Reassessment Notice Under Section 148 Based Solely on Third-

Reassessment Notice Under Section 148 Based Solely on Third-Party Seized Broker Register Quashed

Issue

Whether a reassessment notice under Section 148 alleging unexplained money under Section 69A for payment of “on-money” on land purchase can be sustained when based solely on a third-party broker’s inquiry register seized nine months prior to the purchase, without establishing a live nexus to the petitioner.

Facts

Return of Income: The petitioner filed a return of income declaring approximately ₹1.11 crores for Assessment Year 2021–22.
Land Purchase: The petitioner, jointly with co-purchasers, bought land at Moje Adalaj (Survey Nos. 184 and 182) via registered sale deeds for approximately ₹93 lakhs and ₹63 lakhs, respectively.
Search & Seizure: A search operation was conducted at the premises of a real estate broker, leading to the seizure of inquiry registers containing details of survey numbers, areas, and rates.
Seized Entry Details: An entry in the broker’s register pertained to land available for sale covering Survey Nos. 182, 183, 184, 189, and 190. This entry predated the petitioner’s actual purchase by approximately nine months.
Broker’s Statement: In a statement under Section 131, the broker clarified that the registers were merely listings of plots/lands available for sale at various locations.
Reassessment Notice: Based on the seized entry and invoking Section 292C, the Assessing Officer issued a notice under Section 148 alleging that the petitioner had paid “on-money” resulting in escaped income of ₹3.74 crores.

Decision

Absence of Live Nexus: The High Court held that the impugned Section 148 notice was founded solely on a third-party broker’s inquiry register without any material establishing a live link showing that the entry related to the petitioner’s actual transaction.
Register Reflected Availability, Not Execution: Since the register entry was recorded nine months prior to the purchase and admittedly represented only land “available for sale,” it could not be treated as evidence of an executed transaction or “on-money” payment by the petitioner.
Presumption Under Section 292C Inapplicable: The statutory presumption under Section 292C could not be applied against the petitioner based on loose, uncorroborated third-party documents.
Notice Quashed: The impugned reassessment notice under Section 148 was quashed and set aside, deciding the matter in favor of the assessee.

Key Takeaways

Third-Party Loose Sheets Insufficient for Reopening: Reassessment proceedings under Section 148 cannot be validly initiated based purely on loose entries or inquiry registers seized from third parties without corroborative material directly linking the assessee to the alleged transaction.
Temporal and Factual Distance Matters: An entry recording land merely “available for sale” months prior to an actual purchase cannot be presumed to represent real consideration or “on-money” paid by a buyer.
Requirement of Live Link/Nexus: To initiate reassessment under Section 148, the Assessing Officer must possess tangible material showing a direct, live nexus between the information available and the actual escapement of income.

HIGH COURT OF GUJARAT

Tarun Santramdas Varma

Assistant Commissioner of Income-tax

A.S. Supehia and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPLICATION NO. 2899 of 2026

APRIL 15, 2026

Tushar Hemani, Sr. Adv. and Ms Vaibhavi K Parikh for the Petitioner. Aaditya D Bhatt for the Respondent.

JUDGMENT

A. S. Supehia, J.- 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 assessment year 2021-22 on 10.03.2022 declaring total income at Rs. 1,10,58,190/-. The petitioner, along with joint purchasers Shri Gauravbhai Santarambhai and Shri Mrunalbhai Santarambhai, purchased land at Moje Adalaj bearing Survey No. 184 and Survey No. 182 from Shri Shakarabhai Dhulabhai Patel and Shri Manthan Shakarabhai 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, 189 and 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 (Gujarat), Naliniben Jagdishkumar Gandhi v. ITO (Gujarat) and Deepak Chinubhai Shah v. Dy. CIT (Gujarat)/(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 onRaymond 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 onAsstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. 291 ITR 500 (SC) andAnshul Jain v. Pr. CIT [2022] 449 ITR 256 (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:

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 Mrunal 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 a generalised 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, covers 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 NalinibenJagdishkumar Gandhi(supra). 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 reassessment 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 (Gujarat)/[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 (Gujarat)/[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.