Gujarat High Court
Dhirajlal Laljibhai Patel vs Assistant Commissioner Of Income Tax, ... on 16 September, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/210/2024 JUDGMENT DATED: 16/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 210 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 262 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 259 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 20481 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 20586 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 20401 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 20886 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 20417 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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DHIRAJLAL LALJIBHAI PATEL
Versus
ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2)
==========================================================
Appearance:
MR.VARUN K.PATEL(3802) 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
COMMON JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Tej Shah and
learned advocate Mr. S.N. Devatia for the
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petitioners and learned Senior Standing Counsel
Mr. Varun Patel for the respondent.
2. Having regard to the controversy arising in
this group of petitions in a very narrow compass,
with the consent of the learned advocates, same
are taken up for hearing.
3. Rule returnable forthwith. Learned Senior
Standing Counsel Mr. Varun Patel waives service
of notice of rule.
4. All these group of petitions are arising from
the similar facts and, therefore, raising the
similar issue of challenging notice issued under
Section 148 of the Income Tax Act, 1961 (for
short 'the Act') and are, therefore, heard and
disposed of analogously.
5. Brief facts giving rise to these petitions
can be summarised as under:
5.1 The petitioners purchased plots of Bungalows
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in Scheme Vrundavan-9.
5.2 A search action under Section 132 of the Act
was carried out in case of MHS Group on
16.11.2021. During the course of search
proceedings at residential premises of Dr. Dilip
Ambalal Modi at Bungalow No.1/A and 1/B, Nutan
Sarvoday Co-op. Housing Society Ltd., Kochrab,
Ellisbridge, Ahmedabad, loose papers were found
and seized and on perusal of such loose papers,
it was found that it contained handwritten
details of financial transactions of property
situated at Paldi and Vrundavan-9 along with
bifurcation of cheque and cash payments.
5.3 The respondent Assessing Officer, considering
such seized documents, and loose papers in page
No.33 in his satisfaction note observed as under,
[In SCA No. 20417 of 2023-pg-27)]:
"2.3 A careful perusal of the loose paper
in page no. 33, it is very clear that the
assessee has purchased property being
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Bungalow No. 6 in the Scheme Vrundavan-9 viz.
land admeasuring 1207 @92,500/-, thus, the
cost of land worked out to Rs. 11,16,47,500/-
and construction admeasuring 880 Sq. Yd. @
31,500/-, the construction cost works out to
Rs.2,77,20,000/-. The total value of
bungalow, therefore, worked out to Rs.
13,93,67,500/-. The middle part of the page
no. 33 shows bifurcation of Rs.
13,96,67,500/- with the details of cash
component of Rs.9,92,70,500/- adding thereto
further amount of Rs. 26,54,850/-, the total
cash component works out to Rs 10,19,25,350/-
after reducing Rs.9,93,35,000/-, shown
Rs.25,90,350/- as "Pending" and cheque
component of Rs.4,00,97,000/- with stamp
duty, GST and other expenses. In the said
loos paper, the total cash payment of Rs.
10,19,25,350/- shows against the purchase of
bunglow in Vrundavan-9. During the course of
recording the statement, as reproduced above,
the assessee viz. Dr. Dilip Modi clearly
admitted that he has paid cash of Rs.
10,13,35,000/-out of cash payment of Rs.
10,19,25,350/- to the builder on purchase of
bungalow in Vrundavan-9."
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5.4 The Assessing Officer, thereafter, on the
basis of the above information in case of Dr.
Dilip Modi and after referring to his statement,
as well as the mobile images found out from his
phone, observed as under:
"2.9 From the statement, it is very clear
that Shri Kalpeshbhai N. Aahir admitted that
the amount shown in the diary found and
seized from the residence of Dr. Dilip Modi
is written by Shri Kalpeshbhai N. Aahir.
However, Kalpeshbhai N. Aahir's dispute is
only that the amount shown in the diary is in
actual and not in coded figure as deposed by
Dr. Dilip Modi. He further stated that the
amount shown in the diary is received for the
renovation work. However, Kalpeshihai N.
Aahir failed to furnish any evidences to
prove what renovation work was done in the
newly constructed/being constructed bungalow.
Needless to say that for a newly constructed
bungalow may not be needed any renovation
work."
