Intra-City Transfer of Tax Cases Under Section 127 Requires

Intra-City Transfer of Tax Cases Under Section 127 Requires No Notice or Hearing to Assessee

Issue

Whether transfer orders passed under Section 127 moving an assessee’s assessment case between Assessing Officers within the same city require prior notice or an opportunity of hearing, and whether consequential assessment orders passed post-transfer are valid.

Facts

Writ Petition Filed: The assessee-petitioner filed a writ petition challenging two transfer orders passed under Section 127 for Assessment Year 2024-25.
Transfer Hierarchy: The case was transferred first from the 4th respondent (AO) to the 2nd respondent (AO), and subsequently from the 2nd respondent (AO) to the 1st respondent (AO).
Consequential Orders Challenged: The petitioner also challenged the notice issued under Section 143(2) and the final assessment order passed under Section 143(3) by the transferee officer (1st respondent).
Jurisdictional Location: All the concerned Income Tax Officers and Assessing Officers involved in the transfers were functioning within the boundaries of the same city.

Decision

No Notice Needed for Intra-City Transfers: Since the case transfers were executed between officers located within the same city, the income tax authorities were not statutorily required to issue a notice or afford an opportunity of being heard to the petitioner before passing the transfer orders under Section 127.
Assessment Order Valid: Once the underlying Section 127 transfer orders were held to be valid and within law, the consequential assessment order passed under Section 143(3) by the transferee authority (1st respondent) could not be struck down for lack of jurisdiction.

Key Takeaways

Intra-City Exception to Natural Justice: Statutory requirements of issuing show-cause notices and providing personal hearings under Section 127 apply to inter-city transfers, but do not extend to intra-city operational transfers between local officers.
Validity of Transferee Jurisdiction: Once an intra-city transfer order under Section 127 is sustained, all subsequent proceedings, notices under Section 143(2), and assessment orders under Section 143(3) passed by the transferee officer are legally valid and enforceable.
No Material Prejudice: Shifting an assessment file between Assessing Officers operating within the same city does not cause legal or administrative prejudice to the assessee.

HIGH COURT OF TELANGANA

MS Agarwal Foundries (P.) Ltd.

Deputy Commissioner of Income-tax

P.Sam Koshy and SUDDALA CHALAPATHI RAO, JJ.

WP. No.13934 of 2026

JUNE 12, 2026

A.V.A. Siva Kartikeya, Counsel for the Petitioner. N. Praveen Reddy and K. Sudhakar Reddy, Ld. Standing Counsels for the Respondent.

ORDER

Suddala Chalapathi Rao, J. – Heard Sri A.V.A.Siva Kartikeya, learned counsel for the petitioner, Sri N.Praveen Reddy, learned Standing Counsel for Income Tax Department for respondents No.1 to 3, and Sri K.Sudhakar Reddy, learned Standing Counsel for Income Tax for respondents No.4 to 6.

2. The present writ petition has been filed for the following reliefs:

To declare the order u/s.127 of the Income Tax Act, 1961, dated 05.01.2024 (served on the petitioner 06.03.2026) transferring the file of the petitioner from the 4^th respondent to the 2^nd respondent;

To declare the order u/s.127 of the Income Tax Act, 1961, dated 12.08.2024 (served on the petitioner on 06.03.2026) transferring the file of the petitioner from the 2^nd respondent to 1^st respondent;

To declare the notice u/s.143(2) of the Income Tax Act, dated 21.06.2025 issued by the 6^th respondent vide DIN.No.ITBA/AST/S/143(2)/2025-26/1077309890(1), for the Assessment Year 2024-25;

To declare the Assessment order passed by the 1^st Respondent u/s.143(3) of the Income Tax Act, 1961, dated 23.03.2026, bearing DIN and Order No.ITBA/AST/S/143(3)/2025-26/1087793675(1), for the Assessment year 2024-25;

as arbitrary, illegal, bad in law, void-ab-initio, violative of the principles of natural justice, apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India & Sec 127 of the Income Tax Act, 1961 and consequently set aside the same in the interest of justice.

