Mrunal Santramdas Varma Vs ACIT (Gujarat High Court)
Summary: The Gujarat High Court allowed the writ petition filed by Mrunal Santramdas Varma and quashed the notice dated 30.03.2025 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2021-22. The Court held that the reassessment was founded on conjectures and surmises because the seized inquiry-register entry did not establish any live nexus, direct or indirect, with the petitioner or his land purchase.
The petitioner had filed his return for AY 2021-22 on 10.03.2022 declaring total income of Rs. 99,65,040/-. Along with co-purchasers Shri Gauravbhai Santarambhai and Shri Tarunbhai Santarambhai, he purchased land at Moje Adalaj bearing Survey Nos. 184 and 182 through registered sale deeds dated 01.03.2021 for considerations of Rs. 93,00,000/- and Rs. 63,00,000/- respectively.
A search under Section 132 of the Income-tax 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. Inquiry registers containing details of lands and plots, survey numbers, areas and asking rates were seized. One entry dated 18.06.2020 concerned land at Moje Adalaj and referred to Survey Nos. 182, 183, 184, 189 and 190, with an area of 8.34 bigha and the name “Krupeshbhai Gajipara”.
On the basis of this entry, the Assessing Officer recorded a satisfaction note on 18.03.2025, approved by the Principal Commissioner of Income Tax-3, Ahmedabad on 22.03.2025, and issued the Section 148 notice dated 30.03.2025 alleging that the petitioner had paid on-money of Rs. 3,73,56,434/- in connection with purchase of Survey No. 182. The alleged on-money represented the difference between the consideration recorded in the sale deed and the rate quoted in the inquiry-register entry.
The petitioner objected to the reopening on 28.01.2026 and requested that the reassessment proceedings be dropped. Since no order disposing of the objections was passed, the petitioner approached the High Court.
The petitioner contended that the seized register entry dated 18.06.2020 preceded the actual purchase transaction dated 01.03.2021 by approximately nine months. Reliance was also placed on the statement of broker Shri Pravin Nagjibhai Bavadiya recorded under Section 131, according to which the inquiry registers contained details of “land/plots available for sale at different locations near Ahmedabad” and did not record concluded transactions or the parties thereto.
The petitioner further pointed out that the register entry covered five survey numbers—182, 183, 184, 189 and 190—with a total area of 8.34 bigha, whereas the petitioner and co-purchasers acquired only Survey Nos. 184 and 182, measuring 2.38 bigha and 1.62 bigha respectively, aggregating approximately 4 bigha. The petitioner also had no connection with “Krupeshbhai Gajipara”, whose name appeared in the register, and the Department had not conducted any inquiry with that person.
The Revenue opposed the petition, contending that the inquiry registers were structured business records maintained by a professional real estate broker and were not “dumb documents”. It relied on the presumptions under Sections 132(4A) and 292C of the Income-tax Act and submitted that verification of revenue records established an asset-based nexus between the seized register and the petitioner’s purchase. According to the Revenue, Explanation 2(iv) to Section 148 was sufficient where documents seized from another person “pertain to” or information contained therein “relates to” the assessee.
The Revenue also argued that discrepancies concerning dates, area and names went to the merits and could be examined during reassessment. It relied upon Section 148 reassessment principles and the Supreme Court decisions cited in the judgment, including Raymond Woollen Mills Ltd. v. ITO, CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. and Anshul Jain v. PCIT.
The High Court examined the actual seized register entry and found several material deficiencies. First, the entry was dated 18.06.2020, whereas the petitioner purchased the land only on 01.03.2021. The Court observed that the entry could, at best, be viewed as a market survey reflecting an asking rate for land available for sale as on 18.06.2020. In light of the broker’s own statement that the registers contained details of land and plots available for sale, the entry could not be treated as a record of a transaction executed by the petitioner.
The Court further found that the evidentiary foundation relied upon by the Revenue was weakened by the broker’s own statements. Shri Bavadiya had admitted that clients sometimes brought land documents or title deeds which belonged to the clients and not to him. The Court held that this materially undermined a blanket application of the presumption under Section 292C that every entry necessarily represented an actual financial transaction carried out by or through the broker.
