Lingaraja Rath, J.:— The petitioner, who was hitherto being assessed for the purpose of income-tax by the Income-tax Officer, Ward-3, Kakinada, and had been allotted GIR No. L-754, has come before us complaining to have received an order dated November 26, 1996, transferring her file from the jurisdiction of the third respondent—Income-tax Officer, Kakinada—to the second respondent—Assistant Commissioner of Income-tax, Circle I, Rajahmundry, in purported exercise of the power under section 127(2) of the Income-tax Act, 1961, for short “the Act”.
2. Mr. S. Ravi, learned counsel for the petitioner, has raised the question that section 127(1) and (2) of the Act contemplate issue of a notice to the assessee before an Order transferring the file is passed, but that no notice has been issued to the petitioner before effecting the transfer.
3. A counter-affidavit has been filed disclosing the stand that the petitioner's father's premises was raided which yielded some materials connecting also the petitioner to the suppressed income detected for which proceedings under Chapter XIV-B are initiated against her. Under the provisions of section 158BD, the papers relating to the search are to be handed over to the Income-tax Officer, Kakinada, who is the Assessing Officer so far as the petitioner is concerned, but that since under section 158BG the assessment of the block period in pursuance of the search is to be done only by an officer of the rank of the Assistant Commissioner, the file of the petitioner has also been transferred to the concerned Assistant Commissioner, i.e, the second respondent herein. It has also been contended that the reference to section 127(2) in the impugned order was erroneously made and that that provision has no application since Chapter XIV-B is a specific procedure to be adopted to such cases.
4. Section 127(2) provides that when transfer of the file of an assessee from one Assessing Officer to the other is contemplated, the step to be taken is after giving the assessee reasonable opportunity to be heard and after recording the reasons for doing so, pass the order. Chapter XIV-B lays down special procedure for assessment of search cases, the Assistant Commissioner or a person above him is the designated officer to act as an Assessing Officer instead of the normal procedure of the assessment being done by the Income-tax Officer. While under section 158BD the papers obtained during the search are to be handed over to the Assessing Officer, who is necessarily the Income-tax Officer for the person about whom the satisfaction is reached, that though he is another person, other than the person whose premises has been raided, yet has undisclosed income, there is no provision as to how the records from that Assessing Officer shall stand transferred to the Assistant Commissioner or any other officer higher to him, who is to carry on the assessment. It is to be noted that under section 158BG, it is not the Assistant Commissioner who is necessarily the Assessing Officer, but he is the officer of the lowest rank who can become the Assessing Officer under Chapter XIV-B. Hence it can be imagined that an order has to be passed as to who shall be the Assessing Officer under section 158BG in the case of a search. Such an order can be passed only by a higher officer who may be either the Commissioner or the Chief Commissioner, as the case may be. Hence, unless such an order has been passed, the Assessing Officer to whom the records have been handed over under section 158BD cannot ipso facto hand over the records to the Assistant Commissioner, until he has been chosen to act as the Assessing Officer under section 158BG. For doing so, a procedure for transfer of the records and the passing of orders to that effect is necessary for the records to be transferred to the officer selected under section 158BG. It is in this context that the provisions of section 127 have to be resorted to. It is for such reason, we are unable to agree with learned standing counsel that Chapter XIV-B is a self-contained special provision relating to search procedures and assessments to which section 127 has no application. The submission would have been correct if section 127 and Chapter XIV-B were inconsistent with each other and it has to be held because of such reason that a specific provision like Chapter XIV-B would displace a general provision like section 127. But as we see it, both provisions are supplemental to each other and that the provisions of section 127 fill in the gap between the stage of sections 158BD and 158BG. The impugned order passed under section 127 hence cannot be faulted by saying that the section was not applicable. It is also not correct, as has been contended, that giving a notice under section 127 in the event of a proceeding under Chapter XIV-B would be a mere formality without any substance as records are to be compulsorily handed over to the officer under section 158BG. While in most of the cases the submission may be correct, yet it is conceivable that in some cases, reasonable opportunity being given as contemplated under section 127(1) or (2) of the Act, the person concerned may be able to convince the authority giving the notice that he is actually unrelated or unconnected to the proceeding started under Chapter XIV-B. If such conclusion is reached, the authority at that stage may disassociate the person concerned from the specific proceeding in Chapter XIV-B and may not transfer the papers to the other officer. As has been fairly pointed out by learned standing counsel himself, the provisions of section 127(1) apply when the transfer is contemplated not only between the officers of the subordinate rank but also officers either with or without concurrent jurisdiction. Hence, even when the records are to be transmitted to the officer not higher in rank than the officer to whom the papers are handed over in the first instance under section 158BD, the provisions of section 127 are to be complied with to give notice.
5. In this view of the exposition of the relevant scope of section 127 and sections 158BD and 158BG and the admitted position that the petitioner was not granted any opportunity before the transfer was effected, we would accept the submission of learned counsel for the petitioner and direct the first respondent—Commissioner of Income-tax—to hear the petitioner in the matter of transfer of her file from respondent No. 3 to respondent No. 2 and pass appropriate orders.
6. To facilitate the process, we direct, the petitioner shall make a representation to the first respondent within two weeks from today and that on such representation being made, the first respondent shall, after giving opportunity to the petitioner to be heard, dispose of the matter within four weeks thereafter by reasoned order communicated to the petitioner.
7. The writ petition is disposed of accordingly. No costs.