3. Evidently, though the assessment order passed under Section 143(3) of the Income Tax Act, 1961(for short the Act’) is challenged in the instant writ petition, the petitioner’s grievance is that his case was transferred from the 4^th respondent to the 2^nd respondent and thereafter from the ^2nd respondent to the ^1st respondent without issuing any prior notice to him. According to the petitioner, in the absence of such notice, the transfer itself is invalid and, consequently, the assessment order passed by the 1st respondent is without jurisdiction and liable to be set aside.

4. Thus, the principal issue that falls for consideration is whether the transfer of the petitioner’s case from the 4^th respondent to the 2^nd respondent and thereafter from the 2^nd respondent to the 1^st respondent was made in accordance with law. If the transfer orders are found to be valid and in conformity with the statutory provisions, the consequential assessment orders passed by the transferee authorities cannot be challenged for lack of jurisdiction.

5. For better understanding, Section 127 of the Act, is reproduced hereunder:

“127- Power to transfer cases:

(1)

The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner of Commissioner 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, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.

(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 Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal 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;

(b)

where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf.

(3)

Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the officers are situated in the same city, locality or place.

(4)

The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.

Explanation. —In section 120 and this section, the word “case”, in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.] “

6. A perusal of Section 127 of the Act, it is clear that it empowers the competent authority to transfer a case from one Assessing Officer to another. Sub-section (3) further makes it clear that where the transfer is between officers situated in the same city, locality or place, no opportunity be given. Thus notice either by the 4^th respondent or the 2^nd respondent shall not be necessary and that no prior opportunity of hearing is required to be given to the assessee.

7. In the present case, it is not disputed that the petitioner’s file was first transferred from the 4^th respondent to the 2^nd respondent and subsequently from the 2^nd respondent to the 1^st respondent. It is also not disputed that all the concerned officers were functioning within the same city. Further, it is not even the case of the petitioner that no notice was issued by the 4^th respondent. Thus, once a notice as required under the Act was issued, petitioner is not entitled to any notice of transfer. Therefore, the transfers clearly fall under the Section 127(3) of the Act.

8. Since the transfers were made within the same city, the authorities were not required to issue any notice or provide an opportunity of hearing to the petitioner before passing the transfer orders. The transfers were thus affected in accordance with the statutory provisions.

9. Section 127 also permits transfer of a case at any stage of the proceedings and specifically provides that such transfer does not affect the validity of notices already issued or the proceedings already undertaken. Thus, the assessment proceedings continued validly before the transferee officers after the transfer.

10. In these circumstances, this Court is of the view that the transfer of the petitioner’s case from the 4^th respondent to the 2^nd respondent and thereafter to the 1^st respondent was in complete conformity with Section 127 of the Income Tax Act. No procedural irregularity or violation of the principles of natural justice is made out and thus, no prejudice is caused to the petitioner.

11. Further, the petitioner was also issued notice, dt.29.11.2025, to which the petitioner filed its reply on 08.12.2025, and subsequently notice under Section 142(1) was also issued to the petitioner on 18.03.2026, to which the petitioner submitted reply, dt.21.03.2026 and thereafter, the impugned assessment order, dt.23.03.2026, was passed.

12. Once the transfer orders are held to be valid, the consequential assessment order passed by the 1st respondent cannot be challenged on the ground that the said authority lacked jurisdiction. Thus, the petitioner’s challenge on this aspect is liable to be rejected and the writ petition is liable to be dismissed.

13. In view of the above, this Writ Petition is dismissed. However, it does not preclude the petitioner’s right of challenge before the competent forum against the assessment order raising other grounds. No order as to costs.

As a sequel, miscellaneous petitions pending, if any, shall stand closed.