Reassessment notice under Section 148 is quashed as loose third

Reassessment notice under Section 148 is quashed as loose third-party loose sheets carry no nexus to the taxpayer.

Issue

Whether the tax authorities are legally justified in issuing a reassessment notice under Section 148 for Assessment Year 2019-20 based entirely on an uncorroborated third-party inquiry register seized during a search, without establishing a direct or indirect nexus to the petitioner.

Facts

The Search and Seizure: A search operation under Section 132 was conducted on multiple business entities (including the Bsafal Group and City Estate Group). During this search, an extract of an inquiry register was seized.
The Loose Entry: The register contained a generic entry dated 30.11.2019 concerning properties in Koba with non-agricultural (NA) status and a specific asking rate of ₹45,000 per sq. yd. One line item mentioned Survey No. 131/1/2 (4,570 sq. yd.) and listed the seller’s name as “Shailesh Doshi” (the petitioner).
The Actual Transaction: In reality, the petitioner had sold the agricultural land via a valid, registered sale deed months prior, on 15.03.2019. The land was strictly agricultural at the time of execution.
The Reassessment Notice: Relying solely on the asking rates found in the third-party register, the Assessing Officer (AO) assumed that an “on-money” (unaccounted cash) component of ₹29.30 crores had changed hands. The AO obtained administrative approval from the Principal CIT on 26.03.2025 and issued a Section 148 reassessment notice on 27.03.2025 for A.Y. 2019-20.
The Challenge: The petitioner filed a writ petition to quash the notice, arguing that a hypothetical “asking rate” in a third-party document cannot dictate actual tax liabilities.

Decision

Lack of Nexus to Third-Party Material: Held in favour of assessee. The document relied upon by the AO was entirely third-party material found on premises unrelated to the petitioner. The revenue failed to showcase any corroborative evidence linking the petitioner to the entries or proving that any cash over and above the registered sale deed value was actually received.
Notice Quashed: Held in favour of assessee. A generic entry in a third-party inquiry register detailing an “asking rate” post-transaction cannot establish a “reason to believe” that income has escaped assessment. Because there was no live link or direct nexus between the seized material and the petitioner, the impugned notice under Section 148 was declared void and quashed.

Key Takeaways

Third-Party Documents Lack Evidentiary Weight Alone: Information recovered from a third party during a search cannot form the sole foundation for reopening an assessment under Section 148 unless the AO builds an independent, robust evidentiary link showing that the transaction directly pertains to the taxpayer.
“Asking Rates” Are Not Real Income: Fictional projection figures, rough notebook scribbles, or real estate “asking rates” found in broker dairies do not equate to actual cash received (“on-money”). The Income Tax department cannot tax an individual based on raw speculation that deviates completely from a legally executed and registered sale deed.

HIGH COURT OF GUJARAT

Mona Ashish Shah

Office of the Income-tax Officer

A.S. Supehia and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPLICATION NO. 2375 of 2026

APRIL 8, 2026

Darshan R. Patel for the Petitioner. Aaditya D. Bhatt for the Respondent.

JUDGMENT

A.S. Supehia, J.- With consent of learned advocates appearing for the respective parties, the matter is taken up for final hearing. Learned Senior Standing Counsel Mr.Aaditya D Bhatt has tendered the affidavit-in-reply dated 28.01.2026. The same is ordered to be taken on record.

RULE. Learned Senior Standing Counsel Mr.Aaditya Bhatt waives service of notice of rule on behalf of the respondent no.1.

BRIEF FACTS :

2. By way of 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”) for the Assessment Year 2019-20, seeking reassessment 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.

3. Petitioner is an individual and had filed her return of income for A.Y. 2019-20 on 28.08.2019 declaring total income at Rs.10,48,711/- An information was received that search action under Section 132 of the IT Act was conducted in the case of Bsafal 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-1 alleging that income of Rs.29,30,04,067/- has escaped assessment. The petitioner filed objections dated 02.04.2025 and 08.05.2025.

