Section 148 Notice Quashed for Lack of Live Nexus with Old Broker Register Entry: Gujarat HC

Vinod Parsotam Rabara Vs ITO (Gujarat High Court)

Section 148 Notice Quashed for Lack of Live Nexus with 28-Month-Old Broker Register Entry: Gujarat HC

The Gujarat High Court considered a writ petition challenging a notice dated 20.06.2025 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2022-23. The petitioner had filed the return of income on 17.12.2022 declaring total income of Rs.4,45,21,400. The reopening was based on a search conducted under Section 132 on 28.09.2021 at the premises of B Safal Group and City Estate Management India, during which inquiry registers maintained by a real estate broker were seized. A register entry dated 29.11.2018 relating to land at Village Kaneti, Survey No. 31, was relied upon to allege payment of on-money of Rs.4,88,97,300, being the difference between the registered sale consideration and the rate mentioned in the register.

The petitioner contended that the reopening was based solely on the seized inquiry register and the broker’s statement. It was submitted that the register entry was dated 29.11.2018, whereas the land was purchased by registered sale deed only on 03.04.2021, approximately twenty-eight months later. The petitioner further submitted that the register merely recorded land available for sale and did not record concluded transactions. It was also argued that the register covered the entire land whereas only a portion was purchased, the name appearing in the register was “Sanjay Thakor,” who had no connection with the petitioner, and neither the register nor the broker’s statement referred to the petitioner or co-purchasers. The petitioner also relied upon an ITAT decision concerning the same search and inquiry registers.

The Revenue submitted that the seized inquiry registers were structured business records maintained by a professional broker and were supported by the broker’s statement under Section 131. It argued that the exact survey number matched the petitioner’s purchase, establishing a nexus through Explanation 2(iv) to Section 148. The Revenue further contended that issues relating to dates, area and names pertained to the merits of the addition and that, at the stage of issuing notice under Section 148, only information suggesting escapement of income was required. Reliance was placed on decisions of the Supreme Court concerning reassessment proceedings.

The High Court observed that the sole basis of reopening was the register entry dated 29.11.2018. It noted that the petitioner’s purchase took place approximately twenty-eight months later on 03.04.2021 and held that the entry could, at best, be viewed as a market survey reflecting the asking rate prevailing on the earlier date. It also observed that the broker’s statement confirmed that the inquiry registers contained details of land available for sale and that the entry related to Assessment Year 2019-20, whereas the reopening concerned Assessment Year 2022-23.

The Court further noted that the broker’s statement weakened the Revenue’s reliance on the register, as it indicated that documents could belong to clients and that the names entered were typically those of landowners or brokers rather than persons paying or receiving undisclosed consideration. The Court also found that the register covered a larger area than the land actually purchased and that no inquiry had been made from the person named in the register. It observed that neither the seized register nor the broker’s statement established any direct or indirect link with the petitioner. Referring to its earlier decisions, the Court held that a live nexus between the seized material and the assessee was absent.

Holding that the reassessment had been initiated on conjectures and surmises and that the seized inquiry register did not establish any live nexus with the petitioner, the High Court allowed the writ petition and quashed and set aside the notice dated 20.06.2025 issued under Section 148.

Recent Cases Discussed:

• Trupti Aakash Desai v. ITO, Ward 3(3)(5), Ahmedabad [Special Civil Application No. 985 of 2026, decided on 08.04.2026]
• Kantilal Parsotamdas Patel v. ITO [Special Civil Application No. 3676 of 2026, decided on 08.04.2026]
• Naliniben Jagdishkumar Gandhi v. ITO [2025] 183 taxmann.com 126 (Gujarat)
• Sandhya Maulik Patel v. Asstt. CIT [2025] 181 com 123 (Gujarat)
• Pravin Nagjibhai Bavadiya v. DCIT [ITA Nos. 1688 to 1691/Ahd/2024 and ITA No. 1896/Ahd/2024, vide order dated 09.05.2025]
• Anshul Jain v. PCIT [2022] 143 taxmann.com 38 (SC)

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. RULE returnable forthwith. Learned Senior Standing Counsel Mr. Aaditya D. Bhatt waives service of notice of rule on behalf of the respondent.

2. Since a short issue is involved, with consent of learned advocates for the respective parties, the matter is taken up for final hearing.

3. By way of present writ petition, the petitioner is assailing the impugned notice dated 20.06.2025 issued under Section 148 of the Income Tax Act, 1961 (for short “the IT Act”) for the assessment year 2022-23.

