Case Law Details
Shreeji Foods Private Limited Vs Union of India (Telangana High Court)
The Telangana High Court disposed of two writ petitions through a common order, as both involved the same issue concerning the transfer of income tax assessment proceedings from Hyderabad to Delhi under Section 127 of the Income Tax Act, 1961. The petitions challenged the order dated 27.01.2025 transferring the cases of a company and its directors from Hyderabad to the Deputy Commissioner of Income Tax, Central Circle-20, New Delhi.
The petitioners assailed the transfer order primarily on three grounds. First, they alleged denial of a fair opportunity of hearing as contemplated under Section 127 of the Act. Second, they contended that the transfer process was procedurally defective because the proposal for transfer originated from an officer of the rank of Chief Commissioner while the acceptance came from an officer of the rank of Principal Commissioner, allegedly violating Section 127(2)(a). Third, they argued that sufficient reasons for the transfer had not been disclosed to them.
The Revenue defended the transfer order by asserting that it strictly complied with Section 127 and satisfied all statutory requirements. It was further submitted that the transfer order had already been acted upon, proceedings had commenced in Delhi, and for one assessment year an assessment order had been passed on 27.03.2025. The Revenue argued that interference at such a stage would not be appropriate.
The High Court noted that the transfer order had been issued on 27.01.2025 and had already been implemented. The Court observed that the petitioners had not promptly challenged the transfer order despite being aggrieved by it. Although they had initially submitted objections to the proposed transfer, they did not pursue the matter further and allowed the assessment proceedings to continue in Delhi. The Court also took note of the fact that one assessment order had already been passed and challenged before the Commissioner of Income Tax (Appeals), where the appeal remained pending.
On the issue of hearing, the Court held that Section 127(1) requires that an assessee be given a reasonable opportunity of hearing but does not mandate a personal hearing. The provision itself indicates that such opportunity is to be granted wherever possible. The Court found that notice regarding the proposed transfer had been issued on 22.03.2024, that it had been served upon the petitioners, and that the petitioners had submitted their objections. Since these facts were undisputed, the Court concluded that the requirement of reasonable opportunity had been satisfied and rejected the contention that the absence of a personal hearing invalidated the transfer order.
Regarding the objection based on the ranks of the officers involved, the Court examined Section 127(2)(a). It held that the provision does not require the officers proposing and accepting the transfer to be of the same rank. Instead, it identifies the authorities competent to act in transfer matters. Since the proposal originated from the Chief Commissioner and was accepted by the Principal Commissioner, the Court held that the statutory requirements had been fulfilled. Consequently, this challenge was also rejected.
As to the sufficiency of reasons for transfer, the Court referred to the impugned order itself. The petitioners had objected to the transfer by asserting that they merely had business relationships with another group entity, had no undisclosed transactions, and would face hardship because Delhi was approximately 1,500 kilometres away from Hyderabad. The authorities, however, recorded that during search and seizure proceedings conducted on 11.10.2023, documents relating to unaccounted cash transactions involving the petitioners had been found. It was further noted that several connected cases had already been centralized in Delhi and that transferring the petitioners’ cases to Delhi was necessary for coordinated investigation and meaningful assessment.
The High Court held that these reasons sufficiently justified the transfer. It observed that incriminating material relating to the petitioners had allegedly surfaced during the search proceedings and that the transfer was intended to facilitate coordinated investigation and administrative convenience in accordance with applicable guidelines and circulars.
The Court relied upon judicial precedents recognizing that coordinated investigation is a valid basis for transfer and that writ jurisdiction under Article 226 is discretionary, particularly where no statutory violation or prejudice is established. It also referred to decisions emphasizing that a transfer order merely changes the assessing authority and requires balancing the inconvenience to the assessee against the interests of revenue administration.
Finally, the Court held that the position of the directors could not be viewed differently from that of the company, especially when they were aware of the transfer proceedings and subsequent developments. Finding no merit in any of the grounds raised, the High Court dismissed both writ petitions without costs. Pending miscellaneous petitions were also directed to stand closed.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Since the issue arising in the instant writ petitions is one and the same, we proceed to decide the instant petitions by this Common Order.
2. Heard Mr. Vedula Srinivas, learned Senior Counsel representing Mr.V. Aneesh, learned counsel for the petitioners, in both the writ petitions; and Ms. B.Sapna Heddv, learned Senior Standing Counsel for the Income Tax Department, for the respondents, in both the writ petitions.
