ORDER
SHEET WP No.579 of 2015 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction ORIGINAL SIDE SAARTHAK VANIJYA INDIA LTD.& ANR.
Versus THE CHIEF COMMISSIONER OF INCOME TAX, KOLKATA - I, KOLKATA & ORS.BEFORE: The Hon'ble JUSTICE HARISH TANDON Date : 21st May, 2015.
(Vacation Bench) Appearance: Mr.N.K.Poddar Sr.Adv.Mr.Vineet Tibrewal, Adv.Mr.Amit Agarwal, Adv..for the petitioneRs.Mr.Debasish Chowdhuri, Adv..for the respondents.
The Court: This matter is moved in the Vacation Bench citing the urgency.
In this writ petition the assessee/petitioner is challenging the order dated 15th November, 2014 passed by the Commissioner of Income Tax, Kolkata - I, the respondent no.2 herein by which all the cases relating to the petitioner was transferred to New Delhi under Section 127 of the Income Tax Act, 1961.
According to Mr.Poddar learned Senior Advocate for the petitioner the said order is invalid, illegal and suffers from incurable defects inasmuch as the same is passed in gross violation of the principles of natural justice and have been 2 subsequently created and/or brought in existence in order to fill up the lacunae of a subsequent assessment orders passed by the jurisdictional Commissioner at New Delhi.
He vehemently submits that no notice before initiation of the said proceeding was served upon his client and, therefore, no opportunity of hearing was given which offends Section 127 (ii)(a) of the said Act.
He further developed his argument by saying that if an order under Section 127of the said Act is not communicated to the assessee, it renders the said order invalid and placed reliance upon the judgment of the Apex Court in case of Ajantha Industries versus CBDT reported in [1976].102 ITR281 By referring the decision of the Delhi High Court rendered in case of Smt.
Sarita Jain versus Commissioner of Income Tax and ORS.reported in [2003].261 ITR499 Mr.Poddar would submit that the principles laid down by the Supreme Court in case of Ajantha Industries (Supra) is applied and accepted in toto.
He further submits that if the postal articles have returned with the postal remarks ‘not found’, the same cannot be treated as a good service and, therefore, any order passed on the basis of the said notice is liable to fall.
To buttress the aforesaid submission the reliance is placed upon the judgment of the Supreme Court in case of Union of India & Ors Versus Dinanath Shantaram Karekar & ORS.reported in AIR1998Supreme Court 2722.
He further submits that if the postal articles have returned with the remarks ‘not known, it does not raise any presumption and even if the presumption can be raised, the same is rebuttable one which can be successfully proved from the fact that subsequent letters issued by the Commissioner at Kolkata does not contain any averments and/or statements 3 pertaining to the order passed under Section 127 of the said Act and, therefore, it is inconceivable and improbable that the notice issued under the aforesaid provision has returned with the remarks ‘not known’ whereas the other notices have been duly received and served upon the assessee/petitioner.
The learned Advocate for the respondent authorities submits that before passing a final order under Section 127 of the said Act, a notice was sent to the assessee/petitioner through a postal department and returned with the postal remarks ‘not known’.
He further submits that the petitioner was all along aware of the initiation of a proceeding under the said provision and, therefore, the story of non-service of notice is concocted for the purpose of securing the interim order.
He, however, says that the respondent should be afforded an opportunity to place all the materials in this regard and matter may be finally decided after exchange of affidavits.
Before proceeding to address the issues involved in this writ petition for the limited purpose of passing the interim order, this Court must record that Section 127 of the Income Tax Act bestowed power on the authorities mentioned therein to transfer any case from one Assessing Officer to another provided a reasonable opportunity of hearing is given to the assessee.
Therefore, it cannot be said that the authority which passed the order lacks jurisdiction and, the order per se is a nullity.
The attack is made on two fold grounds firstly that there was no opportunity of hearing given to the assessee/petitioner before passing the final order and secondly, the subsequent letters issued on 7th January, 2015 and 20th February, 2015 does not reveal the order of transfer which necessarily implies 4 that the impugned order dated 15th November, 2014 was passed subsequent thereto.