"2.14 The statement given by Mustufamiya
Mustu H. Shaikh is exactly match with Page
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No. 44 of Annexure-AS/1 in respect of cash
payment of Rs.5,00,00,000/- &
Rs.3,34,35,000/- on 04/08/2021 & 29/08/2021
respectively. Considering the above, it can
be concluded that Kalpeshbhai N. Aahir is
received an amount of Rs. 10,19,25,350/- in
cash on sale of bungalow no. 6 in Vrundanvan-
9 over and above the document price of
Rs.4,00,97,000/. Dr. Dilip Modi also stated
that this cash amount of Rs.8,34,35,000/- and
adding thereto further cash amount of Rs.
1,84,90,350/- and made cash investment of Rs.
10,19,25,000/- in purchase of new property
being Bungalow No. 6 in Vrundavan-9. On
inquiry it revealed that the project of
Vrundavan-9 consists of 21 bunglows having
different plot area, however, the constructed
area is the same. As the detailed discussion
made in the case of Dr. Dilip Modi in this
appraisal report in Para No. 7.6.1.1, it has
been seen that the builder Shri Kalpesh Ahir
has hugely Rs.92,500/- per Sq. Yd. and
construction cost of Rs 31,500/- as has been
arrived at in the case of Dr. Dilip Modi.
Accordingly, a list is prepared applying the
least rate of land at Rs.92,500/- per Sq. Yd.
thereby unaccounted on money receipt from the
owners of the 17 bungalows sold in the Scheme
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Vrundavan-9 comes to Rs. 163,81,61,523/-"
5.5 Thereafter, the Assessing Officer reproduced
the details of the 17 owners of the Bungalows in
Vrundavan-9 Scheme considering the rate of land
at Rs.92,500/- per Sq. Yd, in a Table, and
thereafter finding out from the Office of Sub-
registrar that the average cost of the Bungalow
in the said Scheme was shown as Rs.7300/- per Sq.
Ft., calculated the amount of on-money, which
assumed to have been paid by the each Bungalow
owner. The respondent Assessing Officer
thereafter issued impugned notices under Section
148 of the Act proposing to re-open assessment of
income of the petitioners for respective
Assessment Years. The requisite details of the
notice under Section 148 of the Act for A.Y.
2019-20 to 2021-22 in each case are tabulated as
under:
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Details of Vrundavan 9
Particular Dhirajlal Milankum Brijesh Haresh Kishor Bhanuben Jayantibh Shravan
s Lajibhai ar Dhirajlal Masribhai Bhanubha Hareshbh ai Patel Patel
Patel Dhirajlal Patel Kataria i Kataria ai Kataria
Patel
SCA No. 210 of 259 of 262 of 20481 of 20401 of 20586 of 20417 of 20886 of
2024 2024 2024 2023 2023 2023 2023 2023
A.Y. of 2019-20 2019-20 2019-20 2019-20 2020-21 2019-20 2021-22 2021-22
reopening
Date of 10-02- 10-02- 10-02- 10-02- 10-02- 10-02- 10-02- 10-02-
Satisfacti 2023 2023 2023 2023 2023 2023 2023 2023
on on
Note
Bungalow 3 & 11 3 jointly 11 jointly 5 jointly 16 jointly 5 jointly 9 jointly 9 jointly
No. jointly owned owned owned owned owned owned owned
owned with with with wife with wife with with son with
with sons father father Bhanuben husband father
Brijesh & Dhirajlal Dhirajlal Haresh
Milan
Date of 10.3.2023 10.3.2023 10.3.2023 10.3.2023 10.3.2023 10.3.2023 20.3.2023 20.3.2023
notice
issued
u/s. 148
of the Act
Sale deed 25-10-18 30-03-19 25-10-18 18-01-19 01-10-19 18-01-19 Purchase Purchase
date deed deed
executed executed
on on
31.3.2021 31.3.2021
(Page-58- (Page-55-
60 of 58 of
petition) petition)
Booking 3,21,12,5 1,52,50,0 1,68,62,5 2,60,15,0 2,59,45,0 2,60,15,0 Rs. Rs. 25
amount 00 00 00 00 00 00 6,00,000 lakhs by
paid by cheque cheque on
on 08.03.201
06.09.201 7
6; Rs.
45,00,000
paid by
cheque on
06.09.201
Details Pg. 30 Pg. 31 Pg. 30 Pg. 32 Pg. 32 Pg. 32 Page-43- Page 40-
from 44 of 41 of
public petition petition
domain
Proposed 8,65,75,0 8,65,75,0 8,65,75,0 11,06,70, 9,11,30,0 11,06,70, Rs. Rs.
escapeme 00 00 00 000 00 000 9,65,33,0 9,65,33,0
nt 00 (Page 00 (Page
44) 41)
5.6 Thereafter, copy of reasons recorded/
satisfaction note was issued to the petitioners.
Each of the petitioner raised objection before
the Assessing Officer contending inter alia that
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the respondent Assessing Officer could not have
assumed the jurisdiction by assuming that the
petitioner had also paid on-money as it was found
to have been paid by Dr. Dilip Modi from the
seized material. Each of the petitioners
submitted the details of the amount paid for
purchase of the Bungalow at Vrundavan-9 along
with the sale-deed executed by M/s. Vrundavan
Buildcon in favour of the petitioners.
5.7 The respondent Assessing Officer passed
impugned orders rejecting objections raised by
the petitioners. The petitioners have thereafter
preferred this petition.
6. Learned advocates for the petitioners
submitted that respondent Assessing Officer could
not have assumed the jurisdiction to reopen the
assessment on the basis of the loose papers found
during the course of search at the premises of
Dr. Dilip Modi, as the details mentioned in the
Satisfaction Note/ reasons recorded, refers only
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to the transactions carried out by Dr. Dilip Modi
and there is no reference to any of the
transactions carried out by the petitioners. It
was submitted that the respondent Assessing
Officer has only assumed that the petitioners
also would have paid the amount at the rate of
Rs.92,500/- per Sq. Yd. on the basis of the
computation made in case of Dr. Dilip Modi for
purchase of Bungalow No.6 in Vrundavan-9. It was
also submitted that search in case of MHS Group
took place on 16.11.2021 whereas the petitioners
have purchased the property in Vrundavan-9 Scheme
prior thereto. It was submitted that on the basis
of the details given in Satisfaction Note, the
transaction of purchase made by Dr. Dilip Modi
for the purchase of Bungalow No.6 in Vrundavan-9
was in the year 2021-22, as per the details
mentioned in Para-2.7 which is just prior to the
search. It was further submitted that therefore
the data revealed in the seized documents of Dr.
Dilip Modi could not have been considered as an
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information to compute the escaped income by
presuming that the petitioners would have also
paid the amount over and above the sale-
consideration mentioned in the sale-deed. It was
further submitted that from the public domain, it
was verified by the respondent Assessing Officer
that the average cost of Bungalow of Vrundavan-9
developed by M/s. Vrundavan Buildcon is Rs.7300/-
per Sq. Ft. by referring to the relevant images
of the Vrundavan-9 project captured from website.
It was submitted that on the basis of such
information, it could not have been presumed that
the petitioners have also paid on-money to the
builder so as to reopen the assessment as the
entire basis of reopening is without there being
any material on record for having live nexus with
the information to reopen the assessment in case
of the petitioners.
7. It was submitted that the petitioners have
placed on record all the details pertaining to
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the transactions before the Assessing Officer,
however, the objections raised by the
petitioners have not been disposed of, more
particularly in SCA No. 20417 of 2023 and SCA No.
20886 of 2023. In other cases, the objections
were disposed of by the Assessing Officer on the
ground that incriminating material gathered
during the course of search and seizure
operation, opinion has been formed on the basis
of the facts to compute that on-money was paid by
the petitioners, as the property has been
purchased by the petitioner, is at much lower
rate computed on the basis of the seized material
and the Assessing Officer, shall be deemed to
have information which suggest that the income
chargeable to tax has escaped assessment, which
is sufficient to reopen the assessment. It was
contended in the objection while disposing
objections that computation of alleged on-money
payment by the petitioners is based on the
information available from the seized documents
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from the premises of Dr. Dilip Modi pertaining to
the purchase of the Bungalow No.6 and, therefore,
it was rightly considered by the Assessing
Officer that similarly the petitioners would have
made the on-money payment for purchase of the
Bungalow in Vrundavan-9 Scheme.
8. Learned advocates for the petitioners,
therefore, submitted that disposal of such
objections are only on the basis of conjectures
and surmises without there being any material on
record to show that the petitioner had paid on-
money for purchase of the property in Vrundavan-9
Scheme.
9. It was further submitted that merely on the
basis of the suspicion and in absence of any
corroborative material, the respondent Assessing
Officer could not have assumed the jurisdiction
to reopen the assessment for the year under
consideration.
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10. On the other hand, learned Senior Standing
Counsel Mr. Varun Patel appearing for the
respondent submitted that there is a clear
evidence of the on-money paid by Dr. Dilip Modi
for purchase of the Bungalow No.6 at Vrundavan-9
at the rate of Rs.92,500/- per Sq. Yd as well as
construction rate i.e. Rs.31,500/- per sq.yd for
the construction of Bungalow are clearly
mentioned in the seized material and, therefore,
the respondent Assessment Officer was justified
to compute the on-money paid by petitioner on
applying the same rate which was found from the
loose paper during the course of search.
11. It was submitted that one Kalpeshbhai Ahir
admitted that the amount shown in the Diary found
and seized from the residence of Dr. Dilip Modi
is written by him which contained the amount of
payment of on-money by Dr. Dilip Modi for the
purchase of Bungalow No.6 in Vrundavan-9.
Reference was also made to the District Valuation
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Officer (DVO) under Section 142A of the Act, who
has submitted the estimate of the fair market
value of the property of the bungalow at
Vrundavan-9 Scheme, which is higher than the
registered sale consideration paid by the
petitioner and, therefore, it is clear that the
petitioner has paid on-money in respect of
purchasing of the Bungalow No.9 in said Scheme
resulting into escapement of the income.
12. It was further submitted that during the
course of search proceedings under Section 132 of
the Act carried out at the residential premises
of Dr. Dilip Modi, incriminating documents
containing 48 pages were found at Annexure AS1,
which clearly mentions the rate of land at
Rs.92,500/- per Sq. Yd and construction rate at
Rs.31500/- per Sq. Yd and, therefore, the
Assessing Officer has rightly computed the amount
of on-money ought to have been paid by the
petitioners for purchase of the Bungalow. It was,
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therefore, submitted that the petitioners have
enough opportunity to demonstrate before the
Assessing Officer during the reassessment
proceedings and it cannot be said that the
impugned notices are without jurisdiction.
13. Having considered the rival submissions made
by the learned advocates for the respective
parties, it is apparent that respondent Assessing
Officer has issued the impugned notice on the
basis of the Satisfaction Note on the basis of
search carried out at the premises of Dr. Dilip
Modi and the loose papers found during the course
of search which contained the transactions of the
purchase of Bungalow No.6 in Vrundavan-9,
developed by M/s. Vrundavan Buildcon. It is also
on the basis of such information, the impugned
notices were issued which clearly shows that the
Assessing Officer has no other material except
the seized material which is found during the
search of residential premises of Dr. Dilip Modi
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and on the basis of such information the
Assessing Officer has arrived at a prima-facie
conclusion that the petitioners would have also
made the payment of on-money over and above the
sale consideration reflected in sale-deed without
taking into consideration that each transaction
made by the petitioner was much earlier than that
of the transactions of purchase of Bungalow No.6
made by Dr. Dilip Modi in the year 2021-22, just
prior to the search carried out on 16.11.2021.
14. It is also pertinent to note that reliance
placed on the information found from the public
domain is also without any basis as the Assessing
Officer could not have assumed the jurisdiction
on the basis of such information which has no
live nexus with the material available on record
in form of sale-deed which was executed by the
petitioners much prior to the date of search and
the date of transactions of the purchase made by
Dr. Dilip Modi. It also appears from the record
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that the respondent Assessing Officer has also
referred to the valuation report of the DVO in
some of the cases which could never have been the
basis for assuming jurisdiction and its valuation
report is only an opinion of the valuer and the
same is required to be supported by corroborative
evidence to prima-facie come to the conclusion
that the petitioners must have paid the on-money
for the purchase of the Bungalow.
15. Thus, from the facts of the case, it is
apparent that the respondent Assessing Officer
has issued the impugned show-cause notices only
for the purpose of making phishing inquiry
without there being any supporting material
having a live nexus with the material on record
of purchase of Bungalow by these petitioners in
Vrunavan-9 Scheme.
16. The impugned notices are, therefore, without
jurisdiction and liable to be quashed and set-
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aside.
17. In view of the foregoing reasons, all the
petitions succeed. The impugned notices issued in
each of the relevant petition are hereby quashed
and set-aside. Rule is made absolute to the
aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
SAJ GEORGE
