Reassessment Notice Set Aside as Reopening Based on Third-Party Seized Documents Lacks Nexus With Assessee

By | May 23, 2026
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Reassessment Notice Set Aside as Reopening Based on Third-Party Seized Documents Lacks Nexus With Assessee

Issue

Whether a reassessment notice issued under Section 148 to tax alleged “on-money” can be sustained when it is based entirely on third-party seized documents that lack any direct or indirect connection to the assessee or the land sold.

Facts

  • The assessee (who is now deceased) sold a parcel of agricultural land via a registered sale deed dated January 5, 2019, and subsequently filed their return of income for the assessment year 2019-20.

  • Following a search operations conducted under the Income-tax Act on the “B Safal Group” and its related entities, tax authorities seized certain handwritten inquiry extracts and loose documents.

  • Relying upon these seized papers, the Assessing Officer (AO) formed an opinion that the property rates noted on the loose sheets were far higher than the sale price declared by the assessee.

  • Based on this variance, the AO issued a reopening notice in the name of the deceased assessee, alleging that income had escaped assessment on account of undisclosed cash premium (“on-money”).

  • Evidentiary review revealed that the seized documents referenced the land status as “non-agricultural,” whereas the land actually sold by the assessee was strictly “agricultural.”

  • Furthermore, the individuals listed as making the pricing inquiries in the seized documents were third parties entirely unrelated to the assessee.

  • Additionally, statements recorded under Section 131 of the searched persons did not mention or implicate the assessee’s name in any capacity.

Decision

  • Held, yes: The impugned reassessment is completely invalid as there was absolutely no direct or indirect nexus established between the seized third-party documents and the assessee.

  • Held, yes: The entire case built by the Assessing Officer for reopening the assessment was flawed, being based purely on vague information, unverified conjectures, and groundless surmises.

  • Held, yes: Consequently, the impugned reopening notice issued under Section 148 cannot be sustained in the eyes of the law and is hereby set aside.

  • In favour of assessee: The ruling is delivered completely in favor of the assessee.

Key Takeaways

  • No Reopening on Conjectures: A reassessment cannot be initiated on the whims of an Assessing Officer. Loose, handwritten third-party papers found during a search cannot be tool to reopen a completed assessment unless a clear, documented link connects the paper to the specific taxpayer.

  • Mismatched Property Attributes Explode Revenue’s Case: When the revenue department attempts to use comparative market rates from seized documents to allege under-reporting, the structural nature of the properties must match. Rates for non-agricultural land cannot be used to benchmark the valuation of agricultural land.

  • Notice Against Deceased Status Addressed: While the notice was fundamentally flawed on merits due to a lack of nexus, issuing statutory reassessment notices in the name of a deceased individual without routing them through legal heirs presents an additional, persistent jurisdictional defect in tax administration.

