[Cites 11, Cited by 0]
Gujarat High Court
Parth Sureshbhai Patel vs Deputy Commissioner Of Income Tax ... on 9 April, 2026
Author: A.S. Supehia
Bench: A.S. Supehia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4350 of 2026
With
R/SPECIAL CIVIL APPLICATION NO. 4603 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
✔
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PARTH SURESHBHAI PATEL
Versus
DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 3(1)(1), AHMEDABAD
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Appearance:
MR. HARDIK V VORA(7123) for the Petitioner(s) No. 1
AADITYA D BHATT(8580) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 09/04/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. With consent of learned advocates for the respective
parties, the matters are taken up for final hearing.
RULE. Learned Senior Standing Counsel Mr.Aaditya D. Bhatt
waives service of notice of rule on behalf of the respondent no.1.
2. In view of the common issues involved in the matters, the
same are decided by this common judgment and order. The
captioned writ petition being Special Civil Application No.4350 of
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2026, is treated as a lead matter and the facts are borrowed from
the said petition.
BRIEF FACTS :
3. By way of present writ petitions the petitioners have
assailed the Notice dated 31.03.2025 issued under Section 148 of
the Income Tax Act, 1961 (for short "the IT Act") for the
Assessment Year 2021-22, seeking reassessment of income and
has further prayed to direct the respondent not to proceed
further or pass final order under Section 143(3) read with Section
147 of the IT Act.
4. The petitioner is an individual and had filed his return of
income for A.Y. 2021-22 on 30.09.2021 declaring total income at
Rs.33,49,290/-. An information was received that search action
under Section 132 of the IT Act was conducted in the case of
Bsafal Group, City Estate Group, City Estate Management India
and City Procon Realtors Pvt. Ltd. and several incriminating
documents were found and seized. On the basis of the said
information, the respondent issued notice under Section 148 of
the IT Act dated 31.03.2025 after taking approval from Principal
Commissioner of Income Tax, Ahmedabad-3 alleging that income
of Rs.1,23,23,257/- has escaped assessment. The petitioner filed
objections on 26.06.2025 which were disposed of by respondent
on 08.12.2025.
5. During the pendency of petition, the respondent had
passed reassessment order under section 147 of the IT Act on
31.03.2026, determining total income at Rs.1,56,72,547/- and
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raising consequential demand under section 156 of the IT Act.
Vide Civil Application No.1 of 2026, the petitioner has prayed to
quash the consequential assessment order dated 31.03.2026. Civil
Application was allowed vide order dated 08.04.2026.
SUBMISSIONS ON BEHALF OF PETITIONER:
6. Learned advocate Mr.Hardik Vora has submitted that the
respondent invoked the provision of Section 148 of the IT Act, by
issuing the notice under Section 148 of the IT Act, without
following the procedure. It is submitted that the reassessment
proceedings were initiated on the basis of hand written extract of
the inquiry register, which was found from the premises of
M/s.City Estate Management India and M/s.City Procon Realtors
Pvt. Ltd., a Real Estate Broker providing services to Bsafal Group.
It is submitted that the reopening of the assessment based on the
search proceedings and that too only the basis of extract of a
paper is illegal and a vague attempt made by the Assessing
Officer to rope in the petitioner on the basis of the same material.
It is contended that upon perusal of the hand written extract of
the inquiry register, it is pointed out is that the said extract of the
inquiry register contains the endorsement "NA" i.e. non-
agricultural land of the survey no, mentioned therein and
unquestionably in the present case, the petitioner vide purchase
deed dated 08.03.2021 had purchased the land which was an
agricultural land.
7. It is submitted that the said information which has been
derived by the Assessing Officer from the hand written extract of
the inquiry register is neither authorized nor signed by the
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assessee and it does not contain any name or signature of the
petitioner, co-owners or any of the sellers. It is further submitted
that the information was further shown to one Shri Pravin
Bavadiya, the searched person, who has also not referred the
actual name of the present petitioner and also the status of the
land in question. It is therefore submitted that the extract of the
inquiry registers which is found from the premises of entirely
unrelated party/entities with whom, the petitioner has no
business or any personal association, cannot form a valid basis
from drawing any adverse inference against the present
petitioner, in absence of any direct or indirect link. It is submitted
that from the basis of the extract of the inquiry register, the
satisfaction note was recorded by the Assessing Officer to the
extent that Bsafal Group has accepted on money over and above
the documented price as per the sale deed which is merely on
presumption roping in the petitioner who had purchased the land
vide purchase deed dated 08.03.2021. Thus, it is submitted that
the assessment is sought to be reopened on the basis of
conjunctures and surmises and hence the impugned notice may be
quashed and set aside.
