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S.A Ahluwalia v. State Of Nagaland And Others.
Factual and Procedural Background
The petitioner, a retired IAS officer of the Nagaland cadre, challenged the validity of two orders/letters dated March 15, 1990, and September 20, 1990, concerning the transfer of jurisdiction for assessment of his salary income from Dimapur to New Delhi. Throughout his service, the petitioner was primarily posted in Nagaland except for a deputation period in Delhi from 1978 to 1984. The petitioner filed income tax returns at Dimapur from 1971 onwards, except during the deputation period when returns were filed in Delhi. After returning to Nagaland post-1984, the petitioner resumed filing returns in Dimapur. The Income-tax Officer at Dimapur requested transfer of assessment records to Delhi on the basis that the petitioner was permanently posted there, which the petitioner contested, clarifying he was on deputation and expected to return to Nagaland. Subsequently, a statutory notice under section 127 of the Income-tax Act was issued for transfer of jurisdiction from Dimapur to Delhi for administrative convenience, which the petitioner opposed, arguing lack of proper procedure, absence of valid reasons, and inconvenience caused by the transfer.
The impugned orders/letters transferred the petitioner’s income-tax assessment records and returns to the jurisdiction of the Assistant Commissioner of Income-tax (Investigation), Delhi. The petitioner protested the transfer, particularly noting the absence of any opportunity of hearing and lack of compliance with statutory provisions. Notices were issued to the petitioner by the Delhi authority for assessment years during which the petitioner was serving in Nagaland, which he challenged as lacking jurisdiction. The respondents contended that the transfer was valid, citing administrative convenience, the petitioner’s permanent address in Delhi, and instructions from the Central Board of Direct Taxes. The petitioner’s challenge included reliance on prior appellate decisions setting aside assessments made by the Delhi authority. The court heard submissions and examined the documents before ruling on the validity of the transfer orders.
Legal Issues Presented
- Whether the transfer of jurisdiction for income-tax assessment from Dimapur to Delhi was valid under the provisions of the Income-tax Act, specifically section 127.
- Whether the Assistant Commissioner of Income-tax (Investigation), Delhi, had jurisdiction to deal with the petitioner’s income-tax returns for the periods in question.
- Whether the impugned orders/letters were issued without due authority and without providing the petitioner an opportunity of hearing.
- Whether the procedure prescribed under the Income-tax Act for transfer of jurisdiction was complied with.
Arguments of the Parties
Petitioner’s Arguments
- The transfer of jurisdiction was invalid as no agreement was reached between the Commissioners of Income-tax at Shillong and Delhi as required by section 127(2) of the Income-tax Act.
- The petitioner was not permanently posted in Delhi and had no source of income there during the relevant periods; hence, Dimapur had jurisdiction.
- No reasons were assigned for the transfer, and no opportunity of hearing was provided before the transfer was effected.
- The Assistant Commissioner of Income-tax (Investigation), Delhi, lacked jurisdiction over the petitioner’s salary income assessments for the periods in question.
- The Income-tax Officer at Dimapur was not subordinate to the Assistant Commissioner in Delhi, and therefore, the direction to transfer jurisdiction was without authority.
- The petitioner had complied with filing returns properly and had successfully challenged Delhi’s jurisdiction in prior appeals.
- The Central Board of Direct Taxes Instruction No. 1379 relied upon by respondents had been held bad by appellate authorities.
Respondents’ Arguments
- The transfer was for administrative convenience and therefore valid.
- The petitioner no longer resided in Nagaland, so inconvenience was not a material consideration.
- The petitioner had shown Delhi as his permanent address and had assets there, justifying Delhi’s jurisdiction.
- Since returns were filed in Delhi from 1978 to 1984, Delhi’s jurisdiction continued even after petitioner’s departure.
- The transfer of old assessment records to Delhi was in accordance with the Central Board of Direct Taxes Instruction No. 1379 dated December 19, 1986.
