WEALTH-TAX OFFICER v. DARSHAN KUMAR OSWAL
[Citation -1986-LL-0131-8]

Citation 1986-LL-0131-8
Appellant Name WEALTH-TAX OFFICER
Respondent Name DARSHAN KUMAR OSWAL
Court ITAT-Chandigarh
Relevant Act Wealth-tax
Date of Order 31/01/1986
Assessment Year 1975-76, 1976-77
Judgment View Judgment
Keyword Tags principles of natural justice • opportunity of being heard • administrative order • specific provision • transfer of case
Bot Summary: Patiala, made under s. 127(1) is pari-materia with s. 8B of the WT Act and also had nothing to say about the transfer vide order dt. Once we find that s. 8B is exactly like s. 127(1) and we have the said authority in case of Ajantha Industrial vs. CBDT 1976 CTR 79: 102 ITR 281, we find that the order under s. 127(1) has been held by their Lordships of Supreme Court to be mandatory, direction under law and non- communication thereof to the assessee is not saved by showing that reasons were there. In the same report, it has been observed by their Lordships that when law requires reasons to be recorded in a particular order effecting prejudicially the interest 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 account of omission to communicate the reasons is not expiated. Finally, their Lordships, observed in the said case We are clearly of opinion that non-communication of the reasons in the order passed under s. 127(1) is a serious infirmity in the order for which the same is invalid. In the instant case, it is only absence of reasons but no order was passed under s. 127(1) of the IT Act or s. 8B of the WT Act. Members of Delhi Bench in the said case held as under: It is well settled that s. 127(1) affects the jurisdiction of the ITO and an order thereunder by itself cannot affect the jurisdiction of the IAC in respect of proceedings pending before him and that the jurisdiction of an IAC can only be affected by an order under s. 123(1). As observed all the orders were placed before us in assessee s compilation and there is no dispute about the fact that orders on 4th July, 1979 and 15th Dec., 1979 were respectively passed under s., 125A(1) and s. 124(1) and required orders having not been passed under s. 127(1), the IAC(Asst.


In both these appeals preferred by Revenue under WT Act, common dispute raised pertains to cancellation of wealth tax assessments by CIT(A) on ground that assessing authority lacked jurisdiction and assessments framed were without legal authority. In order to appreciate issue under dispute for both years, it will be of immense help in case facts are briefly narrated and relevant data are produced which were undisputedly accepted by both parties. Assessee s jurisdiction for wealth tax purposes was with ITO, Distt. I(IV). Ludhiana earlier, i.e. till 21st Dec., 1978, when order was passed under s. 127(1) by CIT transferring jurisdiction to IAC (Asst.), Patiala, which is not disputed by assessee factually or on merit. Subsequently on 4th July, 1979, another order was passed by CIT transferring cases above Rs. 5 lakhs and jurisdiction was assigned to ITO, Special investigation Circle, Patiala, which too on merit or fact is not disputed by two parties before us. Subsequently, on 4th July, 1979, another order was passed by CIT under s. 125A(1) by which jurisdiction was transferred to IAC Patiala. Last of all, it was on 15th Dec., 1979 that another order was passed under s. 124(1) wherein jurisdiction was transferred from Patiala authorities to Ludhiana authorities. This was also admitted by both parties that s. 8B under WT Act is in peri materia with s. 127(1) of IT Act, 1961. When dispute regarding jurisdiction was raised before CIT(A), assessee contended that opportunity of being heard was denied and order which was warranted under s. 127(1) having not been passed in respect of transfer of cases from Patiala to Ludhiana, assessments framed by IAC of WT (Asst.), Ludhiana, were without jurisdiction. He also submitted that s. 8B of WT Act being just like s. 127(1) of IT Act, no order under said section was passed for wealth tax purposes also. CIT(A) accepted contention of assessee and annulled two assessments for asst. yrs. 1975-76 and 1976-77. ld. Departmental Representative assailing said order relied on Kapurchand Shrimal vs. CIT (1981) 24 CTR (SC) 345: (1981) 131 ITR 451 (SC), K . P. Varghese vs. ITO & Anr. (1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SC) and AIR 1970 SC 150 and (1984) 2 SSC 50-59 and submitted that cancellation of two assessments orders under WT Act made by CIT(A) is against law. ld. counsel for assessee, while mainly relying on order of CIT(A), submitted that he did not dispute two transfers i.e. from ITO, Distt. I(IV), Ludhiana, to IAC(Asst.) Patiala, made under s. 127(1) is pari-materia with s. 8B of WT Act and also had nothing to say about transfer vide order dt. 4th July, 1979 under s. 124(1) or earlier transfer. He, however, submitted that there being no controversy about fact that two assessments are framed by IAC (Asst.), Ludhiana, to whom at no stage these cases were transferred under s. 127(1), as order passed on 15th Dec., 1979 was under s. 124(1), and therefore, orders framed were without jurisdiction and were rightly cancelled. He submitted as per order of 21st Dec., 1979, jurisdiction was exclusively with IAC, Patiala and he had jurisdiction for same. He submitted that proviso 4 on page 7 talks only of officers and not IACs. Since none of orders were passed under s. 127 i.e. s. 8B dt. 4th July, 1979 or 15th Dec., 1979, jurisdiction continued to stay with IAC, Patiala. In support of this contention beside relying on order of CIT(A), he relied on 102 ITR 281 and said that no opportunity was granted to assessee, transfer of jurisdiction was not valid. In support of his contention he also relied on Shelley Products vs. ITO (1980) 10 ITD 136 (Del), Division Bench decision of Tribunal. After taking into consideration with rival submissions, going through relevant sections of IT Act being ss. 124A(1), 