Chakravarti Mahesh Patel Vs ITO (Gujarat High Court)
Summary: The Gujarat High Court quashed a reassessment notice issued under Section 148 of the Income-tax Act, 1961 to Chakravarti Mahesh Patel for Assessment Year 2019-20. The notice alleged undisclosed on-money of ₹3,32,55,888 in connection with the purchase of agricultural land at Racharda. The Court held that a seized broker’s inquiry-register entry did not establish a live nexus with the petitioner. The petitioner had declared income of ₹17,98,570 and purchased the land under a registered sale deed dated 15 February 2019 for ₹1,12,00,000. During a search of B Safal Group and City Estate Management India on 28 September 2021, the Department seized an inquiry register containing land descriptions and asking prices. Relying on one entry, the Assessing Officer issued the disputed notice dated 27 March 2025.
The petitioner contended that the entry predated the registered transaction, identified an unrelated person named Sanjay Thakkar, and did not record any completed purchase or payment by him. The broker’s statement under Section 131 described the register as containing details of land available for sale. No inquiry was conducted with the named person, and neither the register nor the broker’s statement identified the petitioner as having paid undisclosed consideration. The Revenue argued that matching survey numbers established a sufficient connection and invoked presumptions under Sections 132(4A) and 292C, together with Explanation 2(iv) to Section 148. It submitted that questions about discrepancies in names, areas and dates could be addressed in reassessment and relied on Supreme Court authorities concerning the threshold for issuing reopening notices.
The High Court rejected the inference of an actual on-money transaction from the register’s asking-price entry. It held that the Revenue had not demonstrated any direct or indirect link between the seized material and the petitioner. Applying Naliniben Jagdishkumar Gandhi and referring to Trupti Aakash Desai and Kantilal Parsotamdas Patel, the Court emphasized that a live and direct nexus is essential before invoking Section 148. Allowing the petition, the Court held that reopening was based on conjectures and surmises and set aside the Section 148 notice dated 27 March 2025. The judgment concerns the jurisdictional validity of the reassessment notice, not a determination of any final tax addition.
Cases Discussed
- Sandhya Maulik Patel Vs ACIT — [2025] 181 taxmann.com 123 (Gujarat): Relied upon by petitioner.
- Naliniben Jagdishkumar Gandhi Vs ITO — [2025] 183 taxmann.com 126 (Gujarat): Applied: seized broker register requires live link to assessee.
- Deepak Chinubhai Shah Vs DCIT — SCA No. 13298 of 2025: Relied upon by petitioner.
- Trupti Aakash Desai Vs ITO — SCA No. 985 of 2026, 08.04.2026: Applied: inquiry-register entries cannot be used in isolation.
- Kantilal Parsotamdas Patel Vs ITO — SCA No. 3676 of 2026, 08.04.2026: Followed: reassessment from same search quashed.
- Raymond Woollen Mills Ltd. Vs ITO — [1999] 236 ITR 34 (SC): Cited by Revenue on notice-stage scrutiny.
- CIT Vs Rajesh Jhaveri Stock Brokers (P.) Ltd. — [2007] 291 ITR 500 (SC): Cited by Revenue on reassessment threshold.
- Anshul Jain Vs PCIT — [2022] 143 taxmann.com 38 (SC): Cited by Revenue in support of notice.
Alternative SEO Titles
Gujarat HC Quashes ₹3.32 Crore On-Money Reassessment Notice
Broker’s Inquiry Register Insufficient for Section 148 Reopening
Section 148 Notice Invalid Without Direct Link to Seized Material
Gujarat HC Rejects Land Asking Price as Proof of On-Money
Reassessment Based on Unrelated Third-Party Entry Quashed
FULL TEXT OF THE GUJARAT HIGH COURT JUDGMENT
1. Heard learned Advocate Mr. Samir N. Divatia for the petitioner and learned Senior Standing Counsel Mr. Aaditya D Bhatt for the respondent.
2. Having regard to the controversy involved, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.
3. RULE. Learned Senior Standing Counsel Mr. Aaditya D Bhatt waives service of notice of rule on behalf of the respondent.
4. By this petition under Article 226 of the Constitution of India, the petitioner challenges the notice dated 27.03.2025 issued under Section 148 of the Income Tax Act, 1961 (for short “the Act”) seeking to re-open income tax assessment of the petitioner for the Assessment Year 2019-20 (for short “the assessment year under consideration”) by the Respondent- Income Tax Officer, Circle 4(1)(1), Ahmedabad (for short “the respondent”).
