Delhi HC quashes Order u/s 127 Income Tax Act as Objection Filed was not Considered [Read Order]

A Division Bench of the Delhi High Court quashed an order issued under Section 127 of the Income Tax Act, 1961 as the objection filed by the petitioner, Samson Healthcare Pvt Ltd, was not considered.

The petitioner sought to assail the order passed by the respondent under Section 127 of the Income Tax Act, 1961. Via the impugned order the petitioner’s cases have been transferred from respondent no.2, i.e., Deputy Commissioner of Income Tax (Dy. CIT), Central Circle-22(2) to respondent no.4, i.e., Dy. CIT, Central Circle-2, Faridabad.

The record also showed that the petitioner was issued a notice before the impugned order had been passed. The notice was issued and the record also showed that the petitioner has filed its objections/reply to the said notice. It also appeared that while passing the impugned order, the objections/reply filed by the petitioner were not taken into account.

Section 127(1) of the Income Tax Act states that the Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from any Income-tax Officer or Income-tax Officers subordinate to him to any other Income-tax Officer or Income-tax Officers also subordinate to him and the Board may similarly transfer any case from any Income-tax Officer or Income-tax Officers to any other Income-tax Officer or Income tax Officers.

Section 127(2) of the Income Tax Act notes that the transfer of a case under sub-section (1) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Income-tax Officer or Income-tax Officers from whom the case is transferred.

The Court of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “Therefore, according to us, the best way forward would be to set aside the impugned order dated 25.07.2023, with liberty to the Assessing Officer (AO) to pass a fresh order, albeit, as per law. The AO, before passing a fresh order, will accord a personal hearing to the authorized representative of the petitioner. For this purpose, the AO will issue a notice indicating the date and time of the hearing to the petitioner.”

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