BRIEF FACTS:

4. The petitioner filed his return of income for the assessment year 2022-23 on 17.12.2022 declaring total income at Rs.4,45,21,400/-. The petitioner, along with joint purchasers Smt. Jadiben Manji, Smt. Kokilaben Manji, Smt. Bhartiben Manji, Shri Vijay Kevalji Thakor and Shri Ajay Kevalji Thakor, purchased land at Village Kaneti bearing Survey No. 31 from the joint sellers by registered sale deed dated 03.04.2021 for a total consideration of Rs. 73,82,700/-. A search action under Section 132 of the IT Act was conducted on 28.09.2021 at the premises of B Safal Group and City Estate Management India, a real estate broker providing brokerage services to the B Safal Group. During the course of the search, inquiry registers were found and seized from the premises of City Estate Management India containing details of various lands and plots in and around Ahmedabad along with their survey numbers, area and asking rates. In one of such inquiry registers, a noting dated 29.11.2018 was found in respect of land at Village Kaneti bearing Survey No. 31. On the basis of the said information, the Respondent recorded a satisfaction note on 28.03.2025 which was approved by the Principal Commissioner of Income Tax, Rajkot-1 on 29.03.2025. Thereafter, approval under Section 151 of the IT Act was granted by the Principal Commissioner of Income Tax, Rajkot-1 on 01.05.2025. The Respondent thereafter issued the impugned notice dated 20.06.2025 under Section 148 of the IT Act, alleging that the petitioner had paid on-money of Rs. 4,88,97,300/- on account of purchase of land bearing Survey No.31 at Village Kaneti, being the difference between the consideration recorded in the Sale Deed and the price quoted in the inquiry register noting dated 29.11.2018. The petitioner filed a return of income in response to the said notice on 21.07.2025. Hence, the petitioner has approached this Court by way of the present writ petition.

SUBMISSIONS ON BEHALF OF THE PETITIONER:

5. Learned Senior Advocate Mr. Tushar Hemani has submitted that the Assessing Officer has sought to reopen the assessment only on the basis of a noting found in the seized inquiry register and the statement of Shri Pravin Nagjibhai Bavadiya, the broker and proprietor of City Estate Management India. It is submitted that the relevant noting in the seized inquiry register is dated 29.11.2018, whereas the petitioner along with co-purchasers actually purchased the concerned land bearing Survey No. 31 at Village Kaneti by registered sale deed dated 03.04.2021 – i.e., approximately twenty-eight months after the date of the noting. The noting, therefore, predates the actual purchase transaction of the petitioner by a very considerable period and, as per the statement of Shri Pravin Nagjibhai Bavadiya himself recorded under Section 131 of the IT Act on 27.12.2021, the inquiry registers merely contain details of “land/plots available for sale at different locations near Ahmedabad” and do not record any concluded transaction or parties thereto. Furthermore, the land bearing Survey No. 31 at Village Kaneti was categorised as agricultural land as on the date of the noting, and accordingly the rate stated in the seized document is in the nature of an aspirational or indicative asking rate and nothing more.

5.1 It is further submitted that the register entry covers the entire land bearing Survey No. 31 admeasuring 11,152 sq. mtr. (4.69 vigha), whereas the petitioner along with co-purchasers purchased only a portion thereof by the registered sale deed dated 03.04.2021, and the remaining 2,025 sq. mtr. of the said land continues to remain under the ownership of the original sellers. The register entry thus covers an area considerably larger than that which was actually purchased by the petitioner, rendering any nexus between the seized document and the petitioner’s transaction highly doubtful.

5.2 It is submitted that the name appearing in the seized inquiry register is “Sanjay Thakor” – a person entirely unconnected to and unknown by the petitioner. No inquiry whatsoever has been conducted by the Department from Sanjay Thakor, whose name actually appears in the register. Furthermore, neither the seized inquiry register nor the statement of Shri Pravin Nagjibhai Bavadiya recorded under Section 131 of the Act makes any reference to the petitioner or the co-purchasers. The jurisdictional condition that the seized material must “pertain to” or “relate to” the assessee is not satisfied in the present case.

5.3 It is further submitted that the Income Tax Appellate Tribunal, Ahmedabad Bench in the case of Pravin Nagjibhai Bavadiya v. DCIT [ITA Nos. 1688 to 1691/Ahd/2024 and ITA No. 1896/Ahd/2024, vide order dated 09.05.2025] – arising from the very same search conducted on 28.09.2021 and the very same inquiry registers – has directed deletion of the entire addition made on the basis of the inquiry registers, holding that no additions can be made on conjectures and surmises where no corroborative evidence is found to show that the assessee actually earned income from transactions mentioned in the register. When the inquiry registers have been held to be wholly unreliable and incapable of supporting any addition even in the hands of the broker himself, the same documents cannot be employed against a third party such as the present petitioner in the absence of any live and direct nexus.

