19(1)(g) read with S.64(1) and (2). It is necessary to emphasise that S. 5(7A) authorised transfer of income-tax cases from one officer to another not necessarily within the same place. In other words, the transfer authorised by Section 5(7A) would take the case from the jurisdiction of an officer entitled to try it under S. 64(1) and (2) to another officer who may not have jurisdiction to try the case under the said provision. That, indeed, was the basis on which the validity of S. 5(7A) was challenged. This Court, however, repelled the plea raised against the validity of the said Section on the ground that the right conferred on the assessee by Section 64(1) and (2) was not an absolute right and must be subject to the primary object of the Act itself, namely, the assessment and collection of the income-tax; and it was also held that where the exigencies of tax collection so required, the Commissioner of Income-tax or the Central Board of Revenue had the power to transfer his case under S. 5(7A) to some other officer outside the area where the assessee resided or carried on business. That is how Section 5(7A) was sustained.8. Even so, this Court observed in the case of Pannalal Binjraj, 1957 SCR 233 : ((S) AIR 1957 SC 397 ) (supra) that it would be better if an opportunity is given to the assessee in cases where the powers conferred by S. 5(7A) were intended to be exercised, because he would then be able to mention his objections to the intended transfer. It is in that connection that this Court further expressed its opinion that if the reasons for making the transfer "are reduced, however briefly, to writing, it will help the assessee in appreciating the circumstances which make it necessary or desirable to order such a transfer." It is obviously in pursuance of these observations that the Legislature has made the relevant provisions in S. 127(1) of the Act. If this background is borne in mind, it would be clear that the propriety of giving an opportunity to an assessee and the desirability of recording reasons which this Court emphasised, had reference to cases where transfers were intended to be made from an Income-tax Officer in one place to the Income-tax Officer in another place; and they obviously had no reference to transfers like the present where instead of one officer dealing with the case, another officer in the same place is asked to deal with it.9. It is in the light of these considerations that we have to construe the proviso to S. 127(1). As we have already indicated, the construction for which Mr. Jain contends is a reasonably possible construction. In fact, if the words used in the proviso are literally read, Mr. Jain would be justified in contending that the requirement that reasons must be recorded applies even to cases falling under it. On the other hand, if the obvious object of the proviso is taken into account and the relevant previous background is borne in mind, it would also seem reasonable to hold that in regard to cases falling under the proviso, an opportunity need not be given to the assessee, 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 assessee from one Income-tax Officer to another in the same locality.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. But, on the other hand, the provision that nothing in sub-section (1) shall be deemed to require any opportunity to be given, is worded in an emphatic form; and that fact has to be borne in mind in considering the effect of the proviso. Besides, it would not be unreasonable to assume that the recording of reasons prescribed by S. 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 assessee 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 and reasons given why the transfer is made despite the objection of the assessee. In other words, the requirement as to the recording of reasons flows as a natural consequence and corollary of the requirement that a reasonable opportunity should be given to the assessee. If, however, a reasonable opportunity is not given to the assessee on the ground that it is not possible to do so, S. 127(1) requires that the transfer being of a category where a reasonable opportunity should be given to the assessee, the authority should record its reasons for making the transfer, even though no opportunity was in fact given to the assessee. 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 assessee is required to be given. That is one aspect of the matter which has to be borne in mind in determining the true scope and effect of the proviso.It is in the light of these considerations that we have to construe the proviso to S. 127(1). As we have already indicated, the construction for which Mr. Jain contends is a reasonably possible construction. In fact, if the words used in the proviso are literally read, Mr. Jain would be justified in contending that the requirement that reasons must be recorded applies even to cases falling under it. On the other hand, if the obvious object of the proviso is taken into account and the relevant previous background is borne in mind, it would also seem reasonable to hold that in regard to cases falling under the proviso, an opportunity need not be given to the assessee, 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 assessee from one Income-tax Officer to another in the same locality.