BRIEF FACTS:
4.1 The petitioner filed his return of income for the assessment year 2019-20 on 27.09.2019 declaring total income at Rs. 17,98,570/-. The petitioner, along with joint purchaser Shri Mayank Dineshchandra Shastri, purchased agriculture land at Moje Racharda bearing New Block No. 818, and new Khata No. 1778 from Shri Gautambhai @ Chinubhai Khodidas Patel and Bhikhabhai Kalidas Patel vide registered sale deed dated 15.02.2019 at No. 1592 for a consideration of Rs.1,12,00,000/-. A search action under Section 132 of the 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 details viz. address, name of person, survey number, area and “asking rate” for the property. In one of such inquiry registers, a noting dated 28.12.2018 was found in respect of land at Moje Racharda. On the basis of the said information, the Respondent recorded a satisfaction note on 18.03.2025 which was approved by the Principal Commissioner of Income Tax-3, Ahmedabad on 21.03.2025. Thereafter, the Respondent issued the impugned notice dated 27.03.2025 under Section 148 of the Act, alleging that the petitioner had paid on-money of Rs.3,32,55,888/- (50% share of Rs. 6,65,11,776/-) on account of purchase of land bearing Survey No. Old-1303, New 818 (area 4519 sqm.) situated at Racharda, being the difference between the consideration recorded in the Sale Deed and the price quoted in the inquiry register noting dated 28.12.2018. The petitioner filed detailed objections against the said notice on 18.07.2025 requesting the Respondent to drop the reassessment proceedings. The Respondent has not passed any order disposing of the said objections. Hence, the petitioner has approached this Court by way of the present writ petition.
SUBMISSIONS ON BEHALF OF THE PETITIONER:
5. Learned Advocate Shri S.N. Divatia, for the petitioner 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 28.11.2018, whereas the petitioner along with copurchasers actually purchased the concerned land bearing Survey No. Old-1303, New 818 (area 4519 sqm.) situated at Racharda, by registered sale deed dated 15.02.2019 – i.e., approximately three months after the date of the noting. The noting, therefore, predates the actual purchase transaction of the petitioner and, as per the statement of Shri Pravin Nagjibhai Bavadiya himself recorded under Section 131 of the Act on 27.12.2021 and 28.12.2021, 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.
5.1 It is further submitted that the register entry pertains to Survey No. Old-1303, New 818 (area 4519 sqm.) with a total area of 5400 sq.yd, whereas the petitioner along with co-purchaser purchased only Survey No. Old-1303, New 818 (area 4519 sqm.) situated at Racharda. The entry in the register mentions rate at Rs 3.50 cr. thus less than the area of land 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 Thakkar” – a person entirely unconnected to and unknown by the petitioner. Strikingly, no inquiry whatsoever has been conducted by the respondent from Sanjay Thakkar, 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 copurchasers. The petitioner specifically referred to the answer to question no.14 and 28 of Shri Bavadiya wherein, he had not committed about his role in the purchase of this property for the petitioner. It is further submitted by the ld. Advocate of the petitioner that the petitioner had not availed services of either city management or Pravin Bavadiya nor retained them for and on his behalf for purchase of the said land nor any commission was paid or claimed by the said party towards the purchase of this land. Thus, the jurisdictional condition that the seized material must “pertain to” or “relate to” the petitioner is not satisfied in the present case.
5.3 In support of his submissions, learned Advocate Mr. Samir Divatia has placed reliance on the judgment and order dated 24.11.2025 passed in the case of Sandhya Maulik Patel vs. Asstt. CIT [2025] 181 taxmann.com 123 (Gujarat), Naliniben Jagdishkumar Gandhi vs. ITO [2025] 183 taxmann.com 126 (Gujarat) and Deepak Chinubhai Shah vs. Dy. CIT (Special Civil Application No. 13298 of 2025) and allied matters. He also placed reliance in case of Trupti Aakash Desai vs ITO (Special Civil Application No. 985 of 2026 dtd. 08.04.2026)
5.4 Thus, it is urged that the impugned notice issued under Section 148 of the Act for the assessment year 2019-20 may be quashed and set aside.
SUBMISSIONS ON BEHALF OF THE RESPONDENT:
6. Per Contra, learned Senior Standing Counsel Mr. Aaditya D Bhatt, appearing for respondent Department opposed the petition and contended that the impugned notice under Section 148 of the Act is valid. It is further 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 Act on 27.12.2021 and 28.12.2021, 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.
6.1 It is further submitted that on verification of revenue records through the ANYROR portal, it was found that the land bearing Survey No. Old-1303, New 818 (area 4519 sqm.) situated at Racharda, as recorded in the seized inquiry register, was purchased by the petitioner along with co-purchaser on 15.02.2019. The asset-based nexus between the seized document and the petitioner’s transaction is thus established. While referring to Explanation 2(iv) to Section 148 of the Act, it is contended that 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 exact match between the survey numbers in the seized register and the registered sale deed of the petitioner constitutes sufficient material for invoking jurisdiction under Section 148 of the Act.