It is no longer res integra that any order which is passed in gross violation of the principles of natural justice cannot with stand on a legal parameteRs.Furthermore, Clause (a) of Sub-section (2) of Section 127 of the said Act further provides a reasonable opportunity of hearing and recording of reasons which cannot be said to be a casual exercise or ideal formalities.
An opportunity of hearing is one of the facets enshrined under the Constitution provided the assessee/petitioner suffers prejudice for non-compliance thereof.
Unless the prejudice is shown to have caused to the person, mere non-compliance of the principles of natural justice, does not invalidate the action of the authorities.
It is no doubt true that the Commissioner assumes jurisdiction under the statute and, therefore, cannot travel beyond it.
The jurisdictional Commissioner at New Delhi is empowered to proceed with the case on the basis of an order passed under Section 127 of the said Act and not otherwise.
Though feebly, Mr.Poddar tried to impress this Court that an assessment order has been passed by the jurisdiction Commissioner at New Delhi without affording an opportunity and without having communicated to the petitioner the impugned order dated 15th November, 2014 but this Court is not impressed by such submission as the order which is passed by an authority, whose situs is, beyond the territorial jurisdiction of this High Court, on the basis of the records having transmitted and/or transferred in pursuance of the impugned order, the writ petition cannot 5 be entertained treating that the miniscule part of the cause of action arose within the territorial jurisdiction of this Court.
The ratio laid down in the case of Ajantha Industries (Supra) relates to the non-recording of the reasons and non-communication of the order which is imperative under sub-Section (1) of Section 127 of the said Act, it would be apt to quote the extracts from the said judgment which runs that: “We are clearly of opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee .
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When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated.” In case of Smt.
Sarita Jain (Supra).the Delhi High Court noticed the judgment rendered in case of Ajantha Industries (Supra) and held that unless a notice containing reasons for the proposed transfer is served and an opportunity of hearing is given, the order ultimately passed should also be communicated, any infraction and/or non-compliance would render the said order invalid.
From the records produced by the respondent, it appears that a notice dated 13.10.2014 was sent to the petitioner at the address recorded in the official register but came back undelivered with the remarks ‘not known’.
It further 6 appears from the postal envelope containing the said notice that a remark is made as ‘addressee moved’.
Mr.Poddar, learned Senior Advocate for the petitioner, submits that the postal remarks ‘not known’ is not a good service and, therefore, no presumption can be raised on due service.
The presumption under Section 27 of the West Bengal General Clauses Act can be raised for due service provided it is correctly addressed, prepaid and dispatched though a postal authorities.
It is no doubt that such presumption is rebuttable one and the addressee is to prove before the Court of law that the postal article in fact did not reach to him and not tender by the postal authorities in due couRs.of business.
Mere denial does not rebut the presumption.
If the stand of the respondent is taken to be true, the responsibility ceases the moment the postal article is despatched by speed post which is correctly addressed and the sufficient stamps required therefor, is paid, the authority losses the control of the said article and it would be presumed that the same has reached to the addressee.
This Court can very well raise such presumption unless the materials produced before this Court speaks otherwise.
If the order of transfer is passed on 15th November, 2014, there was no occasion to send further notice by jurisdictional Commissioner at Kolkata on 7th January, 2015 and 20th February, 2015.
Even if this Court accepts the submission of the respondent authorities that there was no infraction and/or violation of the provisions contained under Section 127 as the notice was dispatched and/or sent to the addressee/ petitioner but the fact remains that the postal articles returned with the postal remarks ‘not known’ and subsequent letters issued on 7 7th January, 2015 and 20th February, 2015 gives an adveRs.indication as there was no reflection of the order of transfer therein.
This Court, therefore, finds that a prima facie case has been made out which must be decided after the exchange of affidavits.
The respondents are directed to file affidavit-in-opposition within a period of six weeks from date; reply, if any, be filed within one week thereafter.
Let this matter appear after seven weeks as “For Orders” in the supplementary list.
There shall be a stay of the operation of the impugned order dated 15th November, 2014 passed by the Commissioner of Income Tax Head Quarter, the respondent no.2 till eight weeks from date or until further order which ever is earlier.
(HARISH TANDON, J.) akb/sp.