3. Writ Petition No.18985 of 2025 is filed by the petitioner-Company under Article 226 of the Constitution of India praying the Court to issue a Writ, Order or Direction more particularly in the nature of a Writ of Mandamus declaring the imPugned order dated 27.01.2025 bearing DIN & Order No.ITBA/ COM / F/17/ 2024-25/ 1072556157(1) passed by respondent No.2 as being without jurisdiction, void, illegal, arbitrary, violative of Article 14 of the Constitution of India and also violation of Section 127 of the Income Tax Act, 1961; and Writ Petition No.19007 of 2025 is filed by the petitioners (Directors of Shreeji Foods Private Limited) under Article 226 of the Constitution of India praying the Court to issue a Writ, Order or Direction more particularly in the nature of a Writ of Mandamus declaring the impugned order dated 27.01.2025 bearing DIN 85 Order No. ITBA/COM/F/ 17/2024-25/ 1072556157(1) (for short, ‘the impugned order’) passed by respondent No.2 as being without jurisdiction, void, illegal, arbitrary, violative of Article 14 of the Constitution of India and also violate of Section 127 of the Income Tax Act, 1961 (for short, ‘the Act’).
4. Vide the impugned order, the respondents have transferred the assessment proceedings of the petitioners outside the State, i.e., from Hyderabad it has been ordered to be transferred to Delhi.
5. Learned Senior Counsel appearing for the petitioners canvassed primarily three grounds to assail the above impugned order, viz., (a) denial of a fair opportunity of hearing as is required under Section 127 of the Act; (b) the impugned order dated 27.01.2025 being technically and procedurally flawed inasmuch as the Officer who has proposed for transferring the file from Hyderabad to Delhi is of the rank of Chief Commissioner whereas the Officer who has accepted the said proposal and has agreed for the transfer is an Officer of the rank of Principal Commissioner; thus, it is in contravention of the provisions of Section 127(2)(a) of the Act; and (c) no sufficient reasons have been have been disclosed to the petitioners before transferring the file from Hyderabad to Delhi.
6. In support of his contentions, learned Senior Counsel appearing on behalf of the petitioners relied on the following decisions rendered by different Courts, viz., Noorul Islam Educational Trust vs. Commissioner of Income Tax-II; Herambh Anandrao Shelke vs. M.L. Karmakar Pr. Commissioner of Income-Tax-22; Achintya Securities Private Limited vs. Union of India3; Kamal Varandmal Galani vs. Principal Commissioner of Income Tax-194; and Shikshana Prasaraka Mandali vs. The Commissioner of Income Tax5.
7. On the other hand, learned Senior Standing Counsel for the Income Tax Department, appearing for the respondents, opposing the petitions, contended that the impugned order, when it is read as a whole, would by itself reveal that the order is strictly in accordance with the provisions of Section 127, and that all the parameters enshrined therein have been met and that there are no violations whatsoever of any provisions of the Act in the course of passing of the transfer order. Lastly, she contended that the impugned order is one which has been passed in January, 2025 and immediately thereafter the said order was acted upon and the assessing officer to whom the matter stood transferred also has initiated proceedings and has finalized the same and the Assessment Year for one of the years has also been completed vide order dated 27.03.2025; and as such, it would not be proper, legal and justified to interfere with the impugned order of transfer which already stands substantially acted upon by the respondents and to be interdicted at this juncture, and therefore prayed for dismissal of the writ petitions.
8. Having heard the contentions put forth on either side and on a perusal of the records, particularly taking into consideration the submissions which have been passed on either side, the facts that reveal in the course of hearing are that admittedly the impugned order of transfer is one which was passed on 27.01.2025; admittedly, the said impugned order has also been acted upon and there does not seem to be any strong ground produced before this Court by the petitioners as to why the impugned order of transfer was not promptly challenged by the petitioners if at all they were aggrieved of the proceedings at that point of time. Further, another fact which is revealed is that though the petitioners have filed their formal objection in respect of the transfer being made, they did not pursue it any further and permitted the assessment proceedings to conclude at the transferred place, i.e., Delhi. Another aspect which needs consideration is that the assessment order was passed for one of the years on 27.03.2025 and the said assessment crder has also been challenged by availing the statutory remedy of appeal before the Commissioner of Income Tax (Appeals). The said appeal has also been filed before the jurisdictional appellate authority and the appeal is still pending consideration.
