Gujarat High Court
Primit Shambhuprasad Purani vs The Income Tax Officer, Ward 1(2)(1), ... on 8 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7305 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 6690 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
==========================================================
Approved for Reporting Yes No
✓
==========================================================
PRIMIT SHAMBHUPRASAD PURANI
Versus
THE INCOME TAX OFFICER, WARD 1(2)(1), VADODARA & ANR.
==========================================================
Appearance:
MR RAVISH D BHATT(5867) 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
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 08/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Ravish
D. Bhatt for the petitioner through
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
video conference and learned Senior
Standing Counsel Mr. Karan Sanghani for
the respondent.
2. Rule returnable forthwith in both
the petitions. Learned Senior Standing
Counsel Mr. Karan Sanghani waives
service of notice of rule on behalf of
the respondent.
3. Facts are identical in both the
petitions. However, Special Civil
Application No. 6690/2023 is preferred
because after this Court passed order
dated 18.04.2022 whereby notice was
issued and ad interim relief was
granted by restraining the Assessing
Officer from passing the assessment
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
order and inspite of such interim
order, the respondent Assessing Officer
passed the assessment order under
section 147 read with section 143(3)
and 144B of the Act on 20.03.2023.
Therefore, the same is challenged by
way of Special Civil Application
No.6690/2023.
4. For the sake of convenience, facts
are recorded from Special Civil
Application No.7305/2022.
5. By this petition under Article 226
of the Constitution of India, the
petitioner has challenged notice dated
30.03.2022 issued under section 148 of
the Income Tax Act, 1961 (For short
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
"the Act") for Assessment Year 2018-
2019 along with order of even date
under section 148A(d) of the Act.
6. Brief facts of the case are that
the petitioner filed return of income
for Assessment Year 2018-2019 on
28.03.2019 declaring income of Rs.
8,27,020/- which was processed under
section 143(1) of the Act.
7. The respondent Assessing Officer
issued summons under section 131(1A) of
the Act on 14.07.2021 calling upon the
petitioner for various details along
with source of funds for purchase of
crypto currency during the year under
consideration.
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
8. The petitioner by reply dated
26.07.2021 provided necessary details
and explained the source of funds for
purchasing crypto currency by stating
that he had borrowed funds from his
father.
9. The petitioner thereafter was once
again called upon to provide the
details by issuing summons under the
provisions of section 131(1A) of the
Act on 01.10.2021 to provide the same
information and details about its
transactions in crypto currency and
source of funds to purchase the same.
10. The petitioner again by reply dated
20.10.2021 provided all the information
along with request to condone the delay
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
as his son was sick and hospitalized
and also explained the source of funds
for purchase of crypto currency.
11. It appears that respondent
Assessing Officer thereafter issued
notice under section 148A(b) of the Act
on 17.03.2022 for Assessment Year 2018-
2019 on the ground that the petitioner
has purchased crypto currency amounting
to Rs. 19,00,000/- during the year
under consideration and has failed to
explain the source of investment before
DDIT (Investigation).
12. The petitioner filed detailed reply
dated 19.03.2022 which was uploaded on
24.03.2022 contending inter-alia that
the petitioner has already filed return
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
of income for the year under
consideration and also explained the
source of purchase of crypto currency
by stating that he has made investment
out of the funds received from his
father Shri Shambhuprasad Purani who is
assessed to income tax. The petitioner
also provided the bank statement from
which amount of Rs. 40,00,000/- was
transferred to his account out of which
the petitioner invested Rs. 20,00,000/-
in mutual funds and purchased crypto
currency of Rs. 19,00,000/-.
13. However, respondent Assessing
Officer without considering the reply
of the petitioner passed the impugned
order dated 30.03.2022 under section
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
148A(d) of the Act observing as under:
"3. Therefore, after obtaining
prior approval of the Pr.CIT-1,
Vadodara; a notice u/s.148A(b)
of the Act issued on 17/03/2022
to the asssessee to show cause
as to why a notice under section
148 should not be issued on the
basis of information which
suggests that income chargeable
to tax has escaped assessment in
his case for the A.Y. 2018-2019.
In response to the notice
u/s.148A(b) of the Act, the
asssessee has submitted its
reply dated 24/03/2022 received
in ITBA. The asssessee has also
submitted statement of bank
account, mutual fund statement
etc. The asssessee has submitted
that the source of investment in
crypto currency is out of
redemption of mutual fund. The
asssessee has stated that his
father Shri Shambuprasad Purani
(PAN-ACQPP6055J) is assessed to
tax. From his bank account,
Rs.40,00,000/- received. Out of
this, the assessee has invested
Rs.20,00,000/- in SBI Mutual
Fund port folio No.15611133 and
15611901. The asssessee has
invested Rs. 19,00,000/- in
crypto out of redemption of
mutual fund No.1561190. However,
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
the assessee has not submitted
the copy of bank account details
and return of income of his
father i.e. Shri Shambuprasad
Purani (PAN- ACQPP6055J). Hence,
the contentions of the asssessee
found to be not correct.
