Dhirajlal Laljibhai Patel Vs ACIT (Gujarat High Court)
The Gujarat High Court considered a group of petitions challenging notices issued under Section 148 of the Income Tax Act, 1961, for reopening assessments of various petitioners relating to the purchase of bungalows in Scheme Vrundavan-9. The notices were issued by the Assessing Officer (AO) based on information obtained during a search under Section 132 of the Act conducted at the premises of Dr. Dilip Ambalal Modi on 16.11.2021, involving the MHS Group. During the search, loose papers and handwritten notes were seized containing financial details of transactions, including cash and cheque payments for the purchase of a bungalow (No. 6) in the Vrundavan-9 scheme by Dr. Modi. The AO, relying on these documents, statements of third parties, mobile images, and a valuation report from the District Valuation Officer (DVO), computed alleged “on-money” payments made by other bungalow owners, including the petitioners, and issued notices under Section 148 for the relevant assessment years (2019-20 to 2021-22).
The petitioners objected, arguing that the AO had no jurisdiction to reopen their assessments. They submitted that the seized documents and statements related exclusively to transactions of Dr. Modi and could not be generalized to the petitioners, whose transactions occurred prior to the events relied upon by the AO. The petitioners provided sale deeds and detailed records demonstrating the amounts actually paid, showing no on-money payment. They contended that the AO’s assumptions were based on conjecture and surmises, and that there was no live nexus between the information from Dr. Modi’s transactions and their own property purchases. They further emphasized that reliance on public domain information or DVO valuations could not substitute for concrete evidence specific to the petitioners’ transactions.
