GAUTAM SINGH KARNAWAT S/O SHRI JAI SINGH KARNAWAT vs. ASSISTANT COMISSIONER OF INCOME TAX

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CW/2360/2024HC RajasthanRJHC02011169202418 March 2025Author: AVNEESH JHINGAN,MANEESH SHARMA3 pages
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What did the High Court hold?

The High Court held that Section 127 of the Income Tax Act, 1961, empowers the transfer of cases and mandates a procedure, including providing a reasonable opportunity of being heard to the assessee and passing a reasoned order, unless the transfer is within the same city. In this case, the transfer was between different districts (Jaipur to Bikaner), and it was undisputed that no opportunity of hearing was granted to the petitioner. The impugned order was also found to be bereft of reasons. Citing the Supreme Court's decision in Ajantha Industries, the Court found that the principles of natural justice were not complied with. Consequently, the impugned order dated 17.11.2017 and all consequent proceedings were quashed. The department was granted liberty to proceed in accordance with law. The present writ petition was disposed of in the same terms.

What were the facts?

The petitioner, Gautam Singh Karnawat, filed a writ petition challenging an order passed by the Principal Commissioner of Income-tax, Jaipur-2, under Section 127 of the Income Tax Act, 1961. This order transferred the petitioner's assessment case from Jaipur to the ACIT, Central Circle - Bikaner. The petitioner contended that the transfer order violated principles of natural justice and the prescribed procedure under Section 127. The respondents argued that the transfer order had been acted upon, and an assessment order was passed by the ACIT, against which the petitioner had filed an appeal. The High Court noted that there is no provision for appeal or revision against transfer orders under Section 127.

What were the issues?

1. Whether the transfer order passed by the Principal Commissioner of Income-tax under Section 127 of the Income Tax Act, 1961, is liable to be quashed for violating the principles of natural justice and the prescribed procedure. Assessee's Contentions: The assessee argued that the transfer order was passed in violation of principles of natural justice and without following the procedure prescribed under Section 127 of the Act. Reliance was placed on the Supreme Court decision in Ajantha Industries and Ors. vs. Central Board of Direct Taxes, New Delhi and Ors. The assessee also raised objections that the transfer order was not communicated and passed without an opportunity of hearing. Revenue's Contentions: The revenue submitted that the ACIT, Bikaner, had passed the assessment order, and the petitioner had filed an appeal against it, implying the transfer order had been acted upon. The revenue contended that the pending appeal against the assessment order does not preclude the petitioner from assailing the legality of the transfer order in writ jurisdiction.

Which sections of the Income-tax Act were involved?

Section 127

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JP:12240-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 2360/2024 Gautam Singh Karnawat S/o Shri Jai Singh Karnawat, Aged About 60 Years, Resident Of L-825, Ashiana Aangan, Alwar Byepass, Bhiwadi, District Alwar. ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle Alwar Having Its Address At Room No.-102, Ist Floor, New Admin Bsnl Building, Opp. Cr Building, Moti Dungri Circle, Alwar, 301001 2. Income Tax Officer, Ward Bhiwadi, Having Its Address At B-294-295, Green Tower, Riico Chowk, Bhiwadi. 3. Income Tax Officer, Ward 51(5), Delhi Having Its Address At Civic Centre, E-2, Block, New Delhi. ----Respondents For Petitioner(s) : Ms. Apeksha Bapna with Mr. Rohan Chatter for Mr. Siddharth Ranka For Respondent(s) : Mr. Siddharth Bapna with Mr. Saurabh Jain & Mr. Meyhul Mittal HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE MANEESH SHARMA

Order 18/03/2025 AVNEESH JHINGAN, J. (ORAL)

1.

Learned counsel for the parties are at ad idem that the issue involved in the present writ petition, is covered by the decision of this Court dated 04.03.2025 in D.B. Civil Writ Petition No.3432/2018, wherein the following order was passed:- “1.This petition is filed seeking quashing of order dated17.11.2017 passed by the Principal Commissioner of Income-tax, Jaipur-2 under Section 127 of the Income Tax Act, 1961 (for short ‘the Act’) transferring the case of assessment of the assessee from Jaipur to ACIT, Central Circle - Bikaner (hereinafter referred to as ‘ACIT’).

[2025:RJ-JP:12240-DB] (2 of 3) [CW-2360/2024]

2.

The grievance raised in the present petition is that the order passed is in violation of principles of natural justice and without following the procedure prescribed u/s 127 of the Act. Reliance is placed upon the transfer orders passed u/s 127 by way of filing an appeal or revision. The contention of the counsel for the respondents that the appeal is pending against the assessment order passed by the ACIT does not oust the petitioner from assailing legality and validity of the transfer order in writ jurisdiction.

6.

Section 127 of the Act empowers transfer of cases and prescribes procedure to be followed. The authorized officer can transfer the cases after providing reasonable opportunity of being heard to the assessee and by passing a reasoned order. Exception for not granting opportunity of hearing is in sub-section (3) i.e. in cases where transfer is from one assessing authority to another situated in the same city.

7.

In the present case, the case of the petitioner was transferred from Jaipur to Bikaner, different districts. It is undisputed that no opportunity of hearing was granted to the petitioner before passing the impugned order.

8.

From perusal of the impugned order, it is forthcoming that it is bereft of reasons. The principles of natural justice have been included in Section 127 of the Act yet were not complied with.

9.

The Supreme Court in case of Ajantha Industries (supra) set aside the transfer orders in case where reasons for transfer were available on record but were not communicated to the assessee. It is not the case of

[2025:RJ-JP:12240-DB] (3 of 3) [CW-2360/2024] the department that reasons were ever recorded. Be that as it may, no opportunity of hearing was granted to the petitioner. The impugned order dated 17.11.2017 qua petitioner and proceedings consequent thereto are quashed.

10.

The writ petition is allowed.

11.

The department shall be at liberty to proceed in accordance with law.”

2.

The present petition is disposed of in the same terms. (MANEESH SHARMA),J (AVNEESH JHINGAN),J SAHIL SONI /182

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