6. In support of the aforesaid submissions, learned Senior Advocate has placed reliance on the judgment and order dated 24.11.2025 passed in Sandhya Maulik Patel v. Asstt. CIT [2025] 181 com 123 (Gujarat), Naliniben Jagdishkumar Gandhi v. ITO [2025] 183 taxmann.com 126 (Gujarat) and Deepak Chinubhai Shah v. Dy. CIT (Special Civil Application No. 13298 of 2025) and allied matters.

SUBMISSIONS ON BEHALF OF THE RESPONDENT:

7. While opposing the aforesaid submissions, learned Senior Standing Counsel Mr.Aaditya D. Bhatt, appearing for respondent-revenue, has contended that from the search conducted on B Safal Group and City Estate Management India on 28.09.2021, inquiry registers were seized from broker Shri Pravin Nagjibhai Bavadiya. These registers are not mere dumb documents but are structured business records of a professional real estate broker, systematically maintained with precise survey numbers, village locations, area measurements and rates. In his statement recorded on oath under Section 131 of the IT Act on 27.12.2021, the broker admitted ownership of these registers and confirmed that they belong to his business, thereby activating the statutory presumption of truthfulness under Sections 132(4A) and 292C of the Act.

7.1 It is further submitted that on verification of revenue records through the AnyROR portal, it was found that the land bearing Survey No. 31 at Village Kaneti, as recorded in the seized inquiry register, was purchased by the petitioner along with co-purchasers on 03.04.2021. The asset-based nexus between the seized document and the petitioner’s transaction is thus established through the exact survey number match. Under Explanation 2(iv) to Section 148 of the IT Act, when documents seized from any other person “pertain to” or information contained therein “relates to” the assessee, the Assessing Officer shall be deemed to have information suggesting escapement of income. The discrepancy in dates, area and name are matters relating to the merits of the proposed addition and are to be adjudicated during the course of assessment proceedings. It is, therefore, urged that the present writ petition may be dismissed.

7.2 It is submitted that the Assessing Officer is not required to conclusively prove escapement of income at the stage of issuing notice under Section 148. The threshold is merely “information suggesting escapement” and the same has been met in the present case. The entry in the seized register reflecting a rate of Rs. 1,20,00,000/- per vigha for land bearing Survey No. 31 at Village Kaneti, as against the sale consideration of Rs. 73,82,700/- recorded in the sale deed, constitutes sufficient tangible material for invoking jurisdiction under Section 148 of the IT Act.

7.3 It is further submitted on behalf of the respondent that the action of reopening is well-supported by the pronouncements of the Supreme Court. Reliance is placed on Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC), wherein it was held that at the stage of issuance of notice under Section 148, the Court is not required to go into the merits of the matter, and whether income had or had not escaped assessment is not the relevant consideration at that stage. Reliance is also placed on CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 (SC) and Anshul Jain v. PCIT [2022] 143 taxmann.com 38 (SC). It is further submitted that the expression ‘pertains to’ or ‘relates to’ as employed in Explanation 2(iv) to Section 148 is wider in amplitude than the expression ‘belongs to’ as used in Section 153C; therefore, the seized document need not directly belong to the assessee, a mere relation to or pertaining to the assessee’s income is sufficient to invoke the reopening jurisdiction.

ANALYSIS AND OPINION:

8. We have heard the learned advocates appearing for the respective parties at length and have also perused the documents placed on record. The action of reopening of assessment against the petitioner is premised on a search conducted at the office premises of City Estate Management India on 28.09.2021. During the search, inquiry registers of broker Shri Pravin Nagjibhai Bavadiya were seized. The relevant extract of the seized inquiry register which forms the sole basis for the impugned notice reads as under:

29/11/18 | Village: Kaneti | S. No. 31 | 4.69 Bigha | Rate – Rs. 1,20,00,000/- per Bigha | Sanjay Thakor

9. On the basis of the aforesaid entry in the seized inquiry register, the Assessing Officer formed the opinion that the petitioner had paid on-money of Rs. 4,88,97,300/- on the purchase of land bearing Survey No. 31 at Village Kaneti and accordingly sought to reopen the assessment year 2022-23.

10. The first and foremost aspect which strikes us on a perusal of the seized material is the date of the noting in the inquiry register. The date of the noting is 29.11.2018, which falls in Assessment Year 2019-20. However, the petitioner purchased the land bearing Survey No. 31 at Village Kaneti by registered sale deed dated 03.04.2021 – i.e., approximately twenty-eight months after the date of the noting. The entry in the register, therefore, predates the actual purchase transaction of the petitioner by a very considerable period. In this background, the entry dated 29.11.2018 can, at best, be viewed as a market survey reflecting the asking rate for land available for sale in Village Kaneti as on that date. Notably, the statement of Shri Pravin Nagjibhai Bavadiya recorded under Section 131 of the IT Act himself confirms that the inquiry registers contain details of “land/plots available for sale at different locations near Ahmedabad”. Since the purchase transaction by the petitioner was executed approximately twenty-eight months after the date of the register entry, the noting cannot be treated as a record of any transaction executed by the petitioner. Moreover, the register entry falls in the period of Assessment Year 2019-20 and is wholly incapable of imputing escapement of income for Assessment Year 2022­23, which is the year sought to be reopened.

