Kantilal Parsotamdas Patel Vs ITO (Gujarat High Court)
The Gujarat High Court considered a challenge to a notice dated 31.03.2025 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2020-21. The reassessment proceedings were initiated on the basis of documents allegedly recovered during a search conducted under Section 132 in the case of the BSafal Real Estate and City Estate Management Group, where it was alleged that cash transactions involving real estate had taken place. The petitioners sought quashing of the reassessment notice, contending that there was no material directly linking them with the alleged escapement of income.
The petitioners had filed their return of income declaring total income of Rs.17,50,220. The impugned notice alleged that documents recovered during the search revealed that the petitioners had sold land bearing Survey Nos.347 and 351 to one Natwarlal Hiralal Shah through a registered sale deed dated 29.04.2019 for approximately Rs.75 lakh, whereas a seized loose paper mentioned a rate of Rs.2.25 crore per vigha, leading the Revenue to infer that substantial on-money had been received in cash.
The petitioners argued that the reassessment was founded entirely on a loose paper prepared after the sale transaction had already been completed. They pointed out that the loose paper was dated 28.09.2019, whereas the land had been sold on 29.04.2019, making the document subsequent to the transaction. According to the petitioners, there was no live link between the loose paper and the completed sale transaction, and therefore the conditions for invoking Section 148 were not satisfied. They also highlighted that reassessment proceedings against the third co-owner of the same land had culminated in an assessment determining nil income.