The Court also considered the discrepancy in the survey numbers and land area. The seized entry covered five survey numbers and 8.34 bigha, while the petitioner purchased only two survey numbers measuring approximately 4 bigha. According to the Court, this substantial discrepancy further militated against a connection between the seized register entry and the petitioner’s transaction.
Another significant circumstance was the name “Krupeshbhai Gajipara” appearing in the register. The Court noted that the petitioner was entirely unconnected with that person and that the Department had not made any inquiry with the person whose name actually appeared in the register. The statement of Shri Bavadiya under Section 131 also did not mention the petitioner or the co-purchasers.
The Court therefore concluded that there was no direct or indirect link between the petitioner and the seized document. The Revenue had attempted to reopen the assessment on the basis of vague information allegedly connected with the seized document, but that document did not, in the Court’s view, relate to the petitioner.
The Court also held that the issue was covered by its earlier decision in Naliniben Jagdishkumar Gandhi v. ITO, [2025] 183 taxmann.com 126 (Gujarat), where a similar entry from the same customer inquiry register and the same search had been considered. The Court reiterated the requirement of a live link connecting the seized material with the assessee.
The judgment also referred to Trupti Aakash Desai v. ITO, Special Civil Application No. 985 of 2026, decided on 08.04.2026, where the same search and inquiry register were considered and the Court held that such entries could not be used in isolation without a live and direct nexus with the assessee. The judgment further referred to Kantilal Parsotamdas Patel v. ITO, Special Civil Application No. 3676 of 2026, decided on 08.04.2026, where reassessment proceedings arising from a similar factual situation were quashed.
Accordingly, the Gujarat High Court held that the assessment had been sought to be reopened on the basis of conjectures and surmises. It found that the seized inquiry-register entry did not establish any live nexus with the petitioner and that there was no direct or indirect link between the seized document and the petitioner. The invocation of Section 148 was held to be ill-conceived and unsustainable.
The writ petition was consequently allowed and the impugned notice dated 30.03.2025 issued under Section 148 of the Income-tax Act was quashed and set aside.
Cases Discussed
- Naliniben Jagdishkumar Gandhi v. ITO, [2025] 183 taxmann.com 126 (Gujarat) — relied upon for the requirement of a live link connecting seized material with the assessee.
- Sandhya Maulik Patel v. Asstt. CIT, [2025] 181 taxmann.com 123 (Gujarat) — relied upon by the petitioner in support of the challenge to the reassessment action.
- Deepak Chinubhai Shah v. Dy. CIT, Special Civil Application No. 13298 of 2025 and allied matters — relied upon by the petitioner in support of the challenge based on absence of nexus with seized material.
- Trupti Aakash Desai v. ITO, Ward 3(3)(5), Ahmedabad, Special Civil Application No. 985 of 2026 — applied as a recent decision concerning the same search and inquiry register and the requirement of a live and direct nexus.
- Kantilal Parsotamdas Patel v. ITO, Special Civil Application No. 3676 of 2026 — followed in relation to similar facts arising from the same search where reassessment proceedings were quashed.
- Raymond Woollen Mills Ltd. v. ITO, [1999] 236 ITR 34 (SC) — cited by the Revenue on the limited scope of judicial examination at the stage of issuance of a Section 148 notice.
- CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd., [2007] 291 ITR 500 (SC) — cited by the Revenue regarding reassessment jurisdiction and the stage at which escapement of income is considered.
- Anshul Jain v. PCIT, [2022] 143 taxmann.com 38 (SC) — cited by the Revenue in support of the reopening proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
RULE returnable forthwith. Learned Senior Standing Counsel Mr. Aaditya D Bhatt waives service of notice of rule on behalf of the respondent.
1. Since a short issue is involved, with consent of learned advocates for the respective parties, the matter is taken up for final hearing.
2. By way of present writ petition, the petitioner is assailing the impugned notice dated 30.03.2025 issued under Section 148 of the Income Tax Act, 1961 (for short “the IT Act”) for the assessment year 2021-22.
