Gujarat High Court
Ashapura Transport Co vs The Assistant Commissionr Of Income ... on 25 August, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 2083 of 2023
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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ASHAPURA TRANSPORT CO
Versus
THE ASSISTANT COMMISSIONR OF INCOME TAX, CIRCLE 2(1), RAJKOT
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Appearance:
MR TUSHAR HEMANI SENIOR ADVOCATE MS VAIBHAVI K PARIKH(3238)
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 : 25/08/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned Senior Advocate Mr.
Tushar Hemani for the petitioner and
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learned Senior Standing Counsel Mr. Karan
Sanghani for the respondent.
2. Having regard to the controversy
involved, with the consent of learned
advocates for the respective parties, the
matter is taken up for hearing.
3. Rule returnable forthwith. Learned
Senior Standing Counsel Mr. Karan Sanghani
waives service of notice of rule on behalf
of the respondent.
4. By this petition under Article 226 of
the Constitution of India, the petitioner
has prayed for the following reliefs:
"a) quash and set aside the
impugned notice as well as the
impugned order at ANNEXURE "A
(Colly.)" to this petition;
(b) pending the admission, hearing
and final disposal of this
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petition, stay the implementation
and operation of the impugned
notice as well as impugned order
at ANNEXURE "A (Colly.)" to this
petition and stay further
proceedings for Assessment Year
2017-18;
(c) any other and further relief
deemed just and proper be granted
in the interest of justice;
(d) provide for the cost of this
petition."
5. Brief facts of the case are that the
petitioner partnership firm is carrying on
the business of transportation and
handling of goods mainly meant for civil
supply and these services are provided to
various Government agencies like Food
Corporation of India, Central Warehousing
Corporation, Gujarat State Civil Supply
Corporation Limited, etc.
6. It is the case of the petitioner that
the petitioner was providing services to
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government agencies only and payments
against services so rendered were received
through banking channel only and no cash
is involved and the payments are received
after deduction of tax at source.
Moreover, major portion of the expenses of
the petitioner is in relation to payment
of transporters/truck owners-operators and
for such payment, the petitioner is
required to maintain cash on hand.
7. The respondent issued show cause
notice dated 26.05.2022 under clause (b)
of section 148A of the Income Tax Act,
1961 (For short "the Act") calling upon
the petitioner to show cause as to why
notice under section 148 of the Act should
not be issued for Assessment Year 2017-
2018 for reopening of the assessment as
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there were significant financial
transactions during the year under
consideration in the form of cash deposits
during demonetization period to the tune
of Rs.1,08,11,007/-.
8. The petitioner filed a detailed reply
to the show cause notice on 08.06.2022
contending that the petitioner had
actually deposited Rs.1,02,31,000/- during
demonitisation period and not
Rs.1,08,11,007/- as the petitioner was
having cash on hand in form of SBN
available at the close of 08.11.2016
generated out of the business activities.
The petitioner also filed audit report,
relevant bank account statement for the
entire year and the cash book. The
petitioner also informed the respondent
that cash deposits have been duly
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explained to Assistant/Deputy director of
Income Tax (Investigation)-II Rajkot from
time to time by filing reply and
submissions were made in response to the
summons issued under section 131A of the
Act.
9. The respondent however by the impugned
order dated 30.07.2022 passed under
section 148A(d) of the Act came to the
conclusion that it is a fit case to reopen
the assessment as there was escapement of
income chargeable to tax to the tune of
Rs.1,08,11,007/- and also issued notice
dated 30.07.2022 under section 148 of the
Act.
10. Being aggrieved, the petitioner has
preferred the present petition.
11. Learned Senior Advocate Mr. Tushar
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Hemani for the petitioner submitted that
there is no escapement of income as the
petitioner was having cash balance in the
cash book which is duly audited and return
was filed by the petitioner on the basis
of audited books of accounts.
12. It was further submitted that the
respondent Assessing Officer while passing
the impugned order under section 148A(d)
of the Act has recorded the finding that
"a prudent business man will never keep
such huge cash on hand as idle money at
business premises" and came to the
conclusion that it is a fit case for
reopening the assessment. It was
therefore, submitted that the respondent
Assessing Officer could not have arrived
at satisfaction from the point of view of
the prudent business man because as per
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the business activities of the petitioner,
the petitioner was required to keep huge
cash balance to make payment to
transporters so as to provide services to
Government agencies for transportation of
the goods.
