Telangana High Court

Shreeji Foods Private Limited vs Union Of India on 11 July, 2025

Author: P.Sam Koshy

Bench: P.Sam Koshy

         THE HONOURABLE SRI JUSTICE P.SAM KOSHY

                                AND

 THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA


                  Writ Petition No.18985 of 2025
                                 and
                  Writ Petition No.19007 of 2025


COMMON ORDER:

(per Hon'ble Sri Justice P.SAM KOSHY)

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 Reddy, 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 ::2::

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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 & 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.

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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-I1;

Herambh Anandrao Shelke vs. M.L. Karmakar

Pr. Commissioner of Income-Tax-2 2; Achintya Securities

(2017) 12 S.C.C. 805

2018 SCC OnLine Bom 2109 ::4::

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Private Limited vs. Union of India 3; Kamal Varandmal Galani

vs. Principal Commissioner of Income Tax-19 4; and

Shikshana Prasaraka Mandali vs. The Commissioner of

Income Tax 5.

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

2024 :AHC : 40018-DB (Allahabad High Court)

(2024) 460 ITR 380 (Bombay)

Writ Petition No.2634 of 2012, dated 05.03.2013 (High Court of Judicature at Bombay) ::5::

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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 order has also ::6::

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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.

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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 21.03.2024. 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 ::8::

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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 ::9::

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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 jurisdiction to DCIT, Central Circle-20, Delhi would cause hardship as it is 1500 kms away from Hyderabad.

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3.2. In this regard, the DCIT, Central Circle-20, New Delhi explained that during the course of Search & 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 ::11::

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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 Agarwal 6, a Division 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."

W.P.A.No.33 of 2013, dated 14.03.2013 ::12::

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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, Kolkata 7, 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, Hyderabad 8, 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

W.P.A.No.3868 of 2022, dated 06.01.2023

Writ Petition No.35029 of 2023, dated 08.01.2024 ::13::

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petitions is that, in the writ petition filed by the company, viz.,

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 in 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 and finally the assessment order

being passed against the petitioner-Company in which he was

the Director, which again has been challenged before the ::14::

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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.