Centralised income tax assessment transfer under s. 127 after search-linked investigation upheld; jurisdiction challenge dismissed.

The dominant issue was whether transfer of jurisdiction for centralised assessment under s. 127 to an AO outside the assessee's registered office location was invalid for want of territorial nexus and reasons. The HC held that s. 127 permits centralisation where it is expedient for coordinated investigation and assessment, and the impugned orders expressly recorded this rationale based on search and seizure operations conducted in Haryana against related persons, with a nexus to the assessees. As the orders disclosed adequate reasons and the challenge to lack of connection was unfounded, the transfer orders were upheld and the writ petition was dismissed.

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ISSUES PRESENTED AND CONSIDERED

1. Whether the centralisation of the petitioners' income-tax assessments under Section 127(2) of the Income Tax Act, 1961 is valid where the petitioners' registered office is in New Delhi but the centralised authority exercises jurisdiction in Haryana (Faridabad/Gurgaon) and the petitioners have establishments outside New Delhi.

2. Whether the impugned orders under Section 127(2) are vitiated for want of reasons where the orders do not, according to petitioners, indicate the basis for transfer of jurisdiction to the centralised income-tax authority.

3. Whether the existence of a connection between the petitioners and a person subject to search and seizure (conducted under Section 132) is material to and justifies centralisation of assessments for coordinated investigation and assessment proceedings.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of centralisation under Section 127(2) given registered office in one place and centralisation in another

Legal framework: Section 127(2) permits centralisation of assessments for coordinated investigation and assessment proceedings; administrative office orders delineating jurisdictional ranges inform allocation of cases among income-tax authorities.

Precedent Treatment: The judgment does not rely on or cite any judicial precedents; determination is made on statutory provision combined with departmental office order and factual matrix.

Interpretation and reasoning: The Court examined the departmental Office Order (31.10.2014) setting out jurisdictional coverage for income-tax officials (including DCIT/ACIT (Central) postings covering Gurgaon and Faridabad for the State of Haryana). The Court found the petitioners had factual connections to Haryana (a factory/unit in Sonipat, Haryana) and that the search in question related to a person who is a director of the petitioners and signed company records. On this factual basis and in light of the Office Order specifying that the relevant Central authorities cover Gurgaon/Faridabad, the Court concluded centralisation of the petitioners' assessments with the designated authority in Faridabad/Gurgaon falls within administrative jurisdictional allocation and is a valid exercise under Section 127(2).

Ratio vs. Obiter: Ratio - Where administrative office orders allocate jurisdiction over a territorial range and a taxpayer has factual connections (e.g., establishment in that territorial range) and links to persons subject to coordinated investigation, centralisation under Section 127(2) with the designated authority is permissible. Obiter - none additional on alternative jurisdictional schemes.

Conclusions: The centralisation was validly effected with the relevant income-tax authority as specified in the Office Order; the petitioners' registered office in New Delhi did not preclude centralisation given their establishment in Haryana and the allocation in the office order.

Issue 2 - Adequacy of reasons in the impugned orders under Section 127(2)

Legal framework: Administrative orders affecting jurisdictional allocation should state reasons for transfer/centralisation sufficient to show the basis for coordinated investigation/assessment proceedings; Section 127(2) contemplates centralisation for coordination.

Precedent Treatment: No external precedents were invoked by the Court; assessment of adequacy proceeded from the text of the impugned orders and surrounding facts.

Interpretation and reasoning: The impugned orders explicitly stated centralisation was being done "for the purpose of coordinated investigation and assessment proceedings" and linked this to the search and seizure operation conducted on 29.06.2022 by the Investigation Wing. The Court considered these expressed grounds adequate because they identified the coordinating purpose and the triggering investigative event (the search in the related matter). Further, the factual nexus - the searched person's directorship and signing of company documents - reinforced that the stated reasons were not generic or baseless. The Court rejected the contention that the impugned orders lacked reasons, finding that the orders did state the purpose and connected it to the search operations.

Ratio vs. Obiter: Ratio - An order under Section 127(2) which states that centralisation is for "coordinated investigation and assessment proceedings" and links the centralisation to a specified search/seizure operation constitutes adequate reasoning where factual connections between the taxpayer and the searched person exist. Obiter - the Court did not elaborate a detailed sufficiency test for reasons beyond the facts of the case.

Conclusions: The impugned orders contained adequate reasons for centralisation; no infirmity found on this ground.

Issue 3 - Relevance of connection to searched person (Section 132 operation) for centralisation

Legal framework: Centralisation aims at coordinated investigation; a search/seizure under Section 132 in relation to a person linked to the taxpayer can justify centralisation with the authority handling the broader investigation.

Precedent Treatment: The Court's assessment rests on statutory purpose and documented facts rather than cited case law.

Interpretation and reasoning: The petitioners denied any relationship with the person subjected to search and seizure. The Court examined documentary evidence showing that the searched person was a director of the petitioner companies, had signed returns and resolutions, and affirmed the affidavit supporting the petition. Given those demonstrable connections and the fact that the search was conducted in Haryana, centralisation with the authority handling related investigations in that territorial bracket was reasonably necessary for coordinated investigation and assessment. The presence of the petitioners' establishment in Haryana (Sonipat) further corroborated the appropriateness of centralisation. The Court therefore treated the asserted lack of connection as insubstantial on the facts before it.

Ratio vs. Obiter: Ratio - Demonstrable corporate and documentary links between a taxpayer and a person subject to Section 132 search justify centralisation for coordinated investigation. Obiter - none significant beyond the application to the facts.

Conclusions: The petitioners' connections to the searched person and territorial links to Haryana rendered centralisation appropriate; the Court rejected the contention of no relationship.

Overall Conclusion and Disposition

The Court found no infirmity in the impugned orders centralising assessments under Section 127(2): (a) the centralisation conformed to the Department's Office Order delineating jurisdiction for Haryana, (b) the impugned orders sufficiently stated reasons linking centralisation to coordinated investigation following a Section 132 search, and (c) factual connections between the petitioners and the searched person and the petitioners' establishment in Haryana justified centralisation. The petition was dismissed and ancillary applications disposed of.

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