8. In support of his submissions, learned advocate Mr.Vora
has placed reliance on the judgment and order dated 24.11.2025
passed in Special Civil Application No.4162 of 2023 and allied
matters.
SUBMISSIONS ON BEHALF OF RESPONDENT :
9. In response to the aforesaid submissions, learned Senior
Standing Counsel Mr.Aaditya D. Bhatt has submitted that on the
date mentioned the seized documents, the rates mentioned
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therein is far in excess of the rate at which the petitioner had
purchased the property. It is further submitted that looking to the
huge difference in the prices itself suggests that the Assessing
Officer is of the opinion that the income has escaped assessment.
Hence, the impugned notice as well as assessment order issued is
just and proper. It is submitted that upon working on purchase
consideration and unaccounted cash component involved in the
transaction, it is noticed that the petitioner's share would come to
Rs.1,23,23,257/-.
10. Vehemently opposing the present writ petition, the
submissions advanced as recorded here-in-above, the learned
Senior Standing Counsel Mr.Aaditya Bhatt has submitted that as
per the provisions of Section 148 of the Act, more particularly
clause 4 below Explanation 2, it cannot be said that the
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.
11. 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 regime 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 34 (SC), the revenue has only to see
whether there was a prima facie some 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.
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11.1. 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.) Private 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.
11.2. 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 which are
documents/incriminating material which have been recovered
during the search proceeding, cannot be said to be dumb
documents, devoid of 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.
ANALYSIS AND CONCLUSION:
12. We have heard the learned advocates appearing for the
respective parties, at length and also perused the documents as
pointed out by them.
13. A search under Section 132 of the IT 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
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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 IT
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 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. An extract of the inquiry registry was found which had the
information as under :
04.10.2020 Moje- Nr. Other Side,
Vansajada S. No. 185 3 - vigha. Rate
9023798530 2.10cr
S No. 187 3 - vigha Ind .... NA
Rate 2.50 cr
Bro Kanu Desai
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14. The assessment in the case of the petitioner for the year
2021-22 is sought to the be reopened on the basis of the
aforementioned information contained in the extract of the
inquiry register. It is noticed that the status of the land in question
refers to "NA" i.e. a non-agricultural land and unquestionably the
land which was purchased by the petitioner vide purchase deed
dated 08.03.2021 is an agricultural land. The name of the person
appearing in the register appears to be broker " Kanu Desai' .
Thus, there are two components which do not reconcile with the
petitioner (i) the status of the land being shown as "NA" i.e. non-
agricultural and (iii) Person making inquiry - Bro Kanu Desai. The
Assessing Officer, thereafter, further verified the details of Survey
Number from 'Any RoR, which is a government website, from the
the details of sale deeds, it is assumed by the Assessing Officer
that land bearing Survey No. 185 that the value of land must be
Rs.21000000/- per vigha which values the property at
Rs.50,61,077/-, hence huge amount of cash must have been paid.
On this material, the petitioner has been issued a show cause
notice under Section 148 of the IT Act for reopening of the
assessment.
15. 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
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Section 148 of the IT 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
chit for 3 vigha on 04.10.2020 is sought to be imposed upon the
petitioner to the sale deed registered on 08.03.2021. The
statement of Shri Bavadiya does not mention the name of the
petitioner. There is no link of the petitioner with ' Kanu Desai'
whose name is found in the loose paper. All these aspects are very
relevant, and are required to be examined before roping the
petitioner in re-assessment.
16. We are conscious about the legal precedent as set out by
the Supreme Court. At the stage of notice of re-opening of the
asssessment, 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, and that too, applying the same
after a period of 5 months to the sale deed of the petitioner,
without prima facie establishing the nexus with the Safal group or
City Estate Mangement. Hence,we are inclined to quash the
action of the revenue seeking re-opening of the assessment.
17. Thus, we do not find any direct or indirect link with the
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seized document and the same does not even remotely connect
the rate mentioned of the concerned question of land with the
petitioner. Thus, the revenue has attempted to reopen the
assessment year 2021-22 only on the basis of some vague
information allegedly connected from the seized document and
the same does not in any manner relates to the present
petitioner. Thus, the invocation of the proceedings under Section
148 of the IT Act, itself is ill conceived and unsustainable in light of
the information contained in the seized document.
FINAL ORDER
18. Hence, we are of the opinion that the assessment has been
reopened on the basis of conjunctures and surmises, the same
action is required to be quashed and set aside.
19. Accordingly, the captioned writ petitions stand allowed. The
impugned Notices dated 31.03.2025 and 27.03.2025 issued under
Section 148 of the IT Act respectively along with the
consequential assessment orders are hereby quashed and set
aside. Rule is made absolute. No order as to costs.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(PRANAV TRIVEDI,J)
KUMAR ALOK/ suppl. 3 & 4