11. We find that, even on the question of the evidentiary weight to be attached to the seized inquiry register, the revenue’s case is materially weakened by the admissions made by Shri Bavadiya himself during his statement recorded in the course of the search. At Question No. 14, Shri Bavadiya candidly admitted that sometimes clients come with land documents or title deeds and these belonged to the clients and not to him. This admission directly and significantly undermines the blanket presumption under Section 292C that all entries in the inquiry register necessarily record actual financial transactions carried out by or through Shri Bavadiya. Further, at Question No. 26, it emerges that the ‘owner of the land’ is typically the person whose name is entered in the register—confirming that the name reflected therein is that of the owner or broker who listed the property, and not necessarily a party who paid or received any undisclosed consideration. These specific admissions by the searched person himself effectively negate the foundation upon which the revenue has sought to invoke a generalised presumption under Section 292C to treat the inquiry register entries as conclusive evidence of on-money transactions involving the petitioner.

12. We further note that the register entry relates to the entire land bearing Survey No. 31 admeasuring 11,152 sq. mtr. (4.69 vigha). However, the petitioner along with co-purchasers purchased only a portion of this land, and the remaining 2,025 sq. mtr. continues to remain under the ownership of the original sellers and did not form part of the petitioner’s purchase transaction. The register entry thus covers an area considerably larger than the actual extent of land purchased by the petitioner, and this discrepancy further militates against any live connection between the seized register entry and the petitioner’s transaction.

13. The name “Sanjay Thakor” appearing in the seized inquiry register is of a person who is entirely unconnected to and unknown by the petitioner. The petitioner has specifically pointed out that no inquiry whatsoever has been conducted by the Department from Sanjay Thakor, whose name actually appears in the register. The Assessing Officer has drawn satisfaction in the case of the petitioner based on the same register entry while completely ignoring the person whose name appears therein, without making any inquiry from said person. Furthermore, the statement of Shri Pravin Nagjibhai Bavadiya recorded under the provisions of Section 131 of the IT Act does not in any manner mention the name of the petitioner or the co-purchasers. Thus, we do not find any direct or indirect link between the petitioner and the seized document. The revenue has attempted to reopen the assessment year 2022-23 only on the basis of some vague information allegedly connected from the seized document, which does not in any manner relate to the present petitioner.

14. Even otherwise, this issue is no more res integra as the same is covered in favour of the assessee by the judgement of this Court in the case of Naliniben Jagdishkumar Gandhi v. ITO [2025] 183 com 126 (Gujarat). This Court has, after considering a similar entry in the same customer inquiry register seized in the same search, held as follows:

“Except the seized documents as mentioned herein-above, and the statements of the searched person Shri Bavadiya, there is no material recorded by the Assessing Officer which would reveal the name of the petitioner. It is true that cash transactions operate in very clandestine manner, and the re-assessment cannot be quashed, but the revenue has to prove a live link connecting the assessee. The only link is the survey number of the petitioner.”

15. The aforesaid principle applies with equal, if not greater, force to the present case, where not only is there no live link between the seized register entry and the petitioner’s transaction, but the entry itself suffers from the multiple infirmities and internal contradictions noticed hereinabove.

16. We find further support in two recent decisions of this Court arising from the very same search. In Trupti Aakash Desai v. ITO, Ward 3(3)(5), Ahmedabad [Special Civil Application No. 985 of 2026, decided on 08.04.2026], this Court, dealing with the search at B Safal Group conducted on 28.09.2021 and the very same seized inquiry register, held that the entries therein ‘cannot be used in vacuum’ and that a live and direct nexus between the seized material and the assessee sought to be reopened is a sine qua non. In Kantilal Parsotamdas Patel v. ITO [Special Civil Application No. 3676 of 2026, decided on 08.04.2026], this Court, following the aforesaid line of reasoning and dealing with a similar set of facts arising from the same search, quashed the reassessment proceedings. The present case, on its facts and in law, is indistinguishable from both these decisions and deserves to succeed on this additional ground as well.

FINAL ORDER

17. Hence, we are of the opinion that the assessment has been sought to be reopened on the basis of conjectures and surmises. The seized inquiry register entry does not establish any live nexus with the petitioner. There is no direct or indirect link between the seized document and the present petitioner. The invocation of the proceedings under Section 148 of the IT Act is ill-conceived and unsustainable. Accordingly, the captioned writ petition stands allowed. The impugned Notice dated 20.06.2025 issued under Section 148 of the IT Act is hereby quashed and set aside.