- Petitioner was not entitled to be heard before the transfer order was issued.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| 148 ITR 95 | Venue and jurisdiction in income-tax assessment matters. | Referenced by respondents’ counsel in support of the proposition that the petitioner was not entitled to be heard before transfer of jurisdiction. |
Court's Reasoning and Analysis
The court examined the factual matrix and the statutory provisions governing the transfer of jurisdiction under the Income-tax Act. It noted the petitioner’s consistent filing of returns at Dimapur except during deputation in Delhi and the absence of any valid order transferring jurisdiction from Dimapur to Delhi by a competent authority. The court found that the Assistant Commissioner of Income-tax (Investigation), Delhi, had no authority to direct the Income-tax Officer at Dimapur to transfer jurisdiction or assessment records. The court emphasized that the statutory procedure under section 127, requiring agreement between Commissioners and opportunity of hearing, was not complied with. The petitioner’s contention that the transfer was effected without reasons and without due process was upheld. The court also observed that the impugned orders related to transfer of records and not pending cases and that the petitioner was serving in Nagaland during the relevant assessment years for which Delhi sought jurisdiction. The submissions of the respondents regarding administrative convenience and petitioner’s permanent address in Delhi were considered insufficient to validate the transfer in the absence of statutory compliance.
Holding and Implications
The court allowed the petition and quashed the impugned orders/letters dated March 15, 1990, and September 20, 1990.
The direct effect of this decision is that the jurisdiction for assessment of the petitioner’s salary income remains with Dimapur, and the transfer to Delhi is invalidated. The court did not impose any costs and did not set any new precedent beyond the facts of this case. The ruling reinforces the necessity of strict compliance with statutory procedures for transfer of jurisdiction under the Income-tax Act and affirms the requirement of due process before such transfers are effected.
W.A Shishak, J.:— In this petition, under article 226 of the Constitution of India, the petitioner challenges the validity of order/letter dated March 15, 1990, and also another order/letter dated September 20, 1990 (annexures-A and B). The matter relates to transfer of jurisdiction as regards assessment of the salary income of the petitioner from Dimapur to New Delhi.
2. The petitioner while in service, belonged to the IAS of the Nagaland cadre. The petitioner has since retired. Throughout his service, he was posted in Nagaland except for a short period of five years beginning from the middle of 1978 till 1984 during which period the petitioner was posted in Delhi as Director, Ministry of Home Affairs.
3. Admittedly, the petitioner filed his returns at Dimapur from 1971 onwards and as such assessment was made at Dimapur. As stated above, during the period from 1978 to 1984, since the petitioner was serving in Delhi on deputation and since the petitioner had his residence there in Delhi where his income also accrued, returns were filed in Delhi during the aforesaid period from 1978 to 1984.
4. Thereafter, the income-tax assessment for the year 1984-85 was made at Dimapur, vide annexure-J dated March 31, 1987. Return of income-tax was furnished by the petitioner on August 8, 1985, as is apparent from this document. The Income-tax Officer, A-Ward, Dimapur, wrote a letter dated February 5, 1982, to the petitioner in which it was mentioned “as you are now permanently posted in New Delhi, you are requested to kindly let me know the complete address of the Income-tax Officer under whose jurisdiction assessable now at New Delhi and further requested to reply to the Commissioner of Income-tax, North Eastern Region, P.B No. 20, Shillong, Pin-793001, for transferring the assessment records from this office to the concerned Income-tax Officer in Delhi”. The petitioner replied to the above letter on November 27, 1982, pointing out that he was not permanently posted to Delhi and, therefore, this fact should not be presumed and he stated further that in fact he was posted there in Delhi on deputation for a period of five years with effect from July, 1978, and that after completion of the deputation period, he was likely to go back to his parent cadre in Nagaland for further posting. Therefore, it was suggested that it would not be necessary to transfer all the assessment records to the Income-tax Officer at Delhi. On the other hand, the assessment records being maintained in New Delhi would have to be transferred to the office at Dimapur after he resumed his duties in Nagaland. By letter dated July 22, 1985, the Income-tax Officer, Dimapur, informed the petitioner that as desired by the petitioner in his letter dated February 27, 1982, the assessment record had not been sent to the Income-tax Officer, Delhi.
