1. Challenge to warrant of authorization under Section 132, transfer under Section 127, and notices under Section 153A, Income Tax Act. (Para 1 , 3 , 4 , 5 )
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2026 Supreme(Raj) 516
HIGH COURT OF JUDICATURE FOR RAJASTHAN, BENCH AT JAIPUR
SANJEEV PRAKASH SHARMA, ACJ., SANGEETA SHARMA, J.
B. & B. Mercantile Pvt. Ltd., through its Authorised representative Shri Ranjeet Kumar - Petitioner
Versus
Director Of Income Tax (INV), Chandigarh – Respondent
D.B. Civil Writ Petition No. 2148 of 2014
Decided On : 06-03-2026
Advocates Appeared:
For the Petitioner: Mr. Sachit Jolly, Sr. Adv. assisted by Ms. Rubal Bansal Maini and Mr. Satvik Sareen.
For the Respondents: Mr. Siddharth Bapna with Ms. Tanushka Saxena.
For the Petitioner: Mr. Sachit Jolly, Sr. Adv. assisted by Ms. Rubal Bansal Maini and Mr. Satvik Sareen.
For the Respondents: Mr. Siddharth Bapna with Ms. Tanushka Saxena.
Transfer of cases under Section 127 for coordinated investigation is valid administrative action. However, notices under Section 153A are illegal without actual search and discovery of incriminating material. Such proceedings must be completed within the statutory limitation period, failing which they are time-barred.
Headnote:(A) Income Tax Act, 1961 - Section 127 - Power to transfer cases - Transfer for the purpose of coordinated investigation is an administrative action - Such order does not affect any fundamental or legal right of an assessee and courts ordinarily refrain from interfering unless the exercise of power is arbitrary, perverse or mala fide. (Paras 19, 20, 22, 24)
(B) Income Tax Act, 1961 - Sections 132 and 153A - Search and seizure - Notice for assessment/re-assessment - Mere mention of a name in the warrant of authorization is insufficient to initiate proceedings under Section 153A - Actual search and discovery of incriminating material or documents are essential - Where premises were found closed and no incriminating material was recovered, the issuance of notice under Section 153A is unjustified and illegal. (Paras 26, 27)
(C) Income Tax Act, 1961 - Section 144 - Best judgment assessment - Statutory period of limitation for making an assessment must be adhered to - Proceedings cannot be continued beyond the time period laid down under the Act, even if interim protection was granted to the assessee. (Paras 29, 30, 31)
Facts of the case:
A company's case was transferred from one jurisdiction to another under Section 127 for coordinated investigation. Subsequently, notices under Section 153A were issued for multiple assessment years following search operations. It was revealed that the company's premises were found locked during the operation, and no incriminating material was seized, although some stamps and seals were found. The petitioner challenged the transfer and the subsequent assessment notices.
Findings of Court:
The transfer of the case under Section 127 was held to be valid as it was for coordinated investigation and not mala fide. However, the notices issued under Section 153A were held to be illegal as no actual search resulting in the discovery of incriminating material took place. Furthermore, the assessment proceedings were found to be time-barred.
Issues: Whether the transfer of case under Section 127 for coordinated investigation was legal; whether the notice under Section 153A was valid without the recovery of incriminating material; and whether the assessment proceedings had become time-barred.
Ratio Decidendi: The court reasoned that administrative transfers under Section 127 for coordinated investigations are permissible. However, Section 153A's provisions are drastic and require a factual basis in the form of incriminating evidence found during a search. In the absence of such evidence, and given the expiry of the statutory limitation period for best judgment assessments under Section 144, the proceedings cannot be sustained.
Result: Writ petition allowed.
