NECKLACE DIAMOND vs INCOME TAX OFFICER WARD - 3(2)(1)
- Court
- Gujarat High Court
C/SCA/5482/2023 (GJHC240190622023) JUDGMENT DATED: 01/09/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5482 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
=============================================
Approved for Reporting Yes No
✔
=============================================
NECKLACE DIAMOND
Versus
INCOME TAX OFFICER WARD - 3(2)(1)
=============================================
Appearance:
MR MANISH J SHAH(1320) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1
=============================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 01/09/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. In the present writ petition, the petitioner has prayed for
quashing and setting aside the order passed under Section
148A(d) of the Income Tax Act, 1961 (for short ‘the Act’), dated
31.07.2022 and the notice issued under Section 148 of the Act
of the even date to the petitioner seeking reopening of the
assessment for the Assessment Year (for short ‘A.Y.’) 2017-18.
Brief Facts
2. The petitioner filed its return of income for the A.Y.2017-
18, declaring total income of Rs.4,73,481/- on 01.08.2017. No
scrutiny assessment was undertaken on the return of income
Page 1 of 6
Uploaded by NEHA PRAJAPATI(HC01404) on Wed Sep 02 2026 Downloaded on : Wed Sep 02 18:39:02 IST 2026
C/SCA/5482/2023 (GJHC240190622023) JUDGMENT DATED: 01/09/2026
and the same was accepted as such. Subsequently, the
petitioner was issue notice under Section 148 of the Act, dated
28.04.2021, by the respondent alleging that the income has
escaped assessment. Subsequently, another notice was issued
under Section 148A(b) of the Act, dated 30.05.2022.
2.1 In the show cause notices, it has been alleged that the
petitioner has received accommodation entry of
Rs.1,33,72,000/- from one Shripal Vrajlal Vora. The petitioner
objected to the same by filing a detailed letter dated
13.06.2022. The explanation has not been accepted by the
respondent resulting into the order under Section 148A(d) of
the Act, which is impugned in the writ petition.
3. At the outset, learned advocate, Mr.Manish J. Shah
appearing for the petitioner has submitted that the reopening
of the assessment is premised on the incriminating material
impounded in survey action carried out at the premises of one
Shripal Vora on 14.12.2016 and subsequently, the survey
action was converted to search action under Section 132 of the
Act on 16.12.2016. While referring to the provision of Section
153C of the Act, it is submitted that the Assessing Officer has
erred in resorting to the provisions of Section 148 of the Act by
issuing a notice since the appropriate reopening, is only
permissible under the provisions of Section 153C of the Act. He
has also referred to the provision of sub-section (1) of Section
149 of the Act, which prescribes the limitation period for
issuance of notice under Section 148 of the Act and the same
also stipulates that the provisions of Section 153A or 153C are
to be resorted after looking at the reopening of the assessment
Page 2 of 6
Uploaded by NEHA PRAJAPATI(HC01404) on Wed Sep 02 2026 Downloaded on : Wed Sep 02 18:39:02 IST 2026
C/SCA/5482/2023 (GJHC240190622023) JUDGMENT DATED: 01/09/2026
for the A.Y.2017-18. In support of his submission, he has also
placed reliance on the judgment of this Court dated
07.01.2026 in the case of Paras Chandreshbhai Koticha vs.
Income Tax Officer Ward – 1(2)(2) , Special Civil Application
No.17933 of 2018 and allied matters . Thus, it is urged that the
writ petition may be allowed by setting aside the impugned
notice and the order.
4. Opposing the present writ petition and the foregoing
submissions, learned Senior Standing Counsel, Mr.Karan G.
Sanghani appearing for the respondent has submitted that at
this stage, the reopening of the assessment may not be
quashed as it is precisely reopened by issuance of notices
under Section 148 of the Act. He has submitted that on receipt
of the information by the Deputy Commissioner of Income Tax,
the survey action was initially carried out against one Shripal
Vora and subsequently, it was converted into search action
and during the search operation, several incriminating
documents were found and seized involving the complicity of
the present petitioner in providing the accommodation entries,
the reopening of the assessment was undertaken by resorting
to the provision of Section 148 of the Act. Thus, it is urged that
the writ petition may not be entertained and the petitioner
may be relegated to face the assessment proceedings.
5. The facts, which are established from the record, are that
the petitioner filed his return of income of the A.Y.2017-18 on
01.08.2017 which is subsequently sought to be questioned and
reopened on the basis of the incriminating material found
during the survey and search action against one Shripal Vora.
Page 3 of 6
Uploaded by NEHA PRAJAPATI(HC01404) on Wed Sep 02 2026 Downloaded on : Wed Sep 02 18:39:02 IST 2026
C/SCA/5482/2023 (GJHC240190622023) JUDGMENT DATED: 01/09/2026
A survey action under Section 133A of the Act was carried out
on 14.12.2016 at the premises of Shripal Vora and
subsequently, survey was converted into search action under
Section 132 of the Act on 16.12.2016.
5.1 It is the case of the revenue that during the search
operation, several incriminating documents were found and
seized which revealed that Shripal Vora was involved in
accommodation entry business and was charging commission
towards the same. It is alleged that as per the information
derived from such incriminating material, the petitioner was
beneficiary to the transaction done with the entities controlled
by Shripal Vora to the tune of Rs.1,33,72,000/- during the
Financial Year (for short ‘F.Y.’) 2016-17. Thus, it is not in
dispute that the reopening by resorting to the provisions of
Section 148 of the Act is premised on the incriminating
material found during the search action under Section 132 of
the Act against Shripal Vora.
6. At this stage, we may refer to the decision rendered by
this Court in the case of Paras Chandreshbhai Koticha
(Supra) , dated 07.01.2026, where this Court after threadbare
examination of the provisions of Section 153A/153C of the Act
and provisions of Section 147/148 of the Act in context of
reopening of the assessment pursuant to the search actions
conducted under Section 132/132A of the Act has held thus:
“76. We answer the issues by summarizing the observations as under:
1) It is mandatory for the Assessing Officer of a “searched person”
(Section 153A of the Act) to record satisfaction on the incriminating
material found during the search under Sections 132/132A of the
Act and communicate the same to the jurisdictional Assessing
Page 4 of 6
Uploaded by NEHA PRAJAPATI(HC01404) on Wed Sep 02 2026 Downloaded on : Wed Sep 02 18:39:02 IST 2026
C/SCA/5482/2023 (GJHC240190622023) JUDGMENT DATED: 01/09/2026
Officer of the “other/third person”.
2) In the absence of any satisfaction note recorded by the Assessing
Officer of the searched person, the jurisdictional Assessing Officer
of the other person cannot assume jurisdiction under Section 153C
of the Act solely on the basis of material sent to him by the
Assessing Officer of the searched person. In other words, the “other
person” cannot be subjected to assessment/ reassessment under
Section 153C of the Act on the material received by him sans a
satisfaction note; hence, such an approach would be illegal, without
jurisdiction, and liable to be quashed.
3) The jurisdictional Assessing Officer of the “other/searched person”
(Section 153C) can invoke the provisions of Sections 147/148 of the
Act only on the basis of material available to him from other
sources, other than the incriminating material sent to him. In case a
satisfaction note is recorded on the incriminating material and
transmitted to him/her, then the only recourse available to the
jurisdictional Assessing Officer is to proceed under Section 