Gujarat High Court
Mehul Ravjibhai Surani vs Assessment Unit Income Tax Department on 16 September, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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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
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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.
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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
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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
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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.
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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
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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
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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
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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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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
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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
