ACIT Vs Sandhya Maulik Patel (Supreme Court of India)
Background and Section 153C Proceedings
The litigation arose from notices dated 13.10.2021 issued under Section 153C of the Income-tax Act, 1961 for AYs 2014-15 to 2020-21. A search under Section 132 had been conducted on 15.10.2019 in the case of land broker Shri Dhaval Teli at Ahmedabad. During the search, digital data/images from his mobile phone were acquired, including images of an MoU concerning land bearing Survey No. 329. The petitioners subsequently filed returns, obtained the satisfaction notes recorded by the Assessing Officer (AO), objected to the initiation of proceedings and challenged the Section 153C action before the Gujarat High Court.
Proceedings and Submissions Before Gujarat High Court
The petitioners contended that the material found during the third-party search did not relate to them. The MoU referred to a transaction between seller Dilipbhai Patel and proposed buyer Dhirenbhai Bharvad for Rs.39.32 crore and recorded cash payment of Rs.1 crore, whereas the petitioners’ names did not appear in that MoU. The AO subsequently obtained information concerning a registered sale deed dated 12.04.2018 under which the petitioners purchased the land for Rs.12 crore and inferred an undisclosed investment of Rs.27.32 crore. The petitioners relied, inter alia, upon CIT Vs Radhey Shyam Bansal (2011) 337 ITR 217 (Delhi), CIT Vs Late Sh. Raj Pal Bhatia (2011) 333 ITR 315 (Delhi) and PCIT Vs Abhisar Buildwell (P.) Ltd. (2023) 454 ITR 212 (SC).
The Revenue submitted that judicial review of the AO’s satisfaction was limited and that the information obtained during the search, read with the later-discovered transaction involving the petitioners, was sufficient for initiating Section 153C proceedings. Reliance was placed upon ITO Vs Vikram Sujitkumar Bhatia (2023) 453 ITR 417 (SC) concerning the amended language of Section 153C.
Gujarat High Court Reasoning and Ruling
The Gujarat High Court found that the MoU recovered during the search did not contain the petitioners’ names and did not remotely connect them with that transaction. The searched person had stated that he had not brokered the deal and had only supplied land records subsequently. Those records were not seized during the search; thereafter, the AO obtained the petitioners’ sale-deed information from the public domain.
The High Court held that no incriminating material having a direct nexus with the petitioners was found during the search. The difference between the consideration stated in the earlier MoU and the Rs.12 crore consideration in the petitioners’ subsequent sale deed could not, on the material found during search, sustain the presumption of undisclosed investment. The information collected after the search could not create the required live link between the searched material and the petitioners. It therefore held that the AO had acted de hors Section 153C and quashed the notices. The Court distinguished Vikram Sujitkumar Bhatia on the ground that the controversy considered there concerned the applicability of the Finance Act, 2015 amendment to Section 153C.
Revenue’s Challenge Before Supreme Court
The Revenue challenged the Gujarat High Court judgment before the Supreme Court by Special Leave Petition. The Supreme Court condoned the delay and heard Mr. S. Dwarakanath, learned Additional Solicitor General for the petitioner-Revenue, and Mr. Malak Manish Bhatt for the respondent. The Court expressly recorded that it had gone through the Gujarat High Court’s impugned order dated 24.11.2025 in Sandhya Maulik Patel v. Asstt. CIT, Special Civil Application No. 4162 of 2023.
Supreme Court Reasoning, Final Ruling and Effect on High Court Judgment
The Supreme Court did not record any further factual or legal submissions, frame a separate question of law, or undertake an independent discussion of Section 153C. After considering the impugned judgment, it stated that it found no good ground to interfere with the Gujarat High Court’s judgment. The Special Leave Petition was accordingly dismissed and all pending applications were disposed of.
Consequently, the Gujarat High Court judgment quashing the impugned Section 153C notices remains undisturbed. The Supreme Court’s order itself is confined to dismissal of the Revenue’s Special Leave Petition on the stated ground that no good ground for interference was found.
Cases Discussed
- CIT Vs Radhey Shyam Bansal and Others, (2011) 337 ITR 217 (Delhi High Court) — relied upon by the petitioners before the Gujarat High Court in support of their challenge to the jurisdictional satisfaction.
- CIT Vs Late Sh. Raj Pal Bhatia, (2011) 333 ITR 315 (Delhi High Court) — relied upon by the petitioners in support of their challenge to the Section 153C proceedings.
- PCIT Vs Abhisar Buildwell (P.) Ltd., (2023) 454 ITR 212 (Supreme Court) — relied upon by the petitioners concerning incriminating material in search assessments.
- ITO Vs Vikram Sujitkumar Bhatia, (2023) 453 ITR 417 (Supreme Court) — relied upon by the Revenue regarding amended Section 153C; distinguished by the Gujarat High Court on the issue arising before it.
Read HC Judgment in this case: Sandhya Maulik Patel Vs ACIT (Gujarat High Court)
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned.
2. We have heard Mr. S. Dwarakanath, learned Addl. Solicitor General on behalf of the petitioner and Mr. Malak Manish Bhatt, learned counsel on behalf of the respondent.
3. We have gone through the impugned order dated 24.11.2025 passed by High Court of Gujarat at Ahmedabad in Sandhya Maulik Patel v. Asstt. CIT (Guj)/Special Civil Application No.4162 of 2023.
4. We do not find any good ground to interfere with the impugned judgment of the High Court.
5. Accordingly, the Special Leave Petition is dismissed.
6. Pending application(s), if any, shall stand disposed of.