125A(1) and 127(1) and also ss. 8AA and 8B of WT Act and uncontroverted fact that order passed by CIT dt. 4th July, 1979 and 15th Dec., 1979 were respectively under s. 125A(1) and 124(1) and no order was specifically passed for transfer of case from authorities at Patiala to authorities at Ludhiana, as warranted under Act, no opportunity was granted to assessee and, therefore, jurisdiction was never passed on to IAC(Asst.) who framed two assessments and assessments framed by him were rightly annulled. reliance of learned Departmental Representative on Supreme Court decision in case of Kapurchand Shrimal vs. CIT (supra) is misplaced. On strength of this decision ld. Departmental Representative attempted to persuade as that we had authority and it was our duty to correct all errors in proceedings but when we carefully go through said decision, we find on p. 460 of report it is observed by their Lordships as under: "It is well known that appellate authority has jurisdiction as well as duty to correct all errors in proceedings under appeal and to issue, if necessary, appropriate directions to authority against whose decisions appeal is preferred to dispose of whole or any part of matter afresh unless forbidden from doing so by statute." In instant case it is statute which warrants transfer under s. 8B of WT Act and s. 127(1) of IT Act and makes grant of opportunity, to assessee before transfer of jurisdiction, obligatory for Revenue which having not been done, this case instead supports contention that of assessee. On Supreme Court decision in case of K. P. Varghese vs. ITO & Anr. (supra) again reliance of ld. Departmental Representative is misplaced because he wanted to persuade us that it is statutory provision and must be so construed, if possible, that absurdity and mischief may be avoided and in order to have intentions of legislature fulfilled, even violence be done by statute. relevant observation from said decision on which ld. Departmental Representative mainly relied reads as under: "A statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. Where plain literal interpretation of statutory provision produces manifestly absurd and unjust which could never have been intended by legislature, Court may modify language used by legislature or even do some violence to it, so as to achieve obvious intention of legislature and produce rational construction." above observation does not support ld. Departmental Representative because another Supreme Court decision relied upon by ld. counsel for assessee supports contention that of assessee on all fours. Once we find that s. 8B is exactly like s. 127(1) and we have said authority in case of Ajantha Industrial vs. CBDT 1976 CTR (SC) 79: (1976) 102 ITR 281 (SC), we find that order under s. 127(1) has been held by their Lordships of Supreme Court to be mandatory, direction under law and non- communication thereof to assessee is not saved by showing that reasons were there. In said case, their Lordships even extracted on P. 283 s. 127(1) with Explanation and provisions given thereunder and after same, held on p. 285 of report as under: "We are clearly of opinion that requirement of recording reasons under s. 127(1) is mandatory direction under law and non-communication thereof i s not saved by showing that reasons exist in file although not communicated to assessee." Then further, in same report, it has been observed by their Lordships that "when law requires reasons to be recorded in particular order effecting prejudicially interest of any person, who can challenge order in Court, it ceases to be mere administrative order and vice of violation of principles of natural justice account of omission to communicate reasons is not expiated." Finally, their Lordships, observed in said case "We are, therefore, clearly of opinion that non-communication of reasons in order passed under s. 127(1) is serious infirmity in order for which same is invalid." In instant case, it is only absence of reasons but no order was passed under s. 127(1) of IT Act or s. 8B of WT Act. Therefore, authority i.e. IAC (Assessment) lacked inherent jurisdiction. Absolutely identical question had been before Tribunal in case of Shelley Products vs. ITO (1984) 10 ITD 136 (Del) ld. members of Delhi Bench in said case held as under: "It is well settled that s. 127(1) affects jurisdiction of ITO and order thereunder by itself cannot affect jurisdiction of IAC in respect of proceedings pending before him and that jurisdiction of IAC can only be affected by order under s. 123(1)." This order supports objections of ld. counsel for assessee in respect of transfer made by CIT on 4th July, 1979 under s. 125A(1) from ITO, Special Investigation Circle, Patiala to IAC(Asst.), Patiala. As observed all orders were placed before us in assessee s compilation and there is no dispute about fact that orders on 4th July, 1979 and 15th Dec., 1979 were respectively passed under s., 125A(1) and s. 124(1) and required orders having not been passed under s. 127(1), IAC(Asst.) who framed assessments of wealth tax lacked jurisdiction. reliance of ld. Departmental Representative on yet another Supreme Court decision reported in AIR 1970 Supreme Court 150 Vol. 57, is also misplaced because of distinction on facts and because order of CIT(A) is supported by Supreme Court decision directly reported in Ajantha Industriales & Ors. vs. CBDT 1976 CTR (SC) 79: (1976) 102 ITR 281 (SC) (supra) with which we have dealt with above. Similarly t h e reliance of ld. Departmental Representative on Acharya Jagdishwaranand Avadhuta, etc. vs. CIT AIR 1984 SC 51 is also misplaced because of specific provision on statute regarding transfer from ITO to IAC and from one place to another and that having not been done, in light of above discussion, orders of CIT(A) stand confirmed. In result, both appeals of Revenue are dismissed. *** WEALTH-TAX OFFICER v. DARSHAN KUMAR OSWAL
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