Gujarat High Court
Utpala Pradeep Jain Heir Of Pradeep ... vs Assistant Commissioner Of Income Tax on 7 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8810 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✔
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UTPALA PRADEEP JAIN HEIR OF PRADEEP ROSHANLA JAIN
Versus
ASSISTANT COMMISSIONER OF INCOME TAX
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Appearance:
MR DHINAL A SHAH(12077) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 07/10/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)
1. Heard learned advocate Mr. Dhinal Shah for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for the respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule for and on behalf of Page 1 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined the respondent.
3. Considering the controversy arising in this petition in narrow compass, with the consent of learned advocates appearing for respective parties, the petition is taken up for final hearing today.
4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 12.4.2024 issued under Section 148 of the Income Tax Act, 1961 (for short 'the Act') for A.Y. 2016-17 as well as order dated 12.4.2024 passed by the respondent under Section 148A(d) of the Act for the A.Y. 2016-17.
5. Brief facts of the petition are as follows:
5.1 The assessee being late Pradeep Roshanlal Page 2 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined Jain filed his Income Tax Return for the Assessment Year 2016-17 on 13.10.2016, however, Shri Pradeep Roshanlal Jain passed away on 30.09.2020. Therefore, the present petitioner being legal heir of the assessee Pradeep Roshanlal Jain has subsequently preferred the legal proceedings. The assessee Pradeep Roshanlal Jain filed the Income Tax Return for the A.Y. 2016-17 declaring total income of Rs.17,59,890/-. The return of income was filed along with copy of the computation, audit report for the Financial Year 2015-16.
It is the case of the petitioner that in the audit report, the sales shown was to the tune of Rs.7,99,74,316.68 which, inter alia, included the alleged amount of escaped income. The case of the assessee was reopened under Section 148(d) of the Act and notice under Section 148 of the Act was issued by the Page 3 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined respondent.
6. Being aggrieved by the notice issued under Section 148 of the Act, the petitioner preferred a writ petition before this Court being SCA No. 18788 of 2022. It was alleged that the notice under the provisions of the Act was issued to the deceased assessee, which was not tenable. This Court by way of order dated 31.7.2023 allowed the writ petition. Subsequently, a fresh notice under Section 148 of the Act was issued to the petitioner invoking the provisions of Section 159 read with Section 149(1) of the Act, on 28.2.2024. It is the case of the petitioner that a notice dated 13.3.2024 was received from the respondent under Section 148A(b) of the Act wherein respondent authority had directed the petitioner to show cause and justify the Page 4 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined source of cash deposits made during the year along with documentary evidence. It was further communicated to provide cash-flow statement for the year under consideration as well as the copy of certain ledger Accounts.
7. It is the case of the petitioner that the assessee being late Pradeep Roshanlal Jain, was proprietor of Arihant Petroleum and was engaged in trading of petroleum, diesel and other petroleum products under the dealership IOCL. The location of business of late Pradeep R. Jain was in a remote place in Devgad Baria, Dahod, etc., therefore, the majority entry of transactions were carried out only in cash only. Therefore, the aggregated turnover was to the tune of Rs.729.63 lakh and the cash deposited was to the tune of Rs.652.32 lakh, including the cash deposited during Page 5 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined demonetization of Rs.117.03 lakh. In wake of such facts, the petitioner submitted a detailed reply on 20.3.2024. However, the respondent authority, in complete disregard to the submissions made by the petitioner, passed an order under Section 148A(d) of the Act and issued notice under Section 148 of the Act, which is impugned in the present writ petition.
8. Learned advocate Mr. Dhinal Shah for the petitioner raised the following submissions:
8.1 Learned advocate Mr. Shah for the petitioner submitted that Section 151A of the Act gives the power to the Central Board of Direct Taxes to notify scheme for the purpose of assessment, reassessment or recomputation under Section 147 or issuance of notice under Page 6 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined Section 148 or conducting of enquiry or issuance of notice under Section 148 or conducting of enquiry or issuance of show cause notice or passing of order under Section 148A or sanction for issuance of notice under Section 151, so as to impart greater efficiency, transparency and accountability between the income tax authorities and assessee;
8.2 That in exercise of the powers conferred under the above-mentioned Section, CBDT issued a notification dated 29.03.2022 which provided for the assessment, reassessment or recomputation under Section 147 of the Act.
