MS SAND AND STONE AND ANR vs. PRINCIPAL COMMISSIONER OF INCOME TAX ORS

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CW/10783/2018HC RajasthanRJHC02033625201826 February 2026Author: INDERJEET SINGH,RAVI CHIRANIA3 pages
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What did the High Court hold?

The High Court allowed the writ petition and set aside the order dated 02/03.04.2018. The Court reasoned that the Department's intention to transfer the petitioner's jurisdiction from Jaipur to Bikaner was solely based on proceedings pending against the Gupta Group. Since these proceedings had been closed and the assessment was over, the Court found no justifiable reason for the Department to transfer the jurisdiction. The ratio decidendi is that a transfer of jurisdiction under Section 127, if based on proceedings that are subsequently closed, lacks a valid foundation. The operative direction was to set aside the impugned order. The Department was granted liberty to take appropriate action in accordance with law. No issue was expressly left undecided.

What were the facts?

The petitioners, M/s Sand And Stone 13 Private Limited and its director Shri Ajay Rathi, challenged an order dated 02/03.04.2018 passed under Section 127(1) of the Income Tax Act, 1961. This order transferred their income tax jurisdiction from Jaipur to Bikaner. The transfer was based on allegations that the petitioner had adjusted Rs. 2,00,00,000/- from companies that were allegedly paper entities, as revealed during a search on the Gupta Group. The petitioners argued that the search proceedings against the Gupta Group had been closed by the department, rendering the basis for the jurisdiction transfer invalid. The respondents, represented by the Principal Commissioner of Income Tax and other revenue authorities, admitted that the proceedings against the Gupta Group had indeed been completed and closed.

What were the issues?

1. Whether the transfer of jurisdiction of the petitioner from Jaipur to Bikaner, based on proceedings against the Gupta Group, is legally sustainable when the proceedings against the Gupta Group have been closed? (Question of law and fact, turning on Section 127 of the Income Tax Act, 1961). Assessee's Contention: The petitioner argued that since the search proceedings initiated against the Gupta Group, which formed the basis for transferring their jurisdiction, have been closed by the department, there is no justifiable reason to continue with the transfer of jurisdiction to Bikaner. Revenue's Contention: The respondent-Department admitted that the proceedings against the Gupta Group have been completed and the assessment proceedings have been finally closed by the Jurisdiction Officer at Bikaner.

Which sections of the Income-tax Act were involved?

Section 127

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2026:RJ-JP:9037-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 10783/2018 1. M/s Sand And Stone 13 Private Limited, Registered Office At D-37, Ayodhya Marg, Hanuman Nagar, Jaip, Resident Of 3B, 22-23, Sukhadiya Nagar, Near Gayatri Mandir, Sriganganagar. 2. Shri Ajay Rathi S/o Shri Sant Lal Rathi, Director Of M/s Sand And Stone 13 Private Limited, R/o 3B, 22-23, Sukhadiya Nagar, Near Gayatri Mandir, Sriganganagar. ----Petitioners Versus 1. Principal Commissioner Of Income Tax Central, New Central Revenue Building, Statue Circle, Jaipur Raj. 2. Assistant Commissioner Of Income Tax Central Circle, Bikaner. 3. Deputy Commissioner Of Income Tax, Central Circle-3, Jaipur. ----Respondents For Petitioner(s) : Mr. Gunjan Pathak, Adv. assisted by Ms. Kanishka Singhal, Adv. and Mr. Aditya Bohra, Adv. For Respondent(s) : Mr. Siddharth Bapna, Adv. with Mr. Rahul Kumar, Adv. and Ms. Tanushka Saxena, Adv. HON'BLE MR. JUSTICE INDERJEET SINGH HON'BLE MR. JUSTICE RAVI CHIRANIA

Order 26/02/2026

1.

Learned counsel for the petitioner submitted that the order under Section 127(1) of the Income Tax Act, 1961 dated 02/03.04.2018 has been issued to the petitioner with regard to

[2026:RJ-JP:9037-DB] (2 of 3) [CW-10783/2018] the transferring the juri iction of the petitioner from the Jaipur to Bikaner relying upon a search made on Gupta Group whereby the respondent-Department has alleged that the petitioner has adjusted Rs.2,00,00,000/- (Rupees Two Crores Only) from companies which are existing on paper only as per the search made on Gupta Group,. The juri iction of the petitioner has already been transferred to Bikaner for further proceedings.

2.

Learned counsel for the petitioner submitted that the proceedings of search initiated against Gupta Group has already been closed by the department, therefore, there is no justifiable reason for transferring the juri iction of the petitioner from Jaipur to Bikaner.

3.

Learned counsel for the respondent-Department admitted the fact that the proceedings against Gupta Group have been completed and the assessment proceedings have been finally closed by the Juri iction Officer at Bikaner.

4.

Heard learned counsel for the parties and perused the record.

5.

Since, the Department intends to transfer the juri iction of the petitioner from Jaipur to Bikaner, only on the basis of proceedings pending against the Gupta Group, which have now been closed and the assessment is over, therefore, in our considered view there is no justifiable reason for the department to transfer the juri iction of the petitioner from Jaipur to Bikaner.

[2026:RJ-JP:9037-DB] (3 of 3) [CW-10783/2018] In that view of the matter, the writ petition is allowed and the order dated 02/03.04.2018 is set aside. However, the Department is at liberty to take appropriate action in accordance with law.

7.

All pending applications, if any, shall also stand disposed of. (RAVI CHIRANIA),J (INDERJEET SINGH),J Dushyant/182

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