6.2 It is further submitted that the discrepancies in dates, area, and names are all matters relating to the merits of the proposed addition and are to be adjudicated during the course of the assessment proceedings. The Assessing Officer is not required to conclusively prove escapement of income at the stage of issuing the notice; the threshold is merely “information suggesting escapement” and the same has been met in the present case. The deletion of an addition in the hands of the broker by the Tribunal does not obliterate the information against the actual buyer. It is, therefore, urged that the present writ petition may be dismissed.
6.3 It is further submitted that the action of reopening is wellsupported by the pronouncements of Hon’ble the Supreme Court. Reliance is placed on Raymond Woollen Mills Ltd. vs. ITO [1999] 236 ITR 34 (SC), wherein it was held that at the stage of issuance of notice under Section 148 of the Act, 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 vs. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 (SC) and Anshul Jain vs. 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 of the Act is wider in amplitude than the expression ‘belongs to’ as used in Section 153C of the Act; 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.
6.4 Thus, it is urged that the action of the respondent in issuing the impugned notice for the A.Y. 2019-20 under Section 148 of the Act may be upheld and the present petition may be dismissed.
ANALYSIS AND OPINION:
7. We have heard the learned advocates for the respective parties at length. We have also perused the case laws cited, considered the provisions threadbare and have also perused the material on record.
8. 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 the 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:
28.11.2018 | Moje:- Racharda |Canal Road(_________ side) |Survey No. Old-1303, New 818 (area 4519 sqm.) | 5000 sq. rate 3.50 cr | Rate – 40,000 (S.No.) |Bro Sanjay Thakkar
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 on the purchase of land bearing Survey No. Old-1303, New 818 (area 4519 sqm.) situated at Racharda and accordingly sought to reopen the assessment year 2019-2020 alleging escaped income of Rs. 3,32,55,888/- (being 50% share of Rs. 6,65,11,776/-) in the hands of the petitioner.
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 28.11.2018, whereas the petitioner along with co-purchasers Shri Gauravbhai Santarambhai and Shri Tarunbhai Santarambhai purchased the concerned land bearing Survey No. Old-1303, New 818 (area 4519 sqm.) situated at Racharda from the joint sellers by registered sale deed dated 15.2.2019 – i.e., approximately three months after the date of the noting. The entry in the register, therefore, predates the actual purchase transaction of the petitioner by a considerable period. In this background, the entry dated 28.11.2018 can, at best, be viewed as a market survey reflecting the asking rate for land available for sale in the area of Moje Adalaj as on that date. Notably, the statement of Shri Pravin Nagjibhai Bavadiya recorded under Section 131 of the 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 nine months after the date of the register entry, and since the register is admittedly only a record of land “available for sale”, the noting cannot be treated as a record of any transaction executed by the petitioner.
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 of the Act 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 of the Act to treat the inquiry register entries as conclusive evidence of on-money transactions involving the petitioner.
12. We further note that the register entry pertains to five survey numbers, viz., Survey No. Old-1303, New 818 (area 4519 sqm.) situated at Racharda. However, the petitioner along with co-purchaser purchased only Survey No. Old-1303, New 818 situated at Racharda having area equivalent to 1.9 vigha, of agriculture land. The register entry, therefore, refers to less than the area of land actually purchased by the petitioner. This significant discrepancy in both the number of survey numbers and the total area further militates against any connection between the seized register entry and the transaction of the petitioner.
13. The name “Sanjay Thakkar” 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 on Sanjay Thakkar, 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 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 2019-20 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 petitioner by the judgement of this Court in the case of Naliniben Jagdishkumar Gandhi vs. ITO [2025] 183 taxmann.com 126 (Gujarat). This Court has, after considering similar entry in the same customer inquiry register seized in the same search, thus held:
“10. Except the seized documents as mentioned hereinabove, 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. It is pertinent to note that the date of the seized document referred is of 11.08.2017 and it is the case of the Assessing Officer that the entire plot of land was sought to be sold at the rate of Rs.17,000/- per square yard in the year 2017 as per the entry made in the register (seized document). ”
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 the case of Trupti Aakash Desai vs. 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 the case of Kantilal Parsotamdas Patel vs. 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. For the foregoing reasons, 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 Act is ill-conceived and unsustainable. We, therefore, quash and set aside the impugned Notice dated 27.03.2025 issued under Section 148 of the Act for the Assessment Year 2019-20. Accordingly, the present writ petition is allowed. RULE is made absolute. No order as to cost.