4. In view of the facts and
discussion made above, it is
evident that in this case, there
is information with the
assessing officer which suggests
that income amounting to
Rs.19,00,000/- chargeable to tax
has escaped assessment for AY
2018-19. Therefore, in view of
this information and material
available on record, discussion
made above, especially the fact
that the assessee had not filed
any return of income for AY
2018-19, it is held that it is a
fit case to issue a notice under
section 148 of the Income Tax
Act, 1961. This order is passed
with the prior approval of the
Principal Commissioner of Income
Tax-1, Vadodara."
14. Being aggrieved, the petitioner has
preferred the present petition.
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
15. Learned advocate Mr. Ravish Bhatt
for the petitioner submitted that
inspite of providing information by the
petitioner of the source of funds along
with bank statement of his father from
whom the petitioner had borrowed funds
for purchase of crypto currency,
respondent Assessing Officer has
recorded incorrect fact in the impugned
order passed under section 148A(d) of
the Act to the extent that the
petitioner has failed to provide the
bank statement.
16. It was further submitted that
incorrect statement with regard to non
filing of the return by the petitioner
is also made in contradiction to what
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
is stated in para no.1 of the impugned
order. It was therefore submitted that
impugned order passed under section
148A(d) of the Act is contrary to the
facts on record and is passed without
application of mind and only with a
view to cause harassment to the
petitioner. It was therefore, prayed
that the impugned order and
consequential notice issued under
section 148 of the Act may be quashed
and set aside as the respondent
Assessing Officer could not have
arrived at the conclusion that it is a
fit case to reopen the assessment.
17. Learned advocate Mr. Bhatt further
submitted that this Court by order
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
dated 18.04.2022 issued notice and
granted ad interim relief in terms of
para 8(D) by restraining the Assessing
Officer from passing the assessment
order and inspite of such interim
order, the respondent Assessing Officer
passed the assessment order under
section 147 read with section 143(3)
and 144B of the Act on 20.03.2023.
18. It was submitted that however
respondent Assessing Officer did not
make any addition considering the reply
filed by the petitioner. It was
submitted that however, the petitioner
has preferred Special Civil Application
No. 6690/2023 challenging the
assessment order.
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
19. It was further submitted that as
the impugned notice issued under
section 148 of the Act is without
jurisdiction and therefore, order dated
20.03.2023 is also liable to be quashed
and set aside.
20. On the other hand learned Senior
Standing counsel Mr. Karan Sanghani for
the respondent could not controvert the
contradictions recorded by the
Assessing Officer in the order passed
under section 148A(d) of the Act and
also could not controvert the fact that
the petitioner had filed return of
income for the year under consideration
as well as provided details of source
of funds along with bank statement of
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
the father of the petitioner.
21. It was therefore, submitted by
learned Senior Standing counsel Mr.
Sanghani that considering such facts
the Assessing Officer has not made any
addition while passing the assessment
order. It was further submitted that
the Assessing Officer was of the
opinion that no addition is required to
be made and assessment order is passed
though there is stay order granted by
this Court as no adverse order was to
be passed against the petitioner.
22. In view of above facts and
considering the material facts on
record, it is evident that the impugned
order dated 30.03.2022 passed under
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
section 148A(d) of the Act is a classic
example of order passed without
application of mind by the respondent
Assessing Officer ignoring the fact on
record. Even on perusal of the order
the same is self contradictory as is
evident from para nos. 1 and 4 of the
order. The respondent Assessing Officer
has recorded in para no.1 that the
petitioner has filed return of income
however in para no.4 it is recorded
that no return of income is filed. It
is also not in dispute that the
petitioner has filed bank statement of
his father from whom he had borrowed
funds to purchase crypto currency which
is available on record and not disputed
by the learned advocate for the
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
respondent.
23. We are therefore, of the opinion
that impugned order dated 30.03.2022
passed under section 148A(d) of the Act
is liable to be quashed and set aside
and is hereby quashed and set aside.
Consequently notice issued under
section 148 of the Act of the even date
would not survive and is accordingly
quashed and set aside. Special Civil
Application No.7305/2022 stands
disposed off.
24. In view of setting aside of order
passed under section 148A(d) of the Act
and notice under section 148 of the
Act, subsequent assessment order dated
20.03.2023 and consequential notices
NEUTRAL CITATION
C/SCA/7305/2022 JUDGMENT DATED: 08/04/2025
undefined
issued by respondent Assessing Officer
also would not survive. Accordingly
Special Civil Application No.6690 of
2023 wherein said order dated
20.03.2023 is challenged is allowed and
the assessment order as well as
subsequent notices are hereby quashed
and set aside. Special Application No.
6690/2023 stands disposed off.
25. Rule is made absolute to the
aforesaid extent in both the petitions.
No order as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
RAGHUNATH R NAIR
