Assessees challenged Section 127 Income Tax Act transfer orders and notices issued without hearing, and subsequent assessments. Following Murliwala Agrotech, court quashed transfers, notices and assessment orders; proceedings may resume with hearing if transfer is still proposed, within three months.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
D.B. Civil Writ Petition No. 7436/2019
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Versus
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Connected With
D.B. Civil Writ Petition No. 1858/2018
Vinita Sarda W/o Mr. Anil Sarda, By Caste- Maheshwari, R/oHouse No. 230, Old Ward No-4/ New Ward No-6, Sarda Mohalla, Deshnoke, Bikaner.
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Sadar Bazar, Deshnoke, Bikaner. Both Represented By Mr. Vijay Kumar Khatri, Being The Director Of Petitioner No. 1 And Karta Of The Petitioner No. 2 Respectively
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Versus
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D.B. Civil Writ Petition No. 3990/2018
M/s K.g. Enterprises, Through Proprietor Mr. Kishan Gopal Sarda S/o- Late Prayag Das Sarda, By Caste- Maheshwari, R/o Sarda Mohalla, Deshnoke, Bikaner Office Address- Behind State Bank Of India, Gangashahar Road, Bikaner.
----Petitioner
Versus
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D.B. Civil Writ Petition No. 5160/2019
Anil Sarda S/o Mr. Kishan Gopal Sarda, Aged About 29 Years, By Caste- Maheshwari, R/o- C/o Smt. Kashi Devi Sarda, House No. 230, Old Ward No-4 / New Ward No. 6, Sarda Mohalla, Deshnoke, Bikaner.
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Versus
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Rajasthan.
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D.B. Civil Writ Petition No. 7393/2019
M/s. Shree Chamunda Enterprises, Through Proprietor Mr. Nirmal Kumar Sharma S/o Mr. Sukhdev Sharma, By Caste- Sharma, Age- 34 Years, R/o- Bhardwaj Mention, Near Kasat School, Ward No. - 10, Deshnoke, Bikaner.
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Versus
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D.B. Civil Writ Petition No. 7405/2019
Nirmal Kumar Sarda S/o Mr. Kishan Gopal Sarda, Aged About 36 Years, By Caste- Maheshwari, R/o- C/o Smt. Kashi Devi Sarda, House No. 230, Old Ward No. -4 / New Ward No. 6, Sarda Mohalla, Deshnoke, Bikaner.
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Versus
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D.B. Civil Writ Petition No. 7408/2019
Kashi Devi Sarda W/o Late Prayag Das Sarda, Aged About 82 Years, By Caste- Maheshwari, Age- 82 Years, R/o- House No. 230, Old Ward No-4/ New Ward No.- 6, Sarda Mohalla,
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Deshnoke, Bikaner.
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Versus
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D.B. Civil Writ Petition No. 2066/2020
Vinita Sarda W/o Sh. Anil Sarda, Aged About 26 Years, By CasteMaheshwari, R/o- House No. 230, Old Ward No- 4 / New Ward No. 6, Sarda Mohalla, Deshnoke, Bikaner
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Versus
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D.B. Civil Writ Petition No. 3685/2020
Sarita Sarda W/o Mr. Nirmal Kumar Sarda, Aged About 36 Years, By Caste- Maheshwari, R/o- C/o Smt. Kashi Devi Sarda, House No. 230, Old Ward No - 4/new Ward No - 6, Sarda Mohalla, Deshnoke, Bikaner
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Versus
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Jhandewalan Extension, New Delhi
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D.B. Civil Writ Petition No. 3769/2020
Anil Sarda S/o Kishan Gopal Sarda, Aged About 30 Years, By Caste Maheshwari, R/o C/o Smt. Kashi Devi Sarda, House No.230, Old Ward No.4/ New Ward No.6, Sarda Mohalla, Deshnok, Bikaner.
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Versus
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D.B. Civil Writ Petition No. 3827/2020
M/s. Kashi Prayag Tradelink Pvt. Ltd., Through - Director Smt. Sarita Sarda, W/o Nirmal Kumar Sarda B/c Maheshwari Aged 36 Years R/o Sh. Prayag Das Sarda, Sarda Mohalla, Deshnoke, Bikaner.
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Versus
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Income Tax Central Range- 8, Iii Floor Ara Centre, E-2, Jhandewalan Exetension, New Delhi.
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D.B. Civil Writ Petition No. 4049/2020
Kashi Devi Sarda W/o Late Prayag Das Sarda, Aged About 84 Years, By Caste Maheshwari, R/o House No. 230, Old Ward No. 4/new Ward No. 6, Sarda Mohalla, Deshnoke, Bikaner.
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Versus
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D.B. Civil Writ Petition No. 5836/2020
Nirmal Kumar Sarda S/o Mr. Kishan Gopal Sarda, Aged About 37 Years, By Caste Maheshwari, R/o C/o Smt. Kashi Devi Sarda, House No. 230, Old Ward No. 4, New Ward No. 6, Sarda Mohalla, Deshnoke, Bikaner.
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Versus
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Income Tax Central Range-8, Iii Floor Ara Centre, E-2, Jhandewalan Extension, New Delhi.
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For Petitioner(s) : Mr. Nitin Trivedi For Respondent(s) : Mr. K.K. Bissa, AGC
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE YOGENDRA KUMAR PUROHIT
Order
27/03/2024
In S.B. Civil Writ Petition No.7436/2019, 1858/2018,
3087/2018, 3990/2018, 5160/2019, 7393/2019, 7405/2019 & 7408/2019.
