Gujarat High Court
Atul Mahavirprasad Paldecha vs Income Tax Officer, Ward 2(3)(6), Surat on 7 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/8236/2025 JUDGMENT DATED: 07/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8236 of 2025
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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ATUL MAHAVIRPRASAD PALDECHA
Versus
INCOME TAX OFFICER, WARD 2(3)(6), SURAT & ANR.
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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
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 2
NOTICE SERVED 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 respondents.
2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule on Page 1 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025 NEUTRAL CITATION C/SCA/8236/2025 JUDGMENT DATED: 07/10/2025 undefined behalf of the respondents.
3. Having regard to the controversy in a narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.
4. By this petition under Articles 226/227 of the Constitution of India, the petitioner has prayed for quashing and setting aside the impugned order passed by the respondent no. 1 under Section 148A(d) of the Income Tax Act, 1961 (For Short "the Act") dated 31.08.2024 as well as the notice dated 31.08.2024 under Section 148 of the Act for the Assessment Year 2018-19.
5. The brief facts of the case are as under :-
5.1. The petitioner is a proprietor and is inter alia engaged in the business of trading in Diamonds. The petitioner filed its return of income under Section 139(1) of the Act on 29.09.2018 declaring the total income of Rs.1,28,74,840/-.
5.2. During the course of assessment proceedings and in response to the notice issued under Section 142(1) of the Act, details of purchases and sales were submitted by the petitioner.Page 2 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025
NEUTRAL CITATION C/SCA/8236/2025 JUDGMENT DATED: 07/10/2025 undefined Thereafter the assessment process was completed and order under Section 143(3) of the Act came to be passed on 20.04.2021 whereby the total income of the petitioner was determined at Rs.1,82,27,809/- after making additions of Rs.53,52,969/- under Section 56(2)(x)(b)(B) of the Act. 5.3. Subsequent to the completion of the assessment proceedings, certain information was uploaded on the Insight portal alleging escapement of the income to the tune of Rs.1,48,05,575/- on account of bogus purchases made by the petitioner from one M/s. Tanman Jewels Pvt. Ltd. On the basis of the said information, the case of the petitioner was reopened and notice under Section 148A(b) of the Act was issued on 12.08.2024 alleging that the petitioner had entered into bogus purchase transactions. In response to the said notice, the petitioner submitted a detailed reply on 20.08.2024 denying the allegations.
5.4. Thereafter, the petitioner was again issued with notice dated 24.08.2024 under Section 148A(b) of the Act alleging bogus sales transactions with same party i.e. M/s. Tanman Page 3 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025 NEUTRAL CITATION C/SCA/8236/2025 JUDGMENT DATED: 07/10/2025 undefined Jewels Pvt. Ltd. amounting to R.1,48,05,575/- and thereby directed to furnish reply by 28.08.2024. It is the case of the petitioner that the respondent allowed only four days' time to respond to the notice, which is contrary to the minimum required statutory period of seven days as mandated under Section 148A(b) of the Act.
5.5. It is further the case of the petitioner that due to insufficient time provided, the petitioner was unable to file reply and adequately rebut the fresh allegations made in the second notice dated 24.08.2024. It is the case of the petitioner that on the basis of the aforesaid two notices, the respondent under Section 148A(d) of the Act passed an order dated 31.08.2024 alleging bogus sales of Rs.3,32,82,818/- and on the same date i.e. 31.08.2024, the respondent no. 1 issued notice under Section 148 of the Act seeking to reopen the assessment for the Assessment Year 2018-19. Therefore, the order dated 31.08.2024 passed under Section 148A(d) of the Act and notice under Section 148 of the Act are impugned in the present writ petition.
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6. Learned advocate Mr. Dhinal Shah for the petitioner submitted that the respondent no. 1 has failed to give reasonable opportunity of being heard to the petitioner before passing the impugned order under Section 148A(d) of the Act. Moreover, the notice dated 24.08.2024 provided the petitioner only four days to respond which is in violation of the mandatory seven days statutory period as prescribed under Section 148A(b) of the Act. Therefore, the denial of the statutory minimum time period renders the proceedings void ab initio and violates the right of the petitioner.