BRIEF FACTS:
3. The petitioner filed his return of income for the assessment year 2021-22 on 10.03.2022 declaring total income at Rs. 99,65,040/-. The petitioner, along with joint
purchasers Shri Gauravbhai Santarambhai and Shri Tarunbhai Santarambhai, purchased land at Moje Adalaj bearing Survey No. 184 and Survey No. 182 from Shri
Shakarbhai Dhulabhai Patel and Shri Manthan Shakarbhai Patel vide registered sale deed dated 01.03.2021 for a consideration of Rs. 93,00,000/- and Rs. 63,00,000/- respectively. 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 18.06.2020 was found in respect of land at Moje Adalaj. 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 22.03.2025. Thereafter, the Respondent issued the impugned notice dated 30.03.2025 under Section 148 of the IT Act, alleging that the petitioner had paid on-money of Rs. 3,73,56,434/- on account of purchase of land bearing Survey No. 182 at Moje Adalaj, being the difference between the consideration recorded in the Sale Deed and the price quoted in the inquiry register noting dated 18.06.2020. The petitioner filed detailed objections against the said notice on 28.01.2026 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:
4. 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 18.06.2020, whereas the petitioner along with co- purchasers actually purchased the concerned land bearing Survey Nos. 184 and 182 by registered sale deed dated 01.03.2021 – i.e., approximately nine 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 IT 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.
4.1 It is further submitted that the register entry pertains to Survey Nos. 182, 183, 184, 189 and 190 with a total area of 8.34 bigha, whereas the petitioner along with co- purchasers purchased only Survey Nos. 184 and 182 having areas of 2.38 bigha and 1.62 bigha respectively, totalling approximately 4 bigha. The entry in the register
thus covers three additional survey numbers (183, 189and 190) and more than double the area of land actually purchased by the petitioner, rendering any nexus between the seized document and the petitioner’s transaction highly doubtful.
4.2 It is submitted that the name appearing in the seized inquiry register is “Krupeshbhai Gajipara” – a person entirely unconnected to and unknown by the petitioner.
Strikingly, no inquiry whatsoever has been conducted by the Department from Krupeshbhai Gajipara, 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. In support of the aforesaid submissions, learned advocate has placed reliance on the judgment and order dated 24.11.2025 passed in Sandhya Maulik Patel v. Asstt. CIT [2025] 181 taxmann.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:
6. 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 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 Any ROR portal, it was found that the land bearing Survey Nos. 184 and 182 at Moje Adalaj, as recorded in the seized inquiry register, was purchased by the petitioner along with co-purchasers on 01.03.2021. The asset-based nexus between the seized document and the petitioner’s transaction is thus established. 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 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.
6.2 It is 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 on behalf of the respondent that the action of reopening is well-supported by the pronouncements of the Hon’ble 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:
7. 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:
18.6.20 | Moje:- Adalaj | B/H, Suramya -1 | S. No.
182,183,184,189,190 | 8.34 – bigha | Rate – 2.70 Q |
Krupeshbhai Gajipara
8. 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. 182 at Moje Adalaj and accordingly sought to reopen the assessment year 2021-22 alleging escaped income of Rs. 3,73,56,434/- in the hands of the petitioner.
9. 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 18.06.2020,
whereas the petitioner along with co-purchasers Shri Gauravbhai Santarambhai and Shri Tarunbhai Santarambhai purchased the concerned land bearing Survey Nos. 184 and 182 from the joint sellers by registered sale deed dated 01.03.2021 – i.e., approximately nine 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 18.06.2020 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 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 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.
9.1 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 generalized presumption under Section 292C to treat the
inquiry register entries as conclusive evidence of on- money transactions involving the petitioner.
10. We further note that the register entry pertains to five survey numbers, viz., Survey Nos. 182, 183, 184, 189 and 190, with a total area of 8.34 bigha. However, the
petitioner along with co-purchasers purchased only Survey Nos. 184 and 182, having areas of 2.38 bigha and 1.62 bigha respectively, i.e., a combined area of approximately 4 bigha. The register entry, therefore, overs three additional survey numbers (183, 189 and 190) and refers to more than double 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.
11. The name “Krupeshbhai Gajipara” 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 Krupeshbhai Gajipara, 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 2021-22 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.
12. 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 taxmann.com 126 (Gujarat). This Court has, after considering similar entry in the same customer inquiry register seized in the same search, thus:
“10. 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. 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). ”
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.
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
13. 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 30.03.2025 issued under Section 148 of the IT Act is hereby quashed and set aside.