13. It was further submitted that the
reasons assigned by the respondent to come to
the conclusion for reopening of the
assessment is without any basis as there is
no nexus between the information available
with the respondent Assessing Officer and
alleged escapement of income, more
particularly, in view of the fact that the
Investigation Wing of the department has
already issued summons to the petitioner
which were duly complied with by the
petitioner by letters dated 18.04.2017,
05.05.2017, 07.03.2018 and 04.03.2021
which were also produced before
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the respondent Assessing Officer. It was
therefore, submitted that the impugned
order as well as notice are liable to be
quashed and set aside.
14. On the other hand, learned Senior
Standing Counsel Mr. Karan Sanghani for
the respondent submitted that it is not in
dispute that the petitioner had deposited
cash of more than Rs. 1 crore in the bank
account during the demonitisation period
and there is no sufficient explanation
given by the petitioner for such huge
deposit or any comparison statement is
given by the petitioner in relation to
earlier years for maintaining such huge
cash.
15. It was therefore, submitted that the
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respondent Assessing Officer was justified
in coming to the conclusion that it is a
fit case to reopen the assessment on the
basis of such information received from
the Director of Investigation who has
provided information after making inquiry
with the petitioner.
16. It was submitted that the petitioner
has an alternative efficacious remedy to
challenge the order, if any, passed
against the petitioner in reopening
proceedings before the CIT(Appeals) and
therefore no interference may be made
while exercising extraordinary
jurisdiction under Article 226 of the
Constitution of India.
17. Having heard the learned advocates for
the respective parties and considering the
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facts of the case and on perusal of the
impugned order passed by the respondent
Assessing Officer, it appears that there
is no information available on record to
suggest that the petitioner had deposited
cash of Rs.1,08,11,007/- during the
demonitisation period which is not forming
part of the available cash balance. The
respondent Assessing Officer has
categorically recorded that as per the
cash book furnished by the petitioner, it
was clear that the petitioner was holding
large amount of cash in hand. However, the
Assessing Officer was of the view that the
petitioner being a prudent business man
would never keep such huge cash on hand as
idle money at the business premises and
therefore, arrived at the conclusion that
the petitioner failed to provide any
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justification for requirement of such huge
cash on hand.
18. It also appears that the respondent
Assessing Officer has brushed aside the
replies filed by the petitioner in
response to the summons issued under
section 131A of the Act issued by
Assistant/Deputy Director of Income Tax
(Investigation)-II Rajkot by observing
that the petitioner did not submit
complete details required for verification
of source of cash deposited during
demonitisation.
19. On the basis of reply filed by the
petitioner, it appears that the petitioner
has provided audited books of accounts,
bank statement and entire cash book along
with reply in addition to replies filed by
the petitioner in response to the summons
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issued by Assistant/Deputy Director of
Income Tax (Investigation)-II Rajkot.
However, respondent Assessing Officer
without considering the same and only on
the information that the petitioner has
deposited huge cash amount in the bank
account during the demonitisation period,
had come to the conclusion that it is a
fit case for reopening the assessment.
20. In such circumstances, we are of the
opinion that there is no foundational fact
available so as to enable the respondent
Assessing officer to assume jurisdiction
to reopen the assessment as the
information made available to the
respondent Assessing Officer by the
Investigation wing has not resulted into
any nexus with material available on
record so as to come to the prima facie
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conclusion that it is a fit case to reopen
the assessment on account of escaped
income of the cash deposited during the
demonitisation period.
21. It also appears from the record that
the respondent Assessing Officer has
failed to consider that there was
sufficient cash balance in the books of
account and there is nothing on record to
suggest that such cash balance has cropped
up only on 8.11.2016 on the eve of
demonitisation period.
22. Therefore, considering the facts of
the case, we are of the opinion that the
respondent Assessing Officer could not
have assumed jurisdiction to reopen the
assessment and accordingly, the petition
succeeds and is hereby allowed. Impugned
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order dated 30.07.2022 passed under
section 148A(d) of the Act is hereby
quashed and set aside. Consequentially,
the impugned notice under section 148 of
the Act of even date is also quashed and
set aside.
23. Rule is made absolute to the aforesaid
extent. No order as to costs.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
RAGHUNATH R NAIR
