Goral Infrastructure Private Limited Vs ITO (Gujarat High Court)
Summary : The Gujarat High Court allowed Goral Infrastructure Private Limited’s writ petition challenging the order dated 26 June 2025 under Section 148A(3) and the consequential Section 148 notice for Assessment Year 2021–22. The Court found that the proposed reassessment rested on facts and documentary material identical to those examined for AY 2020–21, for which the Assessing Officer had accepted the returned income both originally and after revision. It also held, in the circumstances recorded in the judgment, that Section 56(2)(x) did not apply to the land purchased in the ordinary course of the petitioner’s business and reflected as stock-in-trade.
Read SC Judgment in this case: ITO Vs Goral Infrastructure Private Limited (Supreme Court of India)
The petitioner, incorporated on 16 January 2015 and engaged in real estate development and infrastructure activities, filed its AY 2021–22 return on 11 March 2022 declaring a loss of ₹13,032, which was processed under Section 143(1). It acquired land bearing Survey Nos. 857, 858, 882 and 889 at Village Goraj, Taluka Sanand, Ahmedabad through a registered deed dated 4 November 2020. For AY 2020–21, three other parcels bearing Survey Nos. 912, 815 and 959 involved memoranda of understanding entered into by Sandeep Agarwal with the landowners, followed by tripartite agreements. Under that arrangement, the landowners were entitled to the consideration specified in the memoranda, while the balance was payable to Agarwal. The original Section 143(3) assessment dated 28 September 2022 accepted the return. A Section 263 order dated 26 March 2025 subsequently required examination of the unexplained differential between stamp duty value and sale deed value; the fresh assessment dated 17 September 2025 again accepted the return without additions.
For AY 2021–22, the Revenue issued a Section 148A(1) show-cause notice on 31 March 2025, followed by the challenged order and notice on 26 June 2025. The petitioner submitted that, although the aggregate sale deed consideration was ₹39.64 lakh, the actual consideration of ₹4.63 crore exceeded the aggregate stamp duty valuation of ₹4.62 crore. It relied on audited accounts showing the land as inventory and the liability to Agarwal as a current liability or trade payable, and stated that the outstanding amount had been fully settled through banking channels during AY 2025–26. It also relied on documents and Agarwal’s oral confirmation recorded through video conferencing in the earlier assessment. The Revenue maintained that the deeming provision in Section 56(2)(x) required examination and questioned whether Agarwal had paid the original landowners.
The Court recorded that no substantial distinguishing feature between the material for the two assessment years had been demonstrated. It expressly acknowledged that the fresh AY 2020–21 assessment dated 17 September 2025 post-dated the impugned June 2025 proceedings, but found that both years were nevertheless premised on identical facts and evidence. While paragraph 10 recorded that the Section 56(2)(x) aspect had not been considered in the earlier order, paragraph 10.1 recorded that the Assessing Officer had examined stamp duty, consideration and the land’s character as stock-in-trade. The Court relied on the disclosed ledger entries, agreements and explanations, including those of the landowners and Agarwal, and rejected the objection concerning payment to the original owners.
Applying Commissioner of Income Tax-IV v. SBJ VON Compounders (P.) Ltd., [2013] 37 taxmann.com 353 (Gujarat), the Court reiterated that the principle of consistency must be followed where circumstances remain unchanged, although res judicata does not strictly apply to income-tax proceedings. It declined the Revenue’s suggestion to remand the matter, held that continuing the proceedings would amount to abuse of statutory provisions, and quashed both the Section 148A(3) order and Section 148 notice dated 26 June 2025. Rule was made absolute to that extent, with no order as to costs.
Reason for the Decision: The Gujarat High Court found that the land transactions, agreements, ledger entries and explanations were materially identical to those examined for AY 2020–21, where the Assessing Officer had accepted the returned income. The Revenue failed to demonstrate any substantial distinguishing circumstances warranting a different approach for AY 2021–22. The Court applied the principle of consistency and also considered the actual consideration, stamp duty valuation and treatment of the land as business inventory. It held that continuing the reassessment proceedings would constitute an abuse of statutory provisions.
Legal Accuracy Note: The judgment should not be presented as establishing a blanket exemption from Section 56(2)(x) for every purchase of land held as stock-in-trade. The Court’s conclusion arose from the particular transaction structure, consideration evidence and assessment history. Also, the fresh assessment for AY 2020–21 was completed on 17 September 2025, after the challenged reassessment notice dated 26 June 2025; this chronology should be preserved when explaining the consistency finding.
Cases Discussed
- Commissioner of Income Tax-IV v. SBJ VON Compounders (P.) Ltd., [2013] 37 taxmann.com 353 (Gujarat High Court) — Relied upon for the principle of consistency where the preceding year’s treatment was accepted and no changed circumstances were demonstrated; res judicata does not strictly apply to income-tax proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned advocate Mr. Hardik Vora for the petitioner and learned Senior Standing Counsel Mr. Dev Patel for the respondent. With the consent of the parties, the matter is taken up for hearing today itself.
2. RULE returnable forthwith. Learned Senior Standing Counsel Mr. Dev Patel waives service of notice of rule on behalf of the respondent.
3. By way of this petition, the petitioner has prayed to quash and set aside the impugned order dated 26.06.2025 passed under Section 148A(3) of the Income Tax Act, 1963 (for Short “the Act”) and consequent notice of the same date issued under Section 148 of the Act for the Assessment Year 2021-22.
4. The brief facts leading to filing of the present petition are that the petitioner is a private limited company incorporated on 16.01.2015 and is engaged in the business of real estate development, infrastructure and other allied activities. The petitioner had filed its return of income for the Assessment Year 2021-22 on 11.03.2022 declaring loss of Rs.13,032/- which was processed under Section 143(1) of the Act. It is the case of the petitioner that during the year under consideration, the petitioner acquired various parcels of immovable land, bearing Survey No. 857, 858, 882 and 889 situated at Village Goraj, Taluka Sanand, District Ahmedabad from Mr. Dhaval Ramchandra Patel vide registered purchase deed executed on 04.11.2020.
4. 1.It appears that during the Assessment Year 2020-21, the petitioner had acquired three parcels of land bearing Survey Nos.912, 815 and 959 and in each of these cases, Mr. Sandeep Agarwal had initially entered into Memorandum of Understanding (MoU) with the original land owners. Thereafter, Tripartite Agreements were executed between the petitioner, the original land owners and Mr. Sandeep Agarwal wherein the total consideration for the parcels of lands was determined. However, as per the mutual understanding recorded in the MoU and the Tripartite Agreements, the landowners were entitled to receive only the portion of consideration specified in MoU while the balance amount was payable to Mr. Sandeep Agarwal. Pursuant thereto, assessment proceedings were initiated in respect of the transactions for the Assessment Year 2020-21 and after having considered the material placed on record, the Assessing Officer passed an order dated 28.09.2022 under Section 143(3) of the Act accepting the return of income filed by the petitioner.
4.2 Subsequently, revision proceedings under Section 263 of the Act were initiated and an order dated 26.03.2025 was passed, setting aside the Assessment Order on the ground that the Assessing Officer had failed to examine the issue of unexplained amount, especially the differential amount between the stamp duty value and the sale deed value. Thereafter, the Assessing Officer after considering the replies and the necessary documents passed an order under Section 143(3) read with Section 263 of the Act on 17.09.2025 accepting the return of income filed by the petitioner without making any additions.
4.3 Based on the information gathered during the original assessment proceedings and the revision proceedings for the Assessment Year 2020-21 whereby the parcels of land were recorded as inventory in the books of accounts and the amounts payable to Mr.Sandeep Agarwal were reflected under ‘Other Current Liabilities’, the respondent under Section 148A(1) of the Act issued notice dated 31.03.2025 for the year under consideration asking the petitioner to show cause as to why the reassessment proceedings may not be initiated against him on the ground that as the transaction value is lesser than the stamp duty valuation in the sale deeds and the whole amount of transaction is shown as payable to Mr. Sandeep Agarwal. 4.
4.4 Pursuant to the said show cause notice dated 31.03.2025, the petitioner filed a detailed reply. However, the respondent passed an order under Section 148A(3) of the Act on 26.06.2025 for reassessment and also issued notice under Section 148 of the Act. Hence, the petitioner is constrained to file the present writ petition.
5. Learned advocate Mr. Hardik Vora appearing for the petitioner submitted that the comparison of the sale deed values, actual consideration and the applicable stamp duty reveals that the amount of actual consideration is in excess or aligned with the respective stamp duty valuation and the total sale deed consideration was Rs. 39.64 lakhs. It is submitted that the actual consideration paid amounting to Rs.4.63 crores is higher than the aggregate stamp duty valuation of Rs.4.62 crores. It is further contended that the parcels of lands acquired were classified in stock-in-trade under the “inventories” head in the audited balance sheet and correspondingly the amount payable to Mr. Sandeep Agarwal was disclosed under “Current Liabilities – Trade Payable” in the audited financial statements for the Financial Year ending on 31.03.2021. However, the entire outstanding liability towards Mr. Sandeep Agarwal has since been fully settled through the banking channels during the Assessment Year 2025-26.
5.1. Further, it is submitted by the learned advocate for the petitioner that during the original assessment proceeding for Assessment Year 2020- 21, the petitioner furnished all the relevant documentary evidence and the Assessing Officer had recorded oral confirmation from Mr. Sandeep Agarwal via video conferencing with regard to the outstanding consideration payable by the petitioner and the transaction structure. Lastly, it is contended that insofar as applicability of Section 56(2)(x) of the Act is concerned, it is submitted that the parcels of lands acquired by the petitioner during the year were purchased in the ordinary course of business, and therefore the said provision would not be applicable in the case of the petitioner.
5.2 In support of his submissions, learned advocate Mr. Vora has placed reliance on the decision of this Court in the case of Commissioner of Income Tax-IV v. SBJ VON Compounders (P) Ltd., reported in [2013] 37 Taxmann.com 353 (Gujarat).
6. Per contra, learned Senior Standing Counsel Mr. Dev Patel appearing for the respondent vehemently opposed the writ petition and has submitted that the reassessment cannot be said to be mere change of opinion as there is no substantial difference between the present proceeding and the assessment proceeding for the Assessment Year 2020-
21. It is submitted that the issue with regard to the differential value arising due to deeming fiction under Section 56(2)(x) of the Act is required to be examined. Learned Senior Standing Counsel Mr. Dev Patel has, therefore, submitted that in fact the proceeding reveal that no payment was made to the original land owners by Mr. Sandeep Agarwal, despite Tripartite Agreement. Thus, it is urged that the present writ petition may not be entertained.
7. We have heard the learned advocates appearing for the respective parties at length.
8. It is not in dispute that the Assessment Year 2020-21 relates to the part of sale transaction of the lands in question. The Assessing Officer during the assessment proceedings in relation to provision under Section 143(3) read with Section 263 of the Act have already examined and verified the transaction and on both the occasions the return of income filed by the petitioner was accepted and no additions were made on this issue. However, based on the same material of facts, for subsequent Assessment Year and Assessment Year 2021-22 have been undertaken by issuing the impugned notice as well as the impugned order passed under Section 148A(3) of the Act dated 26.06.2025 and consequent notice under Section 148 of the Act dated 26.06.2025. When a specific query was raised by us to the learned Senior Standing Counsel Mr.Dev Patel to point out any distinguishing feature between the material which was already examined during the assessment proceedings for Assessment Year 2020-21 and the present Assessment Year 2021-22, he has submitted that the Assessing Officer has failed to appreciate the provisions of Section 56(2) (x) of the Act and has submitted that in the present case, the said provision would be applicable.
9. Having examined both the proceedings of earlier Assessment Years 2020-21 and the present reassessment proceedings for the Assessment Year 2021-22, it is found that the material on which the present proceeding emanates is that both the Assessment Year 2020-21 and Assessment Year 2021-22 are similar. There is no difference between the proceedings which have been culminated in favour of the petitioner. Though, it is noticed by us that the Assessing Officer in the proceedings for Assessment Year 2020-21 accepted the return of income filed of the petitioner vide order dated 17.09.2025 and in the assessment proceedings under Section 143(3) read with Section 263 of the Act, which is subsequent to the impugned notice and order, however, it is an established fact from pleadings and the documents that the assessment of both the Assessment Years 2020-21 and 2021-22 are premised on identical facts and material. Since no substantial difference has been pointed out by the respondent, and the present reassessment proceedings in question emanate from the same material and the documentary evidence furnished during the course of proceedings for Assessment Year 2020-21, we are not inclined to accept the submissions of the respondent.
10.It is noticed by us that in the proceedings of Assessment Year 2020- 21, no notice under Section 56(2)(x) was issued. Thus, while passing the order dated 17.09.2025 in the favour of the petitioner, this aspect has not been considered. In the instant proceedings, in question of Assessment Year 2021-22, the issue of breach of Section 56(2)(x) has arisen. Section 56 provides that income of every kind which is not to be excluded from the total income under this Act, shall be chargeable to income tax under the head “Income from other sources” Clause(x) is included in section 56(2) to provide the receipts of any sum of without consideration as under:
“[(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,—
(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
24 [(B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely—
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to [ten per cent] of the consideration:”
10.1 It is not disputed by the respondent, that the petitioner’s land in question was purchased by the petitioner in normal course of business and the transaction is reflected in the books of accounts as stock-in-trade. This has been disclosed in prior to and subsequent to the years of assessment. In the case of the petitioner, the provision of 56(2)(x) will only come into play, if the capital asset is received with or without consideration. The entire transactions, including the transaction with Sandeep Agarwal has been disclosed, and is supported by ledger entries and agreements. All these transactions are considered by the Assessing Officer, while passing the assessment order dated 17.09.2025 for Assessment Year 2020-21. The Assessing Officer in the assessment proceedings for the Assessment Year 2020-21, has examined the aspect of payment of stamp duty and the sale consideration and has found that the land was held as stock-in-trade, hence the provision of section 56(2)(x) will not be applicable. It is also noticed by us that the assessee has explained the payments made prior to the receipt of the notice under Section 263 of the Act and the same is also found to be in order and it cannot be said that it is an afterthought on the part of the assessee. Thus, the contention raised before us with regard to the actual payment having not been paid to the original owners is also liable to be rejected. When the Assessing Officer while examining the proceedings for Assessment Year 2020-21 has considered in detail all the documentary explanation including the explanation tendered by the land owners and the confirming party Mr. Sandeep Agarwal, the present proceedings cannot be allowed to be continued and the petitioner cannot be compelled to face such proceedings. Hence, we are not inclined to remand the matter as suggested by learned Senior Standing Counsel Mr. Dev Patel.
11. At this stage we may refer to the decision of this Court in the case of SBJ VON Compounders (P.) Ltd. (supra) wherein this Court has held as thus:-
“6. It was shown to the Tribunal that in the preceding assessment year 2003-04, the Assessing Officer had accepted the claim of the assessee on similar issue. He had then accepted all the reasons and explanation for deletion. No change of circumstances in the year under consideration were brought out, and, therefore, following the doctrine of consistency, the CIT (A) and thereafter the Tribunal were justified in deleting the addition made by the Assessing Officer on the basis of stock valuation. It is an accepted principle that even though strictly speaking in Income Tax Proceedings, the principle of res judicata does not apply, the principle of consistency is required to be followed. Furthermore, the assessee had explained the inventory and differentiation in the figures of stock with satisfactory reasons.”
12. Thus, reopening of the assessment proceedings and the impugned notice for scrutiny in view of the acceptance of the return of income by the Assessing Officer on 17.09.2025 for Assessment Year 2020-21, the petitioner assessee has explained in detail all his transactions by producing the books of accounts of the original land owner i.e. the farmers who have also supported the petitioner and Mr. Sandeep Agarwal. Thus, continuing of the proceedings would be nothing but abuse of statutory provisions of law and hence the writ petition succeeds. The impugned order dated 26.06.2025 passed under Section 148A(3) of the Act and impugned notice of the same date passed under Section 148 of the Act are quashed and set aside. Rule is made absolute to the aforesaid extent with no order as to costs.