9. Given the fact that the petitioners have already permitted the Assessing Officer at the transferred place to proceed with the impugned order and the said impugned order having been acted upon by the respondents and had been taken to its logical conclusion for one of the assessment years, we find it difficult to accept the contention raised by the petitioners herein challenging the aforesaid order of transfer by way of instant writ petitions at this juncture. The aforesaid conduct of the petitioners by itself forces this Bench to draw an inference that the petitioners do not have a strong objection on the transfer being so made at that point of time and now when the impugned assessment order for ‘one of the years having been passed, the petitioners seem to have become wiser and now wants to stall the further proceedings on the assessment initiated by the authorities which substantially stands acted upon by the respondents.
10. Coming to the merits of the case, a plain reading of the impugned order (particularly paragraph No.3 therein) would go to show that the petitioners were in fact issued with a notice before the impugned order was passed, and that the notice issued was one that was sent as early as on 2 .03.2024. The impugned order also reflects that it was duly served on the petitioners, and the petitioners have also filed their response thereto by raising objections on the proposed transfer. This aspect is not disputed by the learned Senior Counsel for the petitioners. However, he contended that the respondents ought to have given an opportunity of personal hearing as well.
11. Section 127(1) only mandates giving an assessee a reasonable opportunity of hearing. It does not anywhere enshrine granting of personal hearing. Moreover, Sub-Section (1) of Section 127 would also show that this opportunity also has to be given only wherever it is possible to do so which otherwise would mean that, if it were not possible, the granting of an opportunity of hearing can also be skipped or waived.
12. In the instant case, admittedly an opportunity of hearing was given to which the petitioners have responded to. Thus, the first objection of the petitioners assailing the impugned order does not find force and the same is negated.
13. As regards the Officer proposing and the Officer accepting the proposal of transfer being of different rank, it would be relevant at this juncture to take note of the provisions of Sections 127(2) and 127(2)(a), both of which for ready reference is being reproduced as under, viz.,
“127(2) -Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner —
(a) Where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred 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, pass the order.”
14. A plain reading of Clause (a) of Sub-Section (2) of Section 127 would go to show that Clause (a) does not require of the two officers to be of the same rank rather if we read it with a pragmatic view it only indicates as to which of the officers who can propose and who can accept the proposal for transfer. Now, when we see that the proposal has come from the Chief Commissioner, Delhi and acceptance has been made by the Principal Commissioner, it would meet the requirement as is meant under Clause (a). Hence, the second objection raised by the learned Senior Counsel does not find force by this Court to interdict the impugned transfer order.
15. Coming to the third ground as regards the sufficient reasons not being disclosed in the course of passing of the order of transfer, this Court is only quoting paragraph Nos.3.1 and 3.2 of the impugned which would clearly give the reasons for which there was a request for the transfer to be made, which for ready reference they are reproduced as under, viz.,
“3.1 The assesses, M/s.Shreeji Foods Pvt. Ltd., Shri Dhaval Ranikant Daman, and Shri Shamir Rajnikant Damani vide their letters dated 27.03.2024, 28.03.2024 and 29.03.2024 respectively submitted that they have only business relationships with Sterling Agro Industries Limited (SAIL) and its group, and has no other interest. It was further submitted that it has not made any out of books purchases or other transactions with SAIL group. Further, that transferring their jurisdictio a to DCIT, Central Circle-20, Delhi would cause hardship as it is 1500 kms away from Hyderabad.
3.2. In this regard, the DCIT, Central Circle-20, New Delhi explained that during the course of Search 8s Seizure action carried out on 11.10.2023 in the case of SFPL and its Directors, Shri Dhaval Damani and Shri Samir Damani, details of unaccounted cash transactions pertaining to the assesses were found in the seized documents which remained unexplained and have a bearing on the determination of total income of the assesses. Notwithstanding the above, order under Section 127 of the Act of various companies and persons covered under the search action dated 11.10.2023 has already been passed and centralized to Central Circle-20, New Delhi. Hence, for coordinated investigation and meaningful assessment, the said case is to be transferred to Deputy Commissioner of Income-Tax, Central Circle-20, New Delhi where all other cases of the group are centralized. Hence, the objection of the assessee is baseless and leads to the fact that it is afterthought of the assessee and nothing else.”