1.1. The reliefs claimed, in sum and substance, read as follows:
"A. By an appropriate Writ, Order or Direction, Notices dated 3-11-2017 (Annex.7) issued by the respondent no.2 & Order dated 8.12-2017 (Annex.10) passed by the respondent no.1 may kindly be quashed & set aside and accordingly the respondents may kindly be directed
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to exoneate the petitioners from all the proceedings and further to drop them qua petitioners as has been shown to be initiated in Notices dated 3-11-2017.
B. That the heavy cost may kindly be imposed upon the Respondents for violating the statutory provisions of the Income Tax Act, 1961.
C. Any other order or direction, which this Hon'ble Court deems fit and proper in the facts and circumstances of the case, may kindly be passed in favour of the petitioners.
D. The cost of the writ petition may kindly be awarded in favour of the petitioners."
“ 127 . Power to transfer cases.- (1) The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal 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
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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,—
3.1. In support of such submission, learned counsel placed reliance on (1.) Smt. Jeewan Kumari Vs. Union of India & Ors. reported in (1979) 118 ITR 573 (Raj.), (2.) Noorul Islam Educational Trust Vs. Commissioner of Income Tax reported in (2017) 291 CTR (SC) 230 & (3) Murliwala Agrotech Private Ltd. Vs. Union of India (D.B. Civil Writ Petition No.6847/2021), decided on 20.07.2022 by this Court. 4. On the other hand, learned counsel representing the respondents, while opposing the submission made on behalf of the petitioners, placed reliance on the Division Bench judgment
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rendered by Hon’ble High Court of Madras in the case of Advantage Strategic Consulting (P.) Ltd. Vs. Principal Commissioner of Income Tax, Chennai reported in [2021] 430 ITR 1 (Madras).
“At the outset, we may state here that Section 127(1) of the Income Tax Act, which deals with powers of the competent authority to transfer the assessment proceedings, is framed with the salutary objective of adherence to the principle of natural justice, which is fundamental to any proceeding of adversarial nature. It cannot be denied that the assessment/ reassessment proceedings under the Income Tax Act, would be adversarial to the assessee and hence, adherence to the principles of natural justice, is sine qua non.
Whenever it is proposed to transfer the case of assessee from one assessing authority to another, providing opportunity of hearing to the assessee is essential and can be circumvented only if the competent authority feels, for reasons to be recorded in writing, that it is not possible to do so. In the present case, the respondents have neither setup any such case that it was not possible to provide opportunity of hearing to the assessee, nor any reasons to do so were recorded before taking the decision to transfer the case from Circle Bikaner to Circle New Delhi.
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Notwithstanding the fact that the assessment proceedings under the Income Tax Act, have now become faceless, it cannot be denied that the assessee would be entitled to engage Counsel/ Advisors of his choice to defend himself even in the faceless proceedings and thus, the requirement of following the principles of natural justice cannot be evaded in a casual manner.
In the case of Advantage Strategic Consulting (P) Ltd. (supra) , relied upon by counsel Mr. Bissa, the factual situation was totally different because transfer had been made from one Circle to another in the same city. Furthermore, during pendency of the proceedings, the assessment order had been passed. In that situation, Hon’ble Division Bench went on to hold that proceedings before the High court, had become infructuous.
In the present case, the transfer order and the notices issued in furtherance thereof, have been stayed by this Court and as such, the facts of the case at hand are totally distinguishable.
A Division Bench of this Court in the case of Smt. Jeewan Kumari (supra) , has held that as per Section 127(1) of the Income Tax Act, it was incumbent for the Board to have provided opportunity of hearing to the assessee before ordering transfer of their case. Similar view was taken by Hon’ble the Supreme Court in the case of Noorul Islam Educational Trust (supra).
Consequently, we are of the opinion that the impugned transfer order dated 21.11.2019 (Annexure-7) and the notices (Annexure-2, Annexure-6 and Annexure12), as a consequence thereof, do not stand to scrutiny and hence, the same are declared invalid and set aside. ”
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(in all the above numbered petitions) along with entire proceeding pursuant thereto are quashed and set aside.
In S.B. Civil Writ Petitions No.2066/2020, 3685/2020, 3769/2020, 3827/2020, 4049/2020 & 5836/2020 :-
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decided on 20.07.2022, the present petitions are also allowed in the same terms.
(YOGENDRA KUMAR PUROHIT),J (DR.PUSHPENDRA SINGH BHATI),J
55 to 68-Sudheer/-
2 issues framed by the court
Whether transfer orders under Section 127 passed without opportunity of hearing are valid?
Whether assessment orders passed pursuant to such transfers should be quashed?
Colour shows how this judgement treated each authority
Smt. Jeewan Kumari Vs. Union of India & Ors.Relied on
(1979) 118 ITR 573 (Raj.)
Noorul Islam Educational Trust Vs. Commissioner of Income TaxRelied on
(2017) 291 CTR (SC) 230
Murliwala Agrotech Private Ltd. Vs. Union of IndiaRelied on
D.B. Civil Writ Petition No.6847/2021
Advantage Strategic Consulting (P.) Ltd. Vs. Principal Commissioner of Income Tax, ChennaiDistinguished
[2021] 430 ITR 1 (Madras)
1 provisions across 1 enactments
M/s. Kashi Prayag Tradelink Pvt. Ltd.
Sarita Sarda
Vinita Sarda
M/s Vijay Sanjay Tradecom Pvt. Ltd.
M/s Bhoomika Enterprises
Vijay Kumar Khatri
Pushpendra Singh Bhati
Yogendra Kumar Purohit
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