The notification categorically states that the issuance of notice under Section 148 of the Act, shall be through automated allocation, in accordance with risk management strategy Page 7 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided in Section 1448 of the Act with reference to making assessment or reassessment of total income or loss of assessee; 8.3 That the respondent Authority has admittedly reopened the case upon directions received by him from Pr. Commissioner of Income Tax, Vadodra as mentioned in the letter dated 28.02.2024, without forming his own independent opinion first, and then seek approval, which is completely against the provisions of Section 148 of the Act. Mr. Shah has relied upon the decision of the Hon'ble Apex Court in the case of Commissioner of Income Tax-Shimla vs. The Greenworld Corporation (2009) 7 SCC 69, wherein it was Page 8 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined held that any order passed by the Assessing Officer on the dictates of the higher authorities which is illegal and being without any jurisdiction, is a nullity.
9. Per contra, learned Senior Standing Counsel Mr. Karan Sanghani for the respondent submitted that the final decision was based on reasoned analysis of the facts and legal provisions. Section 148A(d) of the Act mandates the Assessing Officer to review the materials and objections before passing of an order. This was done in the present case. It was submitted that cash deposited in the bank is not accounted for and is not supported by any available facts and record. As per Section 147 of the Act, the Assessing Officer has reason to believe that if any income has escaped assessment, they are empowered to initiate proceedings under Section 148 of the Page 9 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined Act for the purpose of reassessment. The mere fact that cash deposits have been made in the bank does not automatically mean that these deposits are lawful or represent income that has been properly disclosed. In wake of such submissions, Mr. Sanghani has submitted to dismiss the present writ petition preferred by the petitioner.
10. Having heard learned advocates for the respective parties and considering the facts of the case, it is not in dispute that the petitioner has disclosed in the return of income for A.Y. 2017-18 that there was cash deposits to the tune of Rs.652.32 lakh including cash to the tune of Rs.117.03 lakh deposited during demonetization period. Moreover, the petitioner has explained the objection replied with regard to cash deposits made. The assessee has explained that the Page 10 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined business being in rural area of Gujarat and also with regard to petroleum products, the end-users used to make cash deposit instead of any UPI payment. Thus, the petitioner has explained the cash deposit in bank account during the Assessment Year as well as during the demonetization period. The Assessing Officer, however, has discarded such explanation by only observing that the petitioner has failed to submit supporting and corroborative evidence providing direct nexus of cash deposit during the demonetization period from the amount of cash received from the consumer. Thus, reasons assigned by the Assessing Officer in the order disclosing the objection is contrary to the facts on record as the petitioner has explained in detail of the cash deposits in the Bank Account during the year under consideration. It also appears Page 11 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined from the record that the petitioner along with the objection has submitted requisite details, copies of bank statement, audited balance- sheet, etc., which is not referred by the Assessing Officer while disposing the objection. Moreover, this issue is squarely covered by decision of this Court in case of Narsimha Trading Co. v. Income Rax Officer, in SCA No. 17833 of 2021, wherein by judgment dated 2.12.2024 in para Nos. 11,12 and 13 it is observed as under:
"11. It appears that the Assessing Officer has formed reasonable belief that income chargeable to tax has escaped assessment only on the basis of the information available with him regarding the failure on the part of the petitioner-assessee of known source for the cash deposited ignoring that the petitioner has categorically stated in the reply that the cash deposited is out of the Page 12 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined sales which is duly reflected in the books of account.
12. In such circumstances, in absence of any independent application of mind by the respondent- Assessing Officer and in absence of any live link between the information received and the material available record, the impugned notice cannot be sustained. Merely because the Assessing Officer wishes to verify veracity of cash deposit cannot be the basis for reopening for making roving and fishing inquiry by reassessment even in case where the return was not scrutinized before acceptance originally. Therefore, respondent assessing officer could not have assumed jurisdiction to issue the impugned notice for reopening.
13. Reliance placed by the learned advocate for the respondent on the aforesaid decisions would not be applicable in the facts of the Page 13 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025 NEUTRAL CITATION C/SCA/8810/2024 JUDGMENT DATED: 07/10/2025 undefined case because the respondent assessing officer has failed to assume jurisdiction in absence of any tangible material to arrive at prima- facie reason to believe that income has escaped assessment.
11. In view of the foregoing reasons, the petition succeeds. Consequently, the impugned notice dated 12.4.2024 issued under Section 148 of the Act for A.Y. 2017-18 as well as order dated 12.4.2024 passed by the respondent under Section 148A(d) of the Act for the A.Y. 2017-18 are accordingly, quashed and set- aside. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) SAJ GEORGE Page 14 of 14 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:19 IST 2025