16. From the aforesaid given factual matrix of the case, we can conveniently reach to the conclusion that for the reasons stated in the preceding paragraphs and because of certain incriminating materials found by the authorities at Delhi in the course of search and seizure operations conducted under Section 132 against one of the industries at Delhi, some incriminating information was found so far as the petitioners were concerned; and therefore, for the purpose of a coordinated investigation and also for better administrative convenience strictly in accordance with the guidelines and circulars issued by the Central Board of Direct Taxes from time to time, it was decided to transfer the assessment proceedings pertaining to the petitioners to the Deputy Commissioner of Income Tax, Central Circle-20, New Delhi.
17. In the matter of The Commissioner of Income Tax vs. Union of India & Ram Charan Agarwal6, a Di✓ision Bench of Chhattisgarh High Court allowed the appeal by holding as under, viz., (in paragraph Nos.28, 40 and 46) :
“28. The word ‘coordinated’ means harmonious in action. As documents have been seized at different places, it is necessary that all the cases should be considered together at one place so that harmonious investigation be undertaken to arrive at just assessment. The words ‘coordinated investigation’ of the case is not vague.
No Prejudice
40. Writ jurisdiction under article 226 is discretionary. While exercising writ jurisdiction, it is also a relevant consideration, whether any prejudice has been caused or not. Let us consider this aspect also.
46. In the present case, the statutory provision is that transfer can be made for reasons recorded and after affording opportunity. This has been done in the present case. There is no statutory violation.”
18. In one of the recent decisions rendered by the High Court at Kolkata in the case of Kamal Nath vs. The Principal Commissioner of Income Tax, Kolkata7, it was held at paragraph No.22 thereof as under, viz.,
“22. The purpose of a transfer order under Section 127 is not to subject an assessee to tax liability. Its effect is only to subject an assessee to assessment under another jurisdictional officer. Therefore, such an order involves balancing of the inconvenience to the petitioner and revenue interests (public interest), which should tilt towards the latter if there is some nexus derivable from facts and not mere pleas based on conjecture.”
19. Following the aforesaid judgment, this High Court in the case of M/s. Akshara Enterprises Private Limited vs. The Principal Commissioner of Income Tax, Hyderabad8, had dismissed the petition under somewhat similar backdrop.
20. Therefore, taking into consideration all the aforesaid facts and circumstances of the case, we do not find any strong case made out by the learned Senior Counsel for the petitioners calling for interference to the impugned order. Further, the contention that has been reflected in the instant two writ Writ Petition No.18995 of 2025, there is already an assessment order for one of the assessment years having been passed by the assessing officer at the transferred place; and so far as the other writ petition is concerned, viz., Writ Petition No.19007 of 2025, there is no assessment order for any of the assessment years that has been passed. This, in the opinion of this Bench, would hardly make a difference so far as former writ petition is concerned, for the reason that the petitioners ir the latter writ petition are none other than the Directors of the Company, which is the petitioner-Company in the former writ petition, i.e., Writ Petition No.18985 of 2025. Therefore, it cannot be said that the petitioners in Writ Petition No.19007 of 2025 were totally oblivious of the transfer proceedings initiated by the respondents, the response submitted by the petitioner-Company, the impugned order of transfer being passed by the respondent, the petitioner-Company filing their response and objections before the Deputy Commissioner of Income Tax, at Delhi, i.e., the transferred place arid finally the assessment order being passed against the petitioner-Company in which he was the Director, which again has been challenged before the jurisdictional appellate authority. Hence, the view of this Bench taken in the course of the petitioner-Company would also be squarely applicable so far as the petitioners in Writ Petition No.19007 of 2025 are concerned.
21. For all the aforesaid reasons, the instant writ petitions being devoid of merits deserve to be and are accordingly dismissed. No costs.
22. Consequently, miscellaneous petitions pending, if any, shall stand closed.
Notes:
1 (2017) 12 S.C.C. 805
2 2018 5CC OnLine Born 2109
3 2024 :AHC : 40018-0B (Allahabad High Court)
4 (2024) 460 ITR 380 (Bombay)
5 Writ Petition No.2634 of 2012, dated 05.03.2013 (High Court of Judicature at Bombay)
6 W.P.A. No.33 of 2013, dated 14.03.2013
7 W.P.A.No.3868 of 2022, dated 06.01.2023
8 Writ Petition No.35029 of 2023, dated 08.01.2024
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