5. The Commissioner of Income-tax, North Eastern Region, Shillong, sent a statutory notice dated December 23, 1988, under section 127 of the Income-tax Act for transfer of jurisdiction of the petitioner from the Income-tax Officer, Dimapur, to the Assistant Commissioner of Income-tax (Investigation) Circle-8(1), New Delhi, for administrative convenience. The petitioner was directed to appear in Shillong on January 16, 1989, e, ither in person or through a representative duly authorised in writing in this behalf. The petitioner replied to the aforesaid notice by his letter dated January 5, 1989. A strong objection was taken to the proposed transfer of jurisdiction. It was contended by the petitioner that in terms of section 127(2) of the Act, the jurisdiction can be transferred only if the Commissioner of Income-tax at Shillong and the concerned Commissioner at Delhi reached an agreement on the question that such transfer of jurisdiction was called for in the facts of the case. In view of this it was contended by the petitioner that even the Commissioner at Delhi should give the petitioner an opportunity of being heard before any decision for transfer of jurisdiction was taken. It is contended in this letter that after the receipt of this letter by the Commissioner of Income-tax at Shillong, no further information has been received by the petitioner. The contention of the petitioner is that since no valid reasons were brought out for the proposal to transfer jurisdiction, it is wholly insufficient to transfer jurisdiction, merely on administrative convenience. One; of the objections taken was that since the petitioner was not residing at the relevant time nor was he having any source of income in Delhi the proposal for transfer of jurisdiction was uncalled for. It was also stated that since the petitioner was serving in Nagaland, great inconvenience would be caused to him in the event of transfer of jurisdiction from Dimapur to New Delhi.
6. Now, coming to the order/letter dated March 15, 1990, impugned in this petition, apparently the income-tax assessment records pertaining to the petitioner were sent to the jurisdiction of the Assistant Commissioner of Income-tax (Investigation) by the Income-tax Officer, Dimapur “as directed” by the Assistant Commissioner of Income-tax (Investigation), Delhi. Apparently no mention of assessment year is made in this order/letter. The other order/letter dated September 20, 1990, impugned in this petition relates to the transfer of return of income of the petitioner for the assessment year 1990-91. It is indicated in this order that the income-tax return in respect of the petitioner for the assessment year 1990-91 was filed on July 23, 1990. It was further stated “the jurisdiction of the case lies under your circle”. By letter dated October 9, 1990, the petitioner protested to the Income-tax Officer questioning as to the relevant section of law under which jurisdiction could be transferred from Dimapur to the Assistant Commissioner of Income-tax (Investigation), Delhi. It is stated that the petitioner did not receive any further reply from the Income-tax Officer, Dimapur.
7. Annexures W-1, W-2 and W-3 are notices addressed to the petitioner by the Assistant Commissioner of Income-tax (Investigation), dated December 27, 1990, in respect of the assessment years 1975-76, 1976-77 and 1977-78, requiring attendance of the petitioner in the office of the Assistant Commissioner of Income-tax (Investigation) on January 25, 1991.
8. Upon receipt of the aforesaid notices, the petitioner wrote to the Assistant Commissioner of Income-tax reiterating all the points he had raised while replying to the Commissioner of Income-tax, Shillong, and contested the validity of the jurisdiction of Delhi. It is contended in this letter that since he had not heard anything from the Commissioner of Income-tax, Shillong, naturally the petitioner was under the presumption that his assessments were being made at Dimapur. As stated above, the notices received by the petitioner were in respect of the assessment years 1975-76, 1976-77 and 1977-78 during which years the petitioner was serving in Nagaland. The fact that during the aforesaid period the petitioner was serving in Nagaland is not disputed at the Bar.
9. Learned counsel for the petitioner submits that in terms of section 124(b) the Assistant Commissioner of Income-tax (Investigation), Delhi, has no jurisdiction to deal with the income-tax return of the petitioner for the period in question. It is submitted that the Commissioner of Income-tax, Shillong, and the Commissioner of Income-tax, Delhi, exercise jurisdictions for different areas. It is also contended that the petitioner had not defaulted in any manner in filing his returns. Since the period in question clearly indicates that the petitioner was residing in Nagaland as he was serving in Nagaland, in terms of section 120 of the Income-tax Act only Dimapur has jurisdiction in respect of the petitioner for the period in question.
10. As stated above the impugned orders/letters dated March 15, 1990, and September 20, 1990, were passed/issued under the direction of respondent No. 5. It is contended that respondent No. 5 lacks jurisdiction to give any direction or to deal with the assessment of the petitioner in the manner sought to be done in the present case. It is further submitted that the impugned orders/letters are liable to be quashed on the grounds that no opportunity of hearing was given nor was any reason assigned for transferring the jurisdiction from Dimapur to Delhi. It is also submitted that the Income-tax Officer, respondent No. 4, is not a subordinate officer to the Assistant Commissioner of Income-tax (Investigation), Delhi, and at the same time the provisions of section 127 regarding power to transfer cases have not been complied with in the present case.
