Gujarat High Court Sets Aside Transfer Of Income Tax Case From Ahmedabad To Rajkot Without Hearing Taxpayer

The Gujarat High Court has set aside an order transferring an assessee's income-tax reassessment case from Ahmedabad to Rajkot after finding that the transfer was made without granting the taxpayer an opportunity of hearing as required under the Income Tax Act.

The division bench of Justice A. S. Supehia and Justice Pranav Trivedi held that in the present case the transfer of jurisdiction under Section 127(2) of the Income Tax Act could not be sustained since it had been effected without affording the petitioner a reasonable opportunity of hearing, which is mandatory under the provision.

Section 127(2) of the Income Tax Act, 1961, empowers higher tax authorities (Director General, Chief Commissioner, or Commissioner) to transfer a case from one Assessing Officer to another when the officers are not subordinate to the same authority.

The case arose from a writ petition filed by Jay Pareshbhai Soni challenging a notice issued under Section 148 of the Income Tax Act seeking to reopen his assessment for the assessment year 2021–22, as well as an order transferring his case from the Income Tax Officer at Ahmedabad to the Deputy Commissioner of Income Tax at Rajkot.

The petitioner had filed his return of income declaring a total income of Rs. 16.83 lakh. The reassessment proceedings were initiated after certain documents allegedly found during a search operation conducted on the Bleach Chem Group in October 2023 suggested that the petitioner had engaged in cash loan transactions involving Rs. 10 lakh and paid interest of Rs. 5.10 lakh. The petitioner denied having entered into any such transactions and filed objections against the reopening notice.

While the objections were pending, the authorities issued an order dated 19 January 2026 transferring the petitioner's case to Rajkot. The petitioner challenged the transfer order, contending that it was passed without providing him any opportunity of hearing and that the order incorrectly stated that the transfer was made at the request of the assessee.

During the proceedings, the Revenue filed an affidavit admitting that the reference in the transfer order stating that the transfer was made on the request of the assessee was due to a typographical error and that the petitioner had never sought transfer of his PAN from Ahmedabad to Rajkot.

Taking note of this admission, the High Court noted that the transfer order could not be sustained since it had been passed without granting the mandatory opportunity of hearing contemplated under Section 127(2) of the Income Tax Act.

The bench stated that "in view of the specific admission that due to typographical error, the order dated 19.01.2026 transferring the PAN from Ahmedabad to Rajkot i.e. from respondent no.1 to respondent no.3. In view of the aforesaid admission, the said order dated 19.01.2026 apropos the present petitioner is concerned figured at Sr. No.3, is hereby quashed and set aside, as such transfer has been effected without affording any prior opportunity to the present petitioner as contemplated under Section 127(2) of the Act."

The Court accordingly quashed the transfer order insofar as it related to the petitioner and directed the authorities to afford him a hearing before passing any fresh transfer order.

It further directed that after such proceedings, the objections raised by the petitioner to the reassessment notice should be decided in accordance with the law within the stipulated timeline.

For Petitioner: Senior Advocate, Tushar Hemani with Advocate, Vaibhavi K Parikh

For Respondent: Advocate, Maunil G Yajnik