HIGH COURT OF GUJARAT
Bharat Chandrakant Trivedi
v.
Income-tax Officer*
Maulik J. Shelat and A.S. Supehia, JJ.
R/SPECIAL CIVIL APPLICATION NO. 1060 of 2026
MAY  4, 2026
Hardik V Vora for the Petitioner. Aaditya D Bhatt for the Respondent.
JUDGMENT
A.S. Supehia, J. – With consent of the learned advocates for the respective parties, the matter is taken up for final hearing.
2. RULE. Learned Senior Standing Counsel Mr.Bhatt waives service of notice of rule on behalf of the respondent.
BRIEF FACTS :
3. The Petitioner is a son and legal heir of Late Chandrakant Shivram Trivedi, a deceased-assessee, who has passed away on 26.01.2023.
4. By way of the present writ petition, the petitioner has assailed the Notice dated 27.03.2025 issued under Section 148 of the Income Tax Act, 1961 (for short “the IT Act”) in the name of the deceased assessee for the Assessment Year (AY) 2019-20, seeking re-assessment of income and has further prayed to direct the respondent not to proceed further or pass final order under Section 143(3) read with Section 147 of the IT Act.
5. Deceased-assessee had filed his return of income for AY 2019-20 on 25.09.2019 declaring total income of Rs.34,15,030/- and exempt income of Rs.13,46,999/-. An information was received that search action under Section 132 of the IT Act was conducted in the case of B Safal Group, City Estate Group, City Estate Management India and City Procon Realtors Pvt Ltd and several incriminating documents were found and seized. On the basis of the said information, the respondent issued notice under Section 148 of the IT Act dated 27.03.2025, after taking approval from Principal Commissioner of Income Tax, Ahmedabad-3 alleging that income of Rs.27,11,85,955/- has escaped assessment. The petitioner filed a reply dated 23.04.2025, informing the respondent that Shri Chandrakant Trivedi had passed away on 26.01.2023 and categorically stating that the deceased assessee had not entered into any transaction with the B Safal Real Estate and City Estate Management Group.
6. Without taking into consideration the fact that Late Chandrakant Trivedi had passed away, re-assessment proceedings were continued in the name of deceased assessee. Vide letter dated 19.12.2025, the Petitioner was provided satisfaction note and approval of prescribed authority. Vide letter dated 23.12.2025, the petitioner further informed the respondent that the deceased assessee was survived by four children viz. three daughters and one son, being the petitioner herein.
SUBMISSIONS ON BEHALF OF PETITIONER:
7. Learned advocate Mr.Vora has submitted that the respondent invoked the provision of Section 148 of the IT Act, by issuing the Notice under Section 148 of the IT Act, without following the procedure. Firstly, it is submitted that the Notice issued under section 148 of the Act dated 27.03.2025 has been issued in the name of Late Chandrakant Shivram Trivedi, who had passed away on 26.01.2023 and any notice issued in the name of a deceased person is void ab initio and unenforceable in law. He has submitted that consequently, in the absence of a valid notice, the assumption of jurisdiction under section 147 of the Act is bad in law and the entire reassessment proceedings deserve to be quashed.
8. Secondly, it is submitted by learned advocate Mr.Vora that the re-assessment proceedings were initiated on the basis of hand written extract of the inquiry register, which was found from the premises of M/s.City Estate Management India and M/s.City Procon Realtors Pvt. Ltd., a real estate broker providing services to B Safal Group. It is submitted that the reopening of the assessment based on the search proceedings and that too only on the basis of extract of a paper, is illegal and a vague attempt made by the Assessing Officer to rope in the petitioner on the basis of the same material. It is contended that upon perusal of the hand written extract of the inquiry register, it is pointed out that the same contains the endorsement “NA” i.e. non-agricultural land of the survey number mentioned therein and unquestionably in the present case, the petitioner vide sale deed dated 05.01.2019, had sold the land which was an agricultural land.
9. It is further submitted by learned advocate Mr.Vora that the said information which has been derived by the Assessing Officer from the hand written extract of the inquiry register is neither authorized nor signed by the assessee and it does not contain any name or signature of the petitioner, co-owners or any of the sellers. It is further submitted that the information was further shown to one Shri Pravin Bavadiya, the searched person, who has also not referred the actual name of the present petitioner and also the status of the land in question. It is therefore, submitted that the extract of the inquiry registers which is found from the premises of entirely unrelated party/entities with whom the petitioner has no business or any personal association, cannot form a valid basis from drawing any adverse inference against the present petitioner, in absence of any direct or indirect link. It is submitted that from the basis of the extract of the inquiry register, the satisfaction note was recorded by the Assessing Officer to the extent that B Safal Group has accepted on money over and above the documented price as per the sale deed which is merely on presumption roping in the petitioner who had sold the land vide sale deed dated 05.01.2019. Thus, it is submitted that the assessment is sought to be reopened on the basis of conjunctures and surmises and hence the impugned notice may be quashed and set aside.
10. In support of his submissions, learned advocate Mr.Vora has placed reliance on the judgment and order dated 24.11.2025 passed in Sandhya Maulik Patel v. Asstt. CIT (Guj)/Special Civil Application No.4162 of 2023 and allied matters.
SUBMISSIONS ON BEHALF OF RESPONDENT :
11. In response to the aforesaid submissions, learned Senior Standing Counsel Mr.Bhatt filed affidavit-in-reply on 17.02.2026 and has submitted that petitioner had furnished his Aadhaar Card and PAN Card in response to the notices issued during the re-assessment proceedings, which amounts to participation in the proceedings and by virtue of such participation, the alleged defect stands cured under section 292B of the IT Act. Further, it is submitted that on the date mentioned on the seized documents and the rates mentioned therein, is far in excess of the rate at which the petitioner had sold the property. It is further submitted that looking to the huge difference in the prices itself suggests that the Assessing Officer is of the opinion that the income has escaped assessment. Hence, the impugned notice issued is just and proper. It is submitted that upon working on sale consideration and unaccounted cash component involved in the transaction, it is noticed that the Petitioner has received on-money of Rs.27,11,85,955/-.
12. Thus, it is submitted by the earned Senior Standing Counsel that as per the provision of Clause (iv) of Explanation 2 to section 148 of the IT Act, the satisfaction note was drawn by the Assessing Officer and the same was approved by the Principal Commissioner of Income Tax on 26.03.2025, as it was found that the income has escaped assessment in the case of the petitioner. Thus, it is urged that the present writ petition may be dismissed.
ANALYSIS AND CONCLUSION:
13. We have heard the learned advocates appearing for the respective parties, at length and also perused the documents as pointed out by them.
14. The established facts from the record and pleadings reveal that during the search proceedings in the case of B Safal Group, City Estate Group, City Management India and City Procon Realtors Pvt Ltd., an extract of the inquiry registry was found which had the information as under :
24.9.2021 Moje-Santej Behind Shilpgram — 3 TP 152 FP 17S No. 681 NA FP 6.50 Vigha Rate 4.50 cr Krupesh Gajipara

 

15. The assessment in the case of the petitioner for the year 2019-20 is sought to the be reopened on the basis of the aforementioned information contained in the extract of the inquiry register. It is noticed that the status of the land in question refers to “NA” i.e. a non-agricultural land and unquestionably, the land which was sold by the petitioner vide sale deed dated 05.01.2019, is the agricultural land. A person making inquiry appears to be Krupesh Gajipara. Thus, there are two components which do not reconcile with the petitioner (i) the status of the land being shown as “NA” i.e. non-agricultural and (iii) Person making inquiry — Krupesh Gajipara.
16. The questions and answers forming part of the statements recorded under the provisions of 131 of the IT Act, in the case of one Shri Pravin Nagjibhai Bhavadiya, the searched person, does not in any manner, mention the name of the petitioners. Thus, we do not find any direct or indirect link with the seized document and the same does not even remotely connect the rate mentioned of the concerned question of land with the petitioner. Thus, the Revenue has attempted to reopen the AY 2019-20 only on the basis of some vague information allegedly connected from the seized document and the same does not in any manner, relates to the present petitioner. Thus, the invocation of the proceedings under Section 148 of the IT Act, itself is ill-conceived and unsustainable in light of the information contained in the seized document.
FINAL ORDER
17. Hence, we are of the opinion that the assessment has been reopened on the basis of conjunctures and surmises, and the same action is required to be quashed and set aside. Accordingly, the captioned writ petition stand ALLOWED. The impugned Notice dated 27.03.2025 issued under Section 148 of the IT Act is hereby quashed and set aside. No order as to costs. Rule is made absolute.