6.1. Learned advocate Mr. Dhinal Shah further submitted that there are other issues distinct with regard to the allegation of bogus sales, however, prima facie issue which needs to be interfered is violation of the mandatory period of giving response.
7. Per contra, learned Senior Standing Counsel Mr. Karan Sanghani for the respondent could not controvert the submissions made by learned advocate Mr. Dhinal Shah and relied upon the affidavit-in-reply filed on behalf of the Page 5 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025 NEUTRAL CITATION C/SCA/8236/2025 JUDGMENT DATED: 07/10/2025 undefined respondent on the following averments :-
"4. At the outset, I most respectfully submit that the petitioner has challenged the impugned notice dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for A.Y 2018-19 as well as the order dated 31.08.2024 passed under section 148A(d) of the Act submit that this petition is premature and there is an alternative efficacious remedy available under the law. The assessment pursuant to impugned notice is yet to be framed. In other words, the petitioner if aggrieved by the assessment order yet to be framed can file an appeal before the CIT (Appeals) and thereafter to the Appellate Tribunal. It is a settled law that the person aggrieved cannot abandon the statutory mechanism stipulated under the Act. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of Chhabildas Agrawal, (357 ITR 357) Hence, on this limited ground, the challenge to the impugned notice may kindly be rejected.
5. The petitioner has contended that only 4 days time in granted to respond to Section 148A(b) notice as against the Ray 108andatory period of seven days prescribed in the statute.
In this regard, I humbly submit that notice u/s 148A(b) was issued on 12.08.2024 calling upon the petitioner to respond on or before 20.08.2024, therefore, minimum seven days were granted to the petitioner. The petitioner vide letter dated 20.08.2024 duly responded to such notice.
6. Subsequently, another notice u/s 148A(b) of the Act was issued on 24.08.2024 calling upon the petitioner to respond on or before 28.08.2024. The petitioner neither responded to such notice nor filed any adjournment. Consequently, the respondent passed an order u/s 148A(d) on 31.08.2024 and issued notice dated 31.08.2024 u/s 148 of the Act."
7.1. Referring to the above averments, it was submitted that impugned notice issued under Section 148 of the Act is legal and therefore requested to dismiss the petition and pass Page 6 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025 NEUTRAL CITATION C/SCA/8236/2025 JUDGMENT DATED: 07/10/2025 undefined appropriate order.
8. Having heard the learned counsel for the respective parties and having gone through the material placed on record, the primary case of the petitioner is that notice issued under Section 148A(b) of the Act was issued on 24.08.2024 wherein the petitioner was directed to furnish reply by 28.08.2024 which time period is less than the time stipulated under Section 148A(b) of the Act. Section 148A(b) of the Act reads as under :-
Section 148A The Assessing Officer shall, before issuing any notice under Section 148 :-
(a) xxx xxx
(b) Provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under Section 148 should not be issued on the basis of information which suggest that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause
(a);"
9. Upon perusing the above provision, it is not in dispute that the petitioner was not given adequate time as required under Section 148A(b) of the Act, and was not heard before passing the impugned order. It is a fundamental proposition of law that Page 7 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025 NEUTRAL CITATION C/SCA/8236/2025 JUDGMENT DATED: 07/10/2025 undefined the other side should be heard before any order is passed. The maxim of Audi Alteram Partem is broad enough to include the rule against bias since a fair hearing is must for it to be unbiased hearing. In the instant case, the fact is not in dispute that the petitioner was not given appropriate time to respond to the notice issued under Section 148A(b) of the Act and the impugned order was passed without hearing the petitioner. In view of the same, the impugned order passed by the respondent under Section 148A(b) of the Act as well as the notice issued under Section 148 of the Act are not tenable and the same are required to be quashed and set-aside.
10. Considering the facts of the case, the petition succeeds and is accordingly allowed. The impugned order and notice dated 31.08.2024 are hereby quashed and set aside and the matter is remanded to the respondent to comply with the provisions of Section 148A(b) of the Act and pass a fresh order after following due procedure of law.
11.. Such exercise shall be completed within twelve (12) weeks from the date of receipt of copy of this order. Page 8 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025
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12. Rule is made absolute to the aforesaid extent with no order as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) phalguni Page 9 of 9 Uploaded by PHALGUNI PATEL(HC00175) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:34:14 IST 2025