SARABJIT SINGH vs. PRINCIPAL COMMISSIONER OF INCOME TAX 1 AND OTHERS

Facts

The petitioner-assessee, Sarabjit Singh, filed a writ petition under Article 226 of the Constitution of India challenging an order dated 12.01.2023 passed by the Principal Commissioner of Income Tax-1, Amritsar. This order transferred the jurisdiction over the petitioner's cases from Amritsar Circle to Ludhiana Circle. The petitioner argued that his principal place of business and residence are in Amritsar, and he was not afforded a proper opportunity of hearing before the transfer order was passed. The revenue contended that the transfer was necessitated by search and seizure operations under Section 132 of the Income Tax Act, 1961, involving the Jujhar Group, where the petitioner's key person, Shri Gurdeep Singh, was involved. The petitioner's PAN (ALQPS2907P) was transferred from Amritsar to Ludhiana Circle-2.

Held

The High Court held that the impugned order dated 12.01.2023, passed by the Principal Commissioner of Income Tax-1, Amritsar, was passed in violation of the principles of natural justice. The Court noted that the petitioner, in his reply dated 06.01.2023, had requested an adjournment to file a detailed representation after 16.01.2023, as his Chartered Accountant was on leave. However, the impugned order was passed on 12.01.2023, before the requested date and without affording the petitioner a reasonable opportunity to present his case. The Court referred to Section 127 of the Income Tax Act, 1961, which mandates giving the assessee a reasonable opportunity of being heard before transferring a case. Since this condition was not met, the order was not legally sustainable. Consequently, the petition was allowed, the impugned order was set aside, and the respondent-authorities were directed to pass a fresh order after giving the petitioner a reasonable opportunity of hearing. No observations were made on the merits of the case.

Key Issues

1. Whether the impugned order dated 12.01.2023, passed by the Principal Commissioner of Income Tax-1, Amritsar, transferring the jurisdiction over the petitioner's cases from Amritsar Circle to Ludhiana Circle, is liable to be quashed on the grounds of violation of principles of natural justice, specifically the denial of a reasonable opportunity of hearing to the assessee, as mandated by Section 127 of the Income Tax Act, 1961? Assessee's contentions: - The petitioner was not given an adequate opportunity of hearing before the impugned order was passed. - The notice dated 06.01.2023 (Annexure P-5) provided a short window for filing a reply, and the petitioner's Chartered Accountant was on leave. - The petitioner requested an adjournment to file a detailed representation, which was not considered. - The order was passed mechanically, violating natural justice. Revenue's contentions: - Search and seizure operations were carried out under Section 132 of the Act in the case of Jujhar Group. - The petitioner's key person, Shri Gurdeep Singh, was involved in business activities with the petitioner. - The petitioner's PAN was transferred from Amritsar to Ludhiana Circle-2. - The impugned order was passed after considering the assessee's reply.