Shreeii Foods Private Limited v. 'l . Union of lndia

Petition Under Article 226 of the Constitution of lndiir praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ, Order or Direction more particularly irr the nature of a Writ of Mandamus declaring the lmpugned Order dated 27.01 .2Ct25 bearing DIN and Order No. ITBA/COM/F/1 712024-2511072556157(1) passed by the Respondent No. 2 as being without jurisdiction, void, illegal, arbitrary, vio ative of Article 14 of the Constitution of lndia and also violative of Section 127 of the lncome Tax Act, 196'1 . |.A.NO:1 OF 2025 Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay the lmpugned Order dated 27.O1.2025 bearing 'DlN and Order No. ITBA/COM/F/I 712024-2511072556157(1) passed by the Respondent No. 2 and consequently stay all further proceedings and actions including collection of tax pursuant to the lmpugned Order. Counsel for the Petitioner : SRI VEDULA SRINIVAS, LEARNED SENIOR COUNSEL REPRESENTING SRI V.ANEESH Counsel forthe Respondents : Ms. B.SAPNA REDDY, LEARNED SENIOR STANOING COUNSEL FOR INCOME TAX DEPARTMENT The Court made the following COMMON ORDER L THE HONOURAALE SRI WSTICE P.SAIVTKOSHY AND TIIE HONOURABLE SRI WSTICE NARSING RAO NAITDIKONDA Writ Petition No.18985 of 2d25 Writ Petitioa No.19OO7 of 2o25 COMMON ORDER:(per Hon'bte Sri Justice P.SA.[ rOSJtI) Since the issue arising in the instant writ petitions is one and the sEune, we proceed to decide the instant petitions by this Common Order

2. Heard Mr. Vedula Srinivas, Iearned S,:nior Counsel representing Mr.V. Aneesh, learned counsel for Lhe petitioners, in both the urit petitions; and Ms. B.Sapna [iedd-v, 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 ol lndia praying the Court to issue a Writ, Order or Direction more particularly in the nature of a Writ of Mandamus declaring the inrpugned order dated 27.OI.2O25 bearing DIN & Order 2 wP_18985&19OO7_2025 PSK,J & I{NR,J No.ITBA/COM/F/17/2o24-2s/to72s56157(1) passed by respondent No.2 as being without jurisdiction, void, illegal, arbitrary, rriolative of Article 14 of the Constitution of India and also violation of Section 127 of the Income Tax Act, 1961; and Writ Petition No.19OO7 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 12024- 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 I27 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. 3 wp_18985&19OO7_2025 PSK,J & NNR,J

5. l,earned Senior Counsel appearing for the petitioners 4rqE !tlll-.ratt4+ s_ canvassed primarily three grounds to assail the above impugned order, itz., (a) denial of a fair opportunity of hearing as is required under Section 127 of the Act; (b) the irapugned order dated 27.01.2025 being technically and proce'1urally flawed inasmuch as the Officer who has proposed for transferring the frle from Hyderabad to Dethi is of the r'mk of Chief Commissioner whereas the Officer who has a66r:pted the said proposal and has agreed for the transfer is an Officer of the ralk of Principal Commissioner; thus, it is in contravention of the provisions of Section 127(21(al of the Act; and (c) no sufficient reasons have been have been disclosed to the pelitioners 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. Commlgsioaer of lncome Tax-Ir; Herambh Anandrao Shelke vs. M.L- Karmakar Pr. Commissioner of Income-Tax-22; Achhqfa Securities '(zotz) rz s.c.c. gos 'l2018 scc online Bom 2109 4 wP_18985&19OO7_2025 PSK,J & IIN&J Private Limited vs. Union of ladiaa; Kamal Veraadmal Galani vs Principal Coamissioner of lacome Tax-19a; and Shilshana Prasaraka Mandali vs. The Commissioner of lncome Taxs.