11. As stated above impugned order/letter dated September 20, 1990, is in respect of the assessment year 1990-91. During this period, admittedly, the petitioner was serving in Nagaland as Chief Secretary. In fact, the petitioner was in Delhi only for a period of five years, i.e, from 1978 to 1984. Thereafter, he returned to Nagaland. At the same time, it is clear that in the present case we find that it is a matter of transfer of record and not transfer of case as such because no case was pending at Dimapur at the relevant time for the assessment year 1990-91.
12. Mr. B.N Saikia, learned counsel for the respondents, submits that he stands by the affidavit filed on behalf of the respondents. He submits that this court should examine only the very limited question as to whether transfer is valid or whether transfer is detrimental to the petitioner who was in Nagaland at the relevant time. According to Mr. Saikia, since the petitioner is no longer in Nagaland no inconvenience will be caused to him if the matter is taken up in Delhi. According to him, in such a situation, the question of inconvenience raised by the petitioner will be only an academic exercise. At this stage, it may be stated that the question of inconvenience was mentioned by the petitioner while replying to a notice under section 127 received from the Commissioner of Income-tax, Shillong. It appears regarding the impugned orders/letters the question of convenience or inconvenience of the petitioner is not at issue. Mr. Saikia also submits that the petitioner has all along shown Delhi as his permanent address. At the same time, it is contended that the petitioner has his assets in Delhi and that the CBI has made some investigation into his properties. It may be stated that the impugned letters/orders relate only to the assessment of the salary income of the petitioner. It is nowhere indicated that assessments already made in Dimapur are required to be opened in connection with the assets of the petitioner in Delhi. Another submission made by Mr. Saikia is that since the petitioner had submitted his returns in Delhi from 1978 to 1984, the jurisdiction of Delhi continued even after the departure of the petitioner from Delhi. As against this, the submission of learned counsel for the petitioner is that the petitioner on his return to Nagaland filed his returns in Nagaland from 1985 onwards. The petitioner challenged the jurisdiction of Delhi in respect of the assessment of his salary income for the assessment years 1985-86, 1986-87 and 1987-88 before the Commissioner of Income-tax (Appeals) in Delhi, vide Appeals Nos. 10, 11, 12 of 1990-91 and the case was decided in favour of the petitioner. The assessment of the assessment years aforesaid was set aside.
13. Another contention made on behalf of the respondents is that the old assessment records of the assessee were to be transferred to the Income-tax Officer at Delhi as per the Central Board of Direct Taxes Instruction No. 1379, F. No. 385/66 of 1986—11(3) dated December 19, 1986. As against this submission also it is stated on behalf of the petitioner that the instruction aforesaid has already been held to be bad by the appellate authority in the aforesaid appeals filed by the petitioner before the Commissioner of Income-tax.
14. Relying on 148 ITR 95 (sic) as regards venue and jurisdiction, Mr. N.N Saikia further submits that the petitioner cannot claim to be heard before any order for transfer of jurisdiction is issued. Once again it may be stated that although the petitioner had given a detailed reply to the Commissioner of Income-tax, Shillong, in regard to the notice under section 127 of the Act, no final order was ever communicated to the petitioner. At the same time, as stated earlier, action in the impugned letters/orders dated March 15, 1990, and September 20, 1990, appeared to have been taken under the direction of the Assistant Commissioner of Income-tax (Investigation) and such actions are questioned in this petition.
15. After hearing learned counsel for the parties and on a careful examination of the relevant documents placed before me and relied upon by the parties, I am of the view that the orders/letters dated March 15, 1990, and September 20, 1990, cannot be sustained inasmuch as there is no order of transfer of jurisdiction from Dimapur to Delhi by a competent authority. I also hold that respondent No. 5 has no authority to give direction to respondent No. 4 regarding transfer of jurisdiction and in calling for the records of the petitioner.
16. In the light of the facts and circumstances that I have narrated above and findings thereon, this petition is allowed. The impugned orders/letters dated March 15, 1990, and September 20, 1990, issued by respondent No. 4, vide annexures-A and B are hereby quashed and the rule is made absolute.
17. I pass no order as to costs.
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