They asked to be assessed in Hyderabad, then said the Hyderabad officer had no jurisdiction
A group of companies objected to their income tax cases going to Bangalore and requested centralisation at Hyderabad instead. Having got it, they challenged the transfer order and the assessments that followed. The High Court was not persuaded.
A search and seizure operation was followed by centralisation proceedings, and the income tax files of a Hyderabad property and hospitality group were moved to a Central Circle. The group’s case was that nothing incriminating had been found at its premises at all. On 22 September 2026, a Bench of Justice P. Sam Koshy and Justice Narsing Rao Nandikonda dismissed the whole batch of writ petitions challenging that move.
The petitioners were a group of companies and individuals — several Sandhya entities, a hospitality company, a realtors company and a number of individual assessees — each holding a distinct PAN. Because the petitioners were substantially the same, the respondents common and the relief identical, and with the consent of counsel on both sides, the matters were heard and decided together, with one writ petition taken as the lead case. Mr. A.V. Krishna Koundinya, Senior Counsel, appeared for the petitioners.
What was challenged
The relief sought was twofold: a declaration that the order under Section 127 of the Income Tax Act, 1961 passed in June 2019 — which, it was said, had never been served on the petitioner — was arbitrary, without jurisdiction and in violation of natural justice; and, consequentially, the setting aside of the assessment order for assessment year 2014-15 passed in April 2021 on the same grounds.
The petitioners’ account of what happened ran as follows. They were originally under the Principal Commissioner of Income Tax-3, Hyderabad, with their assessing officer in Circle 3(1). The June 2019 order moved that jurisdiction to a Central Circle, and they say it was never served on them or on the other group assessees despite repeated requests. In December 2019 notices under Section 153A were issued to the companies, their directors, group companies and family members of the directors. Under pressure from the Department, they say, they filed returns in response.
The cases were then taken up for scrutiny, with notices under Sections 143(2) and 142(1) issued on seven occasions between February 2020 and April 2021. The petitioners supplied the information through the Department’s web portal, and their authorised representative appeared in person to hand over documents in physical form where uploading was not possible for want of trained personnel. The assessment was completed in April 2021, raising substantial tax demands. On the merits they complained that the assessing officer had ignored audit reports prepared by independent chartered accountants and disallowed various items of expenditure, including interest.
The transfer they had asked for
The record told against the challenge at every point.
The transfer had been effected pursuant to centralisation proceedings initiated after the search. Crucially, the petitioner had itself expressed willingness for centralisation at Hyderabad. The sequence matters: a notice was first issued proposing that the case be transferred to Bangalore; the petitioner objected to that and requested centralisation at Hyderabad instead. What it later attacked was the order giving it what it had asked for.
On the statutory formalities, the Bench noted that the cases from various Hyderabad circles and wards were transferred to a Central Circle within the same city and locality, so the requirement of agreement between different Commissioners was not attracted.
On the opportunity of hearing, it held that the requirement under Section 127(1) is not absolute. The statute itself provides that such opportunity shall be given wherever it is possible to do so, which confers a discretion on the authority depending on the facts of each case — a reading the Bench found supported by the very judgments the petitioners had cited.
On reasons and on service, the answer was the petitioners’ own conduct. They had participated throughout the assessment proceedings, filed returns of income, responded to statutory notices and submitted replies before the Assessing Officer of the Central Circle. That conduct demonstrated knowledge of the transfer and acceptance of it. The argument that mere participation cannot amount to acquiescence or confer jurisdiction where none exists was recorded and rejected on these facts, because the objection was not to a jurisdiction thrust upon them but to one they had sought.
A challenge aimed at the assessment
The Bench also accepted the Department’s reading of what the litigation was really for. The petitioners had an efficacious alternative remedy — a statutory appeal against the assessment order before the competent appellate authority. Instead of taking it, they had come to the High Court questioning the transfer proceedings as a way of attacking the assessment indirectly. Their conduct, the judgment records, indicates that the challenge was primarily intended to avoid the statutory appellate remedy.
A party that has been transferred at its own request, the reasoning runs, cannot turn around and challenge the transfer order on technical grounds, including an alleged violation of natural justice.
No ground was made out to interfere with the transfer orders passed under Section 127 or with the consequential assessment orders. All the writ petitions were dismissed as devoid of merit, pending miscellaneous applications were closed, and there was no order as to costs. The appellate remedy against the assessments remains where it always was.