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 ttrerein have been met and that ttrere are no violations whatsoever of any provisions of the Act in the course of passing of the transfer order. Lastly, she contended that the impugeed 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 findized 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, Iegal and justifred to interfere with t2024 ,AHc : 40018-DB (Atlahabad High court) o (zoz+) +oo lTn gao (Bombay] s Writ Petition No.2634 of 2012, dated 05.03.2013 (High Court of Judicature at Eombay) :;i?: 5:: wP_189,85&19OO7_2025 PSK,J & NNR,J -- - 5-si.*rr]*i!*t*-. r ,. ,la..l|.ftik?.+ the impugned order of transfer which already stands substantially acted upon by the respondents and to be interdicted at this juncture, and therefore prayed lor dismissal of the writ petitions.

8. Having heard the contentions put forth on ,:ither side and perusal of the records, particularly taking into consideration the submissions which have been p,essed 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 on27.O7.2O25; admittedly, the said impul3ned order has also been acted upon and there does not seem to be any strong ground produced before this Court by the petitior-rers as to why the impugrred 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, anottrer 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 proceedinlls to conclude at the transferred place, i.e., Delhi. Another aspe(rt which needs consideration is that the assessment order was passed for one of the years ort 27.03.2025 and the said assessmerrt'order has also 6 wP_18985&19OO7_2025 PSK,J &NNR,J been challenged by availing tJ:re statutory remedy of appeal before the Commissioner of Income Tax (Appeals). The said appeal has also been frled before the jurisdictional appellate authorit5r and the appeal is still pending consirleration.

9. Given the fact that the petitioners have already permitted the Assessing Offrcer at the transferred place to proceed with the impugrred 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 diffrcult to accept tJle 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 itsetf forces this Bench to draw an inference that tJre 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. I I I I I 7 wP_18985&19OO7-2025 PSK,J & NIIR,J

10. Coming to the merits of the case, a plain reading of the ) '- zfrtir+!i*? -$-!*, impugned order (particularly paragraph No.3 therein) would go to show that the petitioners were in fact issue I with a notice before the impugned order was passed, and that the notice issued was one that was sent as early as on 2 .O3 -2024. The impugned order also reflects that it was duly serr/ed 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 (lounsel for tJle petitioners. However, he contended that the respondents ought to have given an opportunit5r of personal hearing rs well.

11. Section 127 (ll only mandates giving zm assessee a reasonable opportunity of hearing. It does not anywhere enshrine granting of personal hearing. Moreovr:r, Sub-Section (1) of Section 127 would also show that this oppo:-tunity also has to be given only wherever it is possible to do so ri'hich otherwise would mean that, if it were not possible, the granting of art opportunity of hearing cal also be skipped or wairred. L2. In the instant case, admittedly an opportunity of hearing was given to which ttre petitioners have respondeC to. Thus, the / +-r 8 wP_18985&19OO7-2025 PSK,J & NIIR J frst 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 ralk, it would be relevant at this juncture to take note of the provisions of Sections 127(21 and 127(21(al, both of which for ready reference is being reproduced as under, viz., " L27l2l -Where the Assessing Oflicer or Assessing Officers from whom the case is to be transferred and the Assessing OIEcer or Assessing Ollicers 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 Offr.cers are subordinate are in agreement, then the Director General or Chief Comrnissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in th.e matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order." L4. 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 oflicers to be of the same rarrk ratller if we read it with a pragmatic view it only indicates as to which of the officers who 9 wP_18985&19OO7-2025 PSK,J & NI{R,J can propose and who can accept the proposal for transfer. Now, .'r r,rrs':grlarrlrtarjdr {r I ! - when we see that the proposal has come liom the Chief Commissioner, Delhi and acceptance has beett made by the Principal Commissioner, it would meet the recuirement as is meant under Clause (a). Hence, the second objt:ction raised by the learned Senior Counsel does not find force t,y 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 passrng of the order of transfer, this Court is only quoting paragraph l{os.3.1 and 3.2 of the impugned which would clearly give the rea.sons for which there was a request for the transfer to be made, rvhich for ready reference they are reproduced as under, viz., "3.1 The assesses, M/s.Shreeji Foods Pvt. Ltd., iihri Dhaval Ranikant Daman, and Shri Shamir Rajnikait Damaru vide their letters dated 27.O3.2O24, 2a.O3.2O24 and 29.o3.2024 respectively subrnitted that they have only business r,:Iationships 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 transactior s with SAIL group. Further, that transferring their jurisdictio r to DCIT, Central Circle-2o, Delhi would cause hardship as it ir; 15OO kms away from Hyderabad. 'j;if,a: i u: :t.'-i ,. 3.i: {r:rri Flar" ::10:: wP_18985&19OO7_2025 PSK,.' & IINR J

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 Sarnir 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 11.10.2O23 has already been passed and central.ized to Central Circle-2O, 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 eise."

