Rajasthan High Court Quashes Repeated Tax Case Transfers | Criticizes Revenue for Rigid and Adamant Approach
Safiya Malik
The High Court of Rajasthan, Division Bench of Chief Justice K. R. Shriram and Justice Ravi Chirania set aside the Income Tax Department’s order transferring the assessment proceedings of Murliwala Agrotech Pvt. Ltd. from Udaipur to Delhi under Section 127 of the Income Tax Act, 1961. The Court criticized the Revenue Department for being rigid and insistent on repeating the transfer despite an earlier decision of a coordinate bench quashing a similar order. It noted that while Section 127 empowers authorities to shift cases for coordination and effective investigation, such power cannot be exercised arbitrarily, especially after related assessments had already been completed.
The case concerned Murliwala Agrotech Pvt. Ltd., which challenged the Income Tax Department’s repeated orders transferring its assessment proceedings from Udaipur to Delhi under Section 127 of the Income Tax Act, 1961. The petitioner initially approached the High Court after an order transferring its case to Delhi was quashed by a coordinate bench in July 2022 on the ground that no adequate opportunity of hearing had been given. The coordinate bench had directed that any future transfer could be made only after following due process.
Subsequently, in September 2022, the Revenue issued a fresh notice under Section 127 and invited objections. The petitioner responded with detailed objections opposing the transfer. Despite this, in October 2022 the Principal Commissioner of Income Tax again ordered the transfer of the case to Delhi, citing the need for uniformity in assessing entities linked to the Brindavan group, which had been subjected to a search under Section 132(1) of the Act in November 2017.
The petitioner contended that there was no justification for the renewed transfer since the assessment of the Brindavan group had been completed in December 2019 and no changed circumstances were presented. The Revenue maintained that the transfer was necessary for administrative convenience and effective coordination.
The Division Bench observed that the factual position had not changed since the earlier quashing of the transfer order and criticized the Revenue for persisting with the transfer despite the previous ruling. The Court quashed the October 2022 order and directed that proceedings continue from the stage prior to the earlier transfer orders, leaving open the Revenue’s right to take steps under applicable provisions of law if warranted.
It stated that the “factual position as it was prior to issuance of earlier transfer order dated 21.11.2019 has not changed, except for few formal approvals of the competent authorities of the Revenue at Delhi which has no material impact on the merits of this case.” The Court found that the Revenue’s repeated attempt to transfer the case was unjustified, holding that such conduct was “rigid and adamant.”
The Bench observed: “We do not approve the conduct of the Revenue for being rigid and adamant to transfer the case of petitioner from Udaipur to Delhi despite passing of the previous order by the co-ordinate Bench of this Court dated 20.07.2022 which was not challenged further but rather accepted by the Revenue.” The judges recorded that the Revenue should have focused on resolving the issue “strictly as per law instead of making the assessee a shuttlecock.”
It stated: “When the faceless system has been put in place by the Revenue itself which has provided more transparency in the taxation matters then act of Revenue of transferring the case by impugned order dated 19.10.2022 is neither reasonable nor justifiable but rather arbitrary.”
The Bench also noted that proceedings against the petitioner had remained pending for over six years due to the Revenue’s actions: “The proceedings initiated by respondent against petitioner are pending for more than 6 years because of respondent’s unreasonable and unjustified act of ordering transfer the case of the petitioner from Udaipur to Delhi.” The Court further recorded that the assessment of the Brindavan group, on which the Revenue relied, had already been completed in December 2019, eliminating any rationale for linking Murliwala Agrotech’s case to Delhi.
It observed: “Admittedly, as stated in reply, the assessment of Brindavan group got completed sometime in December 2019, therefore, as the assessment itself has been passed in the case of Brindavan group, we see no reason why the petitioner’s case should be transferred to Delhi.”
The Bench stated that despite clear judicial directions in the previous judgment, the Revenue’s repetition of its earlier decision under Section 127(1) demonstrated disregard for judicial discipline and the statutory safeguards of natural justice. The Court found no substantial difference between the grounds relied upon in the impugned order and those previously invalidated.
“For the above reason, the present D.B. Civil Writ Petition No.17992/2022 stands allowed and the impugned order dated 19.10.2022 issued under Section 127 of the Act of 1961 is declared invalid and the same is hereby quashed and set aside.”
“Any adverse order passed against the petitioner during the pendency of this petition also stands declared illegal. All rights and contentions of Revenue is kept open including to take steps in accordance with law under the provisions of Section 153C of the Income Tax Act, 1961 or any other applicable provisions. This liberty should not be construed as an approval by us to take such action against petitioner. If such action is taken, petitioner be defended in accordance with law.” The petition was accordingly disposed of.
Advocates Representing the Parties:
For the Petitioners: Mr. Anjay Kothari, Mr. Amit Sharma
For the Respondents: Mr. K.K. Bissa, Mr. G.S. Chouhan
Case Title: Murliwala Agrotech Pvt. Ltd. v. Union of India & Ors.
Neutral Citation: 2025: RJ-JD:41639-DB
Case Number: D.B. Civil Writ Petition No. 17992/2022
Bench: Chief Justice K.R. Shriram and Justice Ravi Chirania
