Power to Transfer Cases – Section 127
The Income Tax Act 1961 (the Act) through section 127 empowers the prescribed authorities therein to transfer cases of Assessees from one or more subordinate Assessing Officers (AO) to any other such AO(s) similarly subordinate in another jurisdiction (subject to administrative protocol). The said provision also allows the transfer of a case at any stage of the relevant proceedings, and does not render necessary the re-issue of any notice already issued by the AO(s) from whom the case is transferred.
As per the said provision, the word “case” in relation to any person whose name is specified in any order or direction issued thereunder, is stated therein to mean all proceedings under the Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under the Act which may be commenced after the date of such order or direction in respect of any year.
Such actions taken are more than merely administrative in nature, as it directly affects the interests of the concerned Assessees in more ways than one. The above said provision of the Act too recognises this potentially adverse impact and to ensure safeguards against arbitrariness, requires the said authority to do the following before passing any such order for transfer —
- Issue a ‘show cause notice’ (SCN) or other such notice to the concerned Assessee to notify the latter of such potential transfer order being contemplated
- Provide the said Assessee a reasonable opportunity of being heard on the matter (wherever it is possible to do so) and against such order
- Recording reasons for such transfer order before passing the same
Non-requirement of ‘Hearing Opportunity’
The above mentioned ‘reasonable opportunity of being heard’ on the matter is however not required where the said ‘transfer’ is between AO(s) whose offices are situated in the same city, locality or place.
Objections and Writ Remedy
Where such transfer is adverse to the concerned Assessee’s interests, the said opportunity of being heard on the matter against the said transfer must be urgently taken and relevant objections thereto must be brought on record with the concerned authority. Where such objections are rejected and the said transfer order is passed, a Writ Petition to the jurisdictional High Court may lie to quash such order, where grounds of jurisdictional error etc. are evident.
Potential Grounds for objections or Writ
- Non-issue of SCN prior to passing transfer order
- Opportunity of being heard denied or objections not recorded
- Reasons for transfer not recorded before said order
- Reasons recorded are factually incorrect/irrelevant or perversity in fact finding etc.
When in receipt of such SCN to transfer the concerned Assessee’s case, it is recommended that professional help be sought to legally assess the such notice and for preparing/drafting appropriate objections thereto. Similarly, when contemplating Writ action against such transfer order, professional assistance would assist in determining whether such remedy is available on the facts of the concerned Assessee, and if so, the probability of a favourable outcome.
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