Act Referred
Legal Category Hierarchy
- tax law
- practice and procedure
Table of Contents
2. Petitioner challenged search and transfer for lack of incriminating material; Revenue defended on coordinated investigation grounds. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 )
3. Transfer for coordinated investigation is administrative and valid. Notice under Section 153A requires incriminating material. Proceedings time-barred. (Para 22 , 24 , 26 , 27 , 30 )
4. Notice under Section 153A requires incriminating material from a valid search; mere warrant insufficient. (Para 26 , 27 )
5. Writ allowed; notice under Section 153A quashed as illegal and proceedings closed as time-barred. (Para 31 , 32 )
6. Is a transfer order under Section 127 of the Income Tax Act for coordinated investigation valid?
Yes, the power to transfer for coordinated investigation is administrative and does not require interference unless arbitrary or mala fide. (Para 19 , 22 , 23 , 24 )
7. Can a notice under Section 153A be issued without any incriminating material found during search?
No. Notice under Section 153A requires satisfaction of conditions under Section 132 and existence of incriminating material; mere mention in warrant insufficient. (Para 26 , 27 )
8. If assessment proceedings become time-barred due to inaction despite no stay, can the Revenue proceed later?
No. The Revenue must proceed with best judgment assessment under Section 144; failure to do so renders proceedings time-barred and lapsed. (Para 29 , 30 , 31 )
JUDGMENT :
SANJEEV PRAKASH SHARMA, ACJ.
1. The petitioner-company, by way of this writ petition, has prayed as under:
"(a) A Writ of Certiorari or Writ, Order or Direction in the nature of Certiorari, or any other appropriate Writ, Order or Direction under Article 226/227 of the Constitution of India, calling for records of the case, declare that warrant of authorization under section 132 of the Income tax Act, 1961 issued in the name of the Petitioner was illegal, bad in law and without jurisdiction.
(b) A writ of Certiorari or Writ, Order or Direction in the nature of Certiorari, or any other appropriate Writ, Order or Direction under Article 226/227 of the Constitution of India, calling upon Respondent No.1 to transmit and certify the records relating to warrant of authorization of search on Petitioner so that the said search warrant and proceedings initiated thereunder may be set aside and/or quashed and conscionable justice may be rendered;
(c) A Writ of Certiorari or Writ, Order or Direction in the nature of Certiorari, or any other appropriate Writ, Order or Direction under Article 226/227 of the Constitution of India, quashing the impugned order dated 17.12.2013 (Annexure 'A') passed under section 127 of the Act transferring the case of the Petitioner from Respondent No.3 to Respondent No.4;
(d) A Writ of Certiorari or Writ, Order or Direction in the nature of Certiotrari, or any other appropriate Writ, Order or Direction under Article 226/227 of the Constitution of India, quashing impugned notices dated 18.12.2013 (Annexure 'B') issued under section 153A of the Act for assessment years 2006-07 to 2011-12;
(e) A Writ of Prohibition or Writ, Order or Direction in the nature of Prohibition, or any other appropriate Writ, Order or Direction under Article 226/227 of the Constitution of India restraining the Respondent No.4 from taking any further proceedings pursuant to impugned notices dated 18.12.2013 for the assessment years 2006-07 to 2012-13.
(f) To grant the petition such further or other relief as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case."
2. On 24.02.2014, this Court passed following order:
"Issue notice, returnable within two weeks. Notices may be given dasti, as prayed. In the meanwhile, petitioner would not be insisted upon to file return to the office where his case has been transferred."
3. The petitioner-company is carrying on business of real estate investments and has been filing regular returns under Section 139 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') in time. The Income Tax returns filed by the petitioner-company for the Assessment Years 2006-2007 to 2011-2012 as mentioned in the written submissions is reproduced as under:
4. A notice under Section 127(1) of the Act was issued to the petitioner on 23.10.2013, inter alia, stating that a search and seizure operation under Section 132 of the Act was carried out in the M3M India Limited Group of cases, Gurgaon on 03.08.2011 by the Investigation Wing of Chandigarh including the premises of the petitioner and the petitioner was asked to show cause as to why its case be not transferred from DCIT, Central Circle, Alwar to ACIT, Central Circle-2, Faridabad.
5. Another notice was served on 09.12.2013 under Section 127(1) of the Act mentioning that the date of search was 30.06.2011 and not 03.08.2011. The petitioner submitted reply objecting to the proposed transfer as there was no search conducted on 03.08.2011 and demanded the warrant of authorisation. On 17.12.2013 another order was passed under Section 127(2) of the Act, whereby the petitioner’s case was transferred based on a search conducted on 30.06.2011 giving out reason that a coordinated investigation was required to be carried out. Vide another notice dated 18.12.2013 issued under Section 153A(1)(a) of the Act, petitioner was asked to submit a true and correct returns of total income for Assessment Years 2006-2007 to 2011-2012. Aggrieved of the sa
