Gujarat High Court
Mehul Ravjibhai Surani vs Assessment Unit Income Tax Department on 16 September, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6142 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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MEHUL RAVJIBHAI SURANI
Versus
ASSESSMENT UNIT INCOME TAX DEPARTMENT & ANR.
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Appearance:
MR MANISH J SHAH(1320) for the Petitioner(s) No. 1
MS MAITHILI D MEHTA(3206) 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 : 16/09/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)
1. Heard learned advocate Mr. Manish Shah for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.
2. Rule, returnable forthwith. Learned advocate Ms. Maithili Mehta waives service of Page 1 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined notice of rule for and on behalf of the respondent.
3. Having regard to the controversy involved in this petition, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.
4. Present writ-petition under Article 226 of the Constitution of India is preferred for the following prayers:
"A) this Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the assessment order passed by Respondent No.1 u/s.147 r.w.s. 144B dated 19.03.2024 at Annexure-M and demand notice u/s.156 dated 19.03.2024 at Annexure-N. B) this Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of mandamus or any other appropriate writ, order or direction directing the Respondents to grant complete stay of demand arising out of assessment order passed u/s.147 r.w.s. 144B dated 19.03.2024 at Annexure-M. Page 2 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined C) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay operation and implementation of the assessment order passed u/s.147 r.w.s.
144B dated 19.03.2024 at Annexure-M and further stay the recovery of demand in pursuance of the notice issued u/s.156 at Annexure-N. D) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Court deems just and proper in the interest of justice."
5. Brief facts giving rise to filing of the present petition are as under:
5.1 The petitioner is an individual, having income from various sources including the income from other sources, long term capital gain, agricultural income and income from partnership firm. The petitioner filed return of income under Section 139(1) of the Income Tax Act, 1961 ( For short 'the Act') on 31.10.2018 declaring total income of Rs.3,23,520/-for Assessment Year 2018-19. No Page 3 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined regular scrutiny assessment was made in the case of petitioner.
5.2 Thereafter, the petitioner received a notice u/s.148A(b) dated 11.03.2022 stating that, genuineness of loss of Rs.19,88,297/-
pertaining to sale of shares of Kushal Limited cannot be ascertained, and hence, income to the extent of Rs.19,88,297/- has escaped assessment. Thereafter, Respondent No.2 passed order u/s.148A(d) dated 07.04.2022 stating that, the case of the petitioner is a fit case for issuance of notice u/s.148 of the Act as income chargeable to tax of Rs.19,88,297/- in respect of transactions pertaining to sale of shares of Kushal Limited has escaped assessment. The aforesaid order is followed by notice u/s.148 dated 07.04.2022. 5.3 Meanwhile, the case of the petitioner was Page 4 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined transferred to National Faceless Assessment Unit vide intimation dated 19.01.2023. The petitioner also received notice u/s.142(1) dated 06.11.2023 asking the petitioner to furnish the details pertaining to transactions executed with Kushal group. The petitioner, in pursuance of the notice issued u/s.148, filed his return of income on 08.11.2023 declaring income as offered in the return filed u/s.139(1) of the Act. In response to the aforesaid notice dated 6.11.2023, the petitioner vide his letter dated 09.11.2023 furnished the requisite details including the complete details relating to transaction executed with Kushal group. Thereafter, notice u/s.143(2) dated 05.12.2023 was issued to the petitioner. Thereafter, certain further communications were exchanged between Respondent No.1 and the petitioner. Page 5 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025
NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined 5.4 Ultimately, Respondent No.1 issued show cause notice cum draft assessment order dated 06.03.2024 proposing an addition of Rs.56,88,367/- u/s.69 of the Act being alleged unexplained investment made in the shares of Kushal Limited. It is the case of the petitioner that, while in the order passed u/s.148A(d), only loss pertaining to transactions executed with Kushal Limited were doubted, but in the show cause notice, addition is proposed on the value of entire investment by considering it as unexplained investment u/s.69 r.w.s. 115BBE of the Act. In response to the aforesaid show cause notice, the petitioner filed a detailed submission dated 09.03.2024 along with the relevant judicial pronouncements explaining that, the transactions executed with Kushal Limited are genuine transactions and the same is also Page 6 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined backed by documentary evidences. It was also stated in the reply that, entire transactions were executed through banking channel and corresponding sales of shares of Kushal Limited was accepted as genuine, and hence, investment/purchase of shares cannot be treated as non-genuine.
5.5 Thereafter, respondent No.1 passed an order u/s.144B r.w.s. 147 dated 19.03.2024 making an addition of Rs.56,88,367/- being alleged unexplained investment u/s.69 r.w.s. 115BBE of the Act.
5.6 It is the case of the petitioner that the Assessment Order passed by Respondent No.1 is a mere reproduction of show cause-cum-draft assessment order. The Respondent No.1 had not even bothered to consider reply dated Page 7 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined 09.03.2024 made by the petitioner in response to the show cause notice-cum-draft assessment order, wherein the petitioner has clearly demonstrated and made clear by leading various evidences that transactions executed with Kushal Limited were genuine.
5.7 It is the case of the petitioner that they relied upon some pertinent and direct judicial pronouncements including the judgments of this Court which directly support the stand of the petitioner. The Assessing Officer had neither rebutted a single submission of the petitioner, nor dealt with any of the judgments/orders cited by the petitioner in support of his case. Thus, entire order passed u/s.144B r.w.s. 147 of the Act is incomplete breach of principle of natural justice. The petitioner was also served with demand notice Page 8 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined u/s.156 of the Act dated 19.03.2024 raising demand of Rs.83,99,643/- which is more than the amount of addition made of Rs.56,88,367/- in Assessment Order.
6. The main grievance raised by the learned advocate for the petitioner is that the Assessment Order passed under Section 147 read with Section 144B of the Act is passed in complete breach of principles of natural justice. It was further submitted that the impugned Assessment Order and more particularly, internal page-9 thereof, which is at page-164 of the paper book, would indicate that straightaway the addition is made by the respondent without even whispering about the detailed reply filed by the petitioner to the show-cause notice issued for proposed addition.
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NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined
7. In response to the same, learned Senior Standing Counsel Ms. Mehta, relying on the affidavit-in-reply has conceded the fact that the reply given by the petitioner is not considered by the Assessing officer. A lame excuse is given in the affidavit-in-reply filed by the respondent in Para-25 that as the assessee has submitted irrelevant submissions, the Assessing Officer has not reproduced the submission in the impugned order. However, such contention is not worthy of being accepted in view of the fact that the contention raised by the petitioner are not considered by the respondent.
8. In view of the same, it cannot be disputed that the impugned order is passed in clear breach of principles of natural justice and, therefore, de hors the settled principles of law. Therefore, without entering into merits Page 10 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025 NEUTRAL CITATION C/SCA/6142/2024 JUDGMENT DATED: 16/09/2025 undefined only on this ground, the impugned order dated 19.3.2024 passed under Section 147 read with Section 144B of the Act are hereby quashed and set-aside and the matter is remanded to respondent-Assessing Officer to pass a fresh de-novo order, in accordance with law after considering the reply of the petitioner as well as providing opportunity of hearing, if desired by the petitioner. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this Order.
The petition is disposed of accordingly. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) SAJ GEORGE Page 11 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:32 IST 2025