SUBMISSIONS ON BEHALF OF PETITIONER :

4. Learned Advocate Mr.Darshan R. Patel 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. It is submitted that the reassessment 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 Bsafal Group. It is submitted that the reopening of the assessment based on the search proceedings and that too only 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 found that the same appears to be dated 30.11.2019, whereas the petitioner had already sold the concerned parcel of land to several coowners on 15.03.2019. The second aspect which is pointed out is that the said extract of the inquiry register contains the endorsement “NA” i.e. non-agricultural land of the survey no, mentioned therein and unquestionably in the present case, the petitioner vide sale deed dated 15.03.2019 had sold the land which was an agricultural land.

5. It is submitted that the said information which has been derived by the Assessing Officer from the hand written extract of the inquiry register is neither authorised nor signed by the assessee and it does not contain any signature of the co-owners. 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 Bsafal 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 already sold the land vide sale deed dated 15.03.2019. 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.

6. In support of his submissions, learned advocate Mr.Patel has placed reliance on the judgment and order dated 24.11.2025 passed in Special Civil Application No.4162 of 2023 and allied matters.

SUBMISSIONS ON BEHALF OF RESPONDENT :

7. In response to the aforesaid submissions, learned Senior Standing Counsel Mr.Aaditya Bhatt while placing reliance on the averments made in the affidavit-in-reply, has submitted that it is impossible to believe that the land is further sold within a period of three months without taking any “on-money”. It is submitted that on the date mentioned the seized documents i.e. three months after the petitioner sold the property to several co-owners, the rates mentioned therein is far in excess of the rate at which the petitioner had sold the property. Hence, the asking rate for the said property would not see such huge jump within a period of three months. 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 notices 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 same would come to Rs.29,30,04,067/-.

8. Thus, it is submitted that as per the provision of Clause (iv) to 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 Principle 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 petitions may be dismissed.

ANALYSIS AND CONCLUSION:

9. We have heard the learned advocates appearing for the respective parties, at length and also perused the documents as pointed out by them.

10. 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 :

30.11.2019	Moje Koba 9824066834	Nr. Koba Village, B/H Kamalam BJP Office, TP 1 &2, S.No. 102/2 7400 sq.yd with NA FP Rate – 45,000/- Shailesh Doshi
30.11.2019	Moje Koba 9824066834	Juna Koba to Koba Road TP-1 FP 75. S.No. 131/1/2 4570 sq.yd, N.A Rate – 45,000/- Shailesh Doshi

11. 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 not in dispute that the petitioner had sold the land vide sale deed dated 15.03.2019. It is also noticed from the sale deed that the land in said question of survey number being Block No.131/1/2 was an agricultural land at the time of sale in the month of March 2019. The information relating to the date in the seized document is 30.11.2019. 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 15.03.2019 is an agricultural land. The name of the seller appears to be Shailesh Doshi. Thus, there are three components which do not reconcile with the petitioner (i) the date mentioned as 30.11.2019, (ii) the status of the land being shown as “NA” i.e. non-agricultural and (iii) the name of the seller – Shailesh Doshi. Thus, the status of the land is very important aspect for determination of the value of land, which the revenue has ignored.

12. The questions and answers forming part of the statements recorded under the provision of 131 of the IT Act, in the case of one Shri Nagjibhai Bhavadiya, the searched person, does not in any manner mention the name of the petitioner. There is no prima facie link established with Safal Group or City Estate. 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 land in question with the petitioner. Thus, the revenue has attempted to reopen the assessment of the year 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

13. Hence, we are of the opinion that the assessment has been reopened on the basis of conjunctures and surmises, the same action is required to be quashed and set aside. Accordingly, the writ petition stands allowed. The impugned Notice dated 27.03.2025 issued under Section 148 of the IT Act is hereby quashed and set aside along with all consequential proceedings. No order as to costs. Rule is made absolute.