[Cites 12, Cited by 0]
Gujarat High Court
Raivat Kalpeshbhai Shah vs Income Tax Officer,Ward 3(3)(2), ... on 8 April, 2026
Author: A.S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/SCA/3809/2026 JUDGMENT DATED: 08/04/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.3809 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI Sd/-
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Approved for Reporting Yes No
✔
=============================================
RAIVAT KALPESHBHAI SHAH
Versus
INCOME TAX OFFICER,WARD 3(3)(2), AHMEDABAD
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Appearance:
MR TUSHAR HEMANI, SENIOR ADVOCATE for
MS VAIBHAVI K. PARIKH, (3238) for the Petitioner(s) No. 1
MR AADITYA D BHATT(8580) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 08/04/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. RULE returnable forthwith. Learned Senior Standing
Counsel Mr.Aaditya Bhatt waives service of notice of rule for
respondents.
2. The present writ petition has been filed challenging the
notice issued under Section 148 of the Income Tax Act, 1961
(for short, "the Act") dated 25.03.2025 and to stay further
proceedings of the Assessment year 2021-22.
3. The petitioner is engaged in the business of real estate
and filed his return of income on 30.03.2022 declaring total
income of Rs.22,11,610/-. The respondent recorded a
satisfaction note dated 15.03.2025 under Explanation 2(iv) to
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Section 148 and proviso to Section 148A(c) of the Act alleging
escapement of income on the basis of information received
pursuant to a search.
4. A search and seizure action under Section 132 of the Act
was carried out on 28.09.2021 in the case of B Safal Group and
M/s. City Estate Management India, a real estate broker, during
which inquiry registers containing details of various properties
and their asking rates were seized. A statement of Shri Pravin
Nagjibhai Bavadiya, proprietor of M/s. City Estate Management
India, was recorded, wherein it was stated that such registers
contained details of properties available for sale.
5. One of the entries in the seized register dated
18.03.2019 pertained to land situated at Godhavi bearing
Survey No.575. On verification, it is found that the said land
was purchased on 10.03.2021 by the petitioner.
6. As per the registered sale deed, the property was
purchased for Rs.1,35,00,000/-, whereas the satisfaction note
refers to Rs. 81,00,000/-.
7. As per the seized material, the alleged value of the
property was Rs.7,09,68,253/- and the Respondent alleged
that the difference of Rs. 6,28,68,253/- represented
unaccounted cash ("on-money") paid by the petitioner.
8. The respondent formed an opinion that the seized
material pertained to the petitioner and indicated payment of
unaccounted cash.
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9. The satisfaction note was approved by the Principal
Commissioner of Income Tax on 19.03.2025 and further
approval under Section 151 of the Act was granted by the
Chief Commissioner of Income Tax on 22.03.2025.
10. Pursuant thereto, notice dated 25.03.2025 under Section
148 of the Act was issued to reopen the assessment. The
petitioner filed a return of income on 03.01.2026 in response
to the said notice declaring total income of Rs.22,11,610/-,
though beyond time due to change of Chartered Accountant.
11. Thereafter, the respondent issued notice under Section
142(1) of the Act dated 16.12.2025 alleging payment of
unaccounted cash and calling for details.
12. The petitioner initially sought time and thereafter filed a
detailed reply dated 13.01.2026 along with documentary
evidence including sale deed, bank statements, and complete
details of payment and source of funds.
13. It is the case of the petitioner that there was no evidence
of money trail, no corroboration, and no admission to support
the alleged cash transaction, and no cross-verification was
conducted with the sellers and that the statement of the
broker did not establish any actual transaction at the alleged
value.
14. Subsequently, notice under Section 143(2) dated
28.01.2026 was issued, to which the petitioner responded on
03.03.2026 reiterating earlier submissions and denying the
allegations. Hence, the present petition challenging the
impugned order dated 25.03.2025.
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15. Learned Senior Advocate Mr.Tushar Hemani appearing
with learned advocate Ms.Vaibhavi Parikh, for the petitioner at
the outset, has submitted that the provision of Section 148 of
the Act would not get attracted in the present case, as the
seized documents neither pertains to the petitioner nor any
information contained therein relates to the petitioner and the
entire reopening is premised on the notings in a loose paper.
He has further submitted that the petitioner has purchased
land from Ghelubhai Udesang Vaghela and Jayendrasinh
Ghelubhai Vaghela which shows no connection with either
Bsafal Group or City Estate Group. It is contended that the
petitioner has not paid any on-money on purchase of land from
Ghelubhai Udesang Vaghela and Jayendrasinh Ghelubhai
Vaghela. No inquiries have been made by the department on
Shri Manish whose name appears on the seized inquiry
register. It is contended that neither the seized material nor
the statement of Shri Pravin Nagjibhai Bavadiya makes any
reference to the Petitioner. The seized inquiry register
mentions the name of Shri Manish as a broker, who is not
known at all to the petitioner. It is submitted that department
has neither made any inquiries with either Shri Manish or
above named two sellers nor recorded their statements in
respect of alleged on-money payments. Even otherwise, the
seized inquiry register is a dumb document having no
evidentiary value in the eyes of law. The seized inquiry register
is not per se able to establish whether the transaction has
been actually executed at the rates specified therein. Thus, it
is submitted that the impugned notice is required to be
quashed and set aside in such circumstances, as the
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information from the loose paper does not even remotely
connect to the petitioner.
16. Learned Senior Advocate Mr.Hemani, has submitted that
the notings found in the seized inquiry register has been
wholly misconstrued by the Respondent. The relevant entry
pertains to land situated at Godhavi village bearing Survey
No.575 and is dated 18.03.2019. It is submitted that the said
land had already been purchased by the Petitioner from Shri
Ghelubhai Udesang Vaghela and Shri Jayendrasinh Ghelubhai
Vaghela by way of a registered sale deed dated 10.03.2021.
Thus, the transaction relied upon by the Respondent is
temporally disconnected and has no nexus with the year under
consideration.
17. Learned Senior Advocate Mr.Hemani, has further
submitted that the sale consideration recorded in the
registered sale deed is Rs.1,35,00,000/-, whereas the
satisfaction note erroneously mentions Rs.81,00,000/-, thereby
demonstrating clear non-application of mind. Reliance is also
placed on the statement of Shri Pravin Nagjibhai Bavadiya
recorded under Section 131 of the Act, wherein it is
categorically stated that the seized inquiry registers merely
contain details of lands "available for sale" at various locations
near Ahmedabad. The entry referring to "sq. yard" and the
rate of Rs. 7,500/- pertains to agricultural land and cannot be
linked to any concluded transaction of the petitioner.
18. It is emphatically submitted that the name of the
Petitioner does not appear anywhere in the seized register.
The only name reflected is that of one Shri Manish, stated to
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be a broker, who is admittedly not known to the Petitioner.
Despite this, no inquiry whatsoever has been conducted by the
department with the said person to verify the alleged
transaction.
19. It is contended that in the absence of any corroborative
material, the Respondent could not have arrived at the
satisfaction that the noting in the seized register pertains to
the Petitioner. Merely because the land mentioned therein was
purchased by the Petitioner in the past, it cannot be presumed
that a subsequent noting made nearly two years later relates
to any transaction undertaken by the Petitioner during the
relevant assessment year.
20. Without prejudice, learned Senior Advocate Mr.Hemani,
has submitted that that there is no escapement of income
chargeable to tax for the year under consideration. He draws
the attention of this Court to the distinction between the
erstwhile provision of Section 147 of the Act and the amended
provision effective from 01.04.2021. While earlier the
Assessing Officer was required to have "reason to believe" that
income had escaped assessment, under the amended regime,
the jurisdictional precondition is the actual escapement of
income. In the present case, there is no material whatsoever to
establish any such escapement.
21. Vehemently opposing the present writ petition, the
submissions advanced as recorded here-in-above, learned
Senior Standing Counsel Mr.Aaditya Bhatt has submitted that
as per the provision of Section 148 of the Act, more particularly
Clause 4 to Explanation 2, it cannot be said that the
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information, which is unearthed during the search proceedings
from the concerned broker, does not pertain or pertains to any
information contained therein relates to the assessee.
22. It is submitted that the legislature has deliberately used
the expansive phrases "pertains to" and "relate to". Unlike the
stringent requirement of "belongs to" under the erstwhile
Section 153C of the Act and hence, as per the decisions of the
Supreme Court in the case of Raymond Woollen Mills Limited
Vs. Income-tax Officer, [1999] 236 ITR page 34 (SC), the
revenue has only to see whether there was a prima facie
material on the basis of which the department could reopen
the case and the sufficiency or correctness of the material is
not a thing to be considered at this stage of issuance of notice.
23. Further reliance is also placed by learned Senior Standing
Counsel Mr.Bhatt on the decision of the Supreme Court in the
case of Assistant Commissioner of Income-tax vs. Rajesh
Jhaveri Stock Brokers (P.) Ltd., [2007] 291 ITR 500 (SC) and it
is submitted that the only question which is required to be
examined at the stage of issuance of notice is whether there
was relevant material on which a reasonable person could
have formed a requisite belief.
24. Reliance is also placed on the decision of the Supreme
Court in the case of Anshul Jain vs. Principal Commissioner of
Income-tax, [2022] 143 taxmann.com 38 (SC). It is submitted
that in the present case, the documents / incriminating
material which have been recovered during the search
proceeding, cannot be said to be dumb documents, devoid of
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any evidential value. It is submitted that the material which
was seized specifically mentions the names of the brokers or
third parties and the same reveal the link between the
petitioner and the land dealing, by paying the on- money.
Thus, it is urged that, at this stage, the Court may not interfere
with the reopening of the assessment.
25. We have heard the learned advocates appearing for the
respective parties at length.
26. A search under Section 132 of the Act was conducted on
Bsafal Group and City Estate Group on 28.09.2021 and during
the search, it is the case of the revenue that incriminating
documents and digital data were seized. Post search, a
statement of one Shri Pravin Nagjibhai Bavadia was recorded
after he was confronted with the documents found and seized
from the premise of the City Estate Management, which is a
broker, dealing with land deals in the city of Ahmedabad.
Statement under Section 131 of the Act of Shri Pravin
Nagjibhai Bavadiya are incorporated in the impugned notice. A
specific question No.14, was asked to him with regard to the
documents found during the search and in response, he has
submitted that 'I confirm that the documents were found and
seized from the premises of the propriety entity City Estate
Management' It is further responded by him that sometimes
the clients come with their land documents or title deeds and
there might be such types of documents which are also seized
with the above annexures and these belonged to the clients
and not to him. Question No.26, when he was confronted with
the annexures, he has referred that such annexure contained
the details of lands/plots available for sale at different locations
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of Ahmedabad and each entry contains the details of land,
location, village, Taluka, survey number, area, rate, owner of
the land, etc., and he doesn't know the current status
regarding the sale of the land. From the seized material, a
loose paper chit was found, which makes reference to Survey
No.575 situated at Moje Godhavi, which was sold by the
petitioner on 10.03.2021. The relevant contents of the said chit
are as under:
"18.03.2019/2014
Moje : - Godhavi Opp.Godhavi Village
S.No.566/ 1+2 / 575
26,000 Sq.(Survey No.)
Rate 8500/-
S.No.490
20000/- Sq. (Survey No.)
Rate 7500/-
Bro Manish Bopal"
27. As per the registered sale deed, the property was
purchased for Rs.1,35,00,000/-, whereas the satisfaction note
refers to Rs.81,00,000/-. As per the seized material, the alleged
value of the property was Rs.7,09,68,253/- and the respondent
alleged that the difference of Rs.6,28,68,253/- represented
unaccounted cash ("on-money") paid by the petitioner. By
comparing the said amount with the sale consideration
reflected in the sale deed dated 10.03.2021, it was further
concluded that the differential amount had been paid in cash
as "on-money". The respondents have, however, not
established any connection with the individual, Manish Bopal,
who is referred to in the chit.
28. A bare perusal of the chit reveals that it does not contain
any names or identifiable figures, and the same is dated
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18.03.2019. After a gap of almost two years, the petitioner
bought the land vide sale deed dated 10.03.2021. We fail to
understand how the Assessing Officer has alleged payment of
"on-money" by the petitioner after two years, by arriving at a
rate of Rs.8,500/- per square yard. The entire calculation
appears to have been made on the basis of data collected from
"Any RoR", a Government website reflecting details of sale
deeds. The survey number mentioned in the loose paper is
linked with the petitioner by the revenue by gathering
information from the government Website "Any RoR", which
records the details of the sale deeds. It is true that the cash
transactions are done in a clandestine manner using coded
script, however, the revenue, before re-opening the
assessment has to establish a live link of the assessee on the
basis of seized material only. The expression " relates to" and
"pertains to" used in Clause(iv) to Explanation 2 to Section 148
of the Act cannot be used in vacuum. The revenue after the
seizure of incriminating material is under an obligation to
analyze such material, in light of attendant circumstances and
record relevancy and a prima facie opinion linking such
material establishing escapement of income at the hands of
the assessee. The information which is derived from the
incriminating material in the instant case, does not establish
live-link. The information is absolutely vague and unspecific
and the rate mentioned in the loose-paper is attempted to be
imposed upon the petitioner after a period of two years from
the date recorded in the chit on the basis of sale deed
registered on 10.03.2021. The statement of Shri Bavadiya does
not mention the name of the petitioner. Even prima facie link
of the petitioner with broker 'Manish' whose name appears in
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the loose paper is not found. There is no link, even remotely,
found with Bsafal Group or City Estate Management India or
City Procon Realtors Private Limited. All these aspects are
very relevant, and were required to be examined before roping
the petitioners in re-assessment. Thus, in our considered
opinion, the provision of Section 148 of the Act is not attracted,
hence the action of the respondents in re-opening of the
assessment requires to be quashed.
29. We are conscious about the legal precedent as set out by
the Supreme Court in the decisions cited before us by the
revenue. At the stage of notice of re-opening of the
assessment, albeit, the Court cannot go into the sufficiency of
evidence, however, simultaneously the Court has to examine
the aspect as to whether there is even prima facie some
material, which could enable the department to reopen the
assessment. In the present case, the reopening is based on a
vague, irrelevant, and non-specific information.
30. The writ petition, accordingly, succeeds. The impugned
notices are quashed and set aside. Rule made absolute.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(PRANAV TRIVEDI,J)
MAHESH/37