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 arrd 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 tJle 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:: wP_18985&19OO7_2025 PSK,J & NITR,J by the Central Board of Direct Taxes from time to time, it was i i*' -a.3r!a5l!.{ltt .lardE,t>4 decided to transfer the assessment proceedings pertaining to the petitioners to the Deputy Commissioner of Incolne Tax, Central Circle-2O, New Delhi. L7. In the matter of The Commissioner of l:ncome Tax vs. Union of India & Ram Charan Agamale, a Di'rision Bench of Chhattisgarh High Court a-llowed the appeal by holding S under, vtz., (in paragraph Nos.28, 4O and 46) : "28. T*rc word 'coordinated' means harmoniou; in action. As documents have been seized at different lrlaces, it is necessaq/ that all the cases should be considered together at one place so that harmonious investigation be undertaken to arrive at just assessment. Ihe words 'coordinated investigation' of the case is not vagu e. No PreJudlce

40. Writ jurisdiction under article 226 is dir;cretionary. While exercising writ jurisdiction, it is also a relevant consideraLion, whether any prejudice has been caused or not. [,et 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." t w.p.A.No.33 of 20t3, dated 74.03.2o1)-- t .rL2tl EP_18985&190(J7_2025 PSK,., & mlRr.I

18. In one of the recent decisions rendered by the High Court at Kolkata in the case of Kanal llath vs. The Principal Commissioner of Income Tax, Kolkataz, 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 offrcer. 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 ttre aforesaid judgment, this High Court in the case of M/s. Akshara Enterprises Priyate Limited IIs. The Principal Commissioner of Incooe Tax, Hyderabads, had dismissed the petition under somewhat similar backdrop. 2o. Therefore, taking into consideration all the aforesaid facts and circumstances of the case, we do not find aly strong case made out by the learned Senior Counsel for the petitioners calling for interference to the impugned order. Further, tlre contention that has been reflected in the instant two writ ' w.p.a.No.3868 of 2022, dated 06.or.2o23 t Writ Petition No.35029 of 2023, dated 08.01.2024 €.:t :: l3:: urP_ 1 8i985& 19OO7 _2025 PSK,J & lIttR,J r ".r,\r<-Gf,L.Frr}'+..e-.r petitions is that, in the writ petition filed by thr-' company, viz., - Writ Petition No.18995 of 2025, there is already an assessment order for one of the assessment yea-rs 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.i9OO7 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 rvrit petition ls concerned, for the reason that the petitioners ir the latter writ petition are none ot-her than the Directors of the Company, 1 which is the petitioner-Company in the former ul'it petition, i.e., Writ Petition No.18985 of 2025. Therefore, it cannot be said that the petitioners in Writ Petifion No,19OO7 of 20'.25 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 frling their response and objections before the Deputy Commissioner of Ircome Tax, at Delhi, i.e., the transferred place and frnally the assiessment order being passed against the petitioner-Company in which he was the Director, which again has been challengt:d before tJre ::14:: Ep_1t9a5&19OO7_2025 PfiK,J & NNR,J 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 of2025 are concerned. 2L. 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. //TRUE COPY// 'ou5;3uo$t33.t+[l[ SECTION OFFICER To V.ANEESH' Advocate IOPU One CC to SRI One CC to Ms B-SAPNA REDDY, LEA RNED 1 OUNSEL FOR INCOME TAX DEPARTMENT, 2 c 3T wo CD CoPies SA PVL S/ ENIOR STANDING Advocate IOPUCI HIGH COURT DATED:1110712025 o ,1 /2 O2 SEP 2E o ( I ;-tl * D1 f/ / ,-:> --,\ t COMMON ORDER WP.Nos.18985 AND 19007 0F 2025 DISMISSING THE BOTH WRIT PETITIONS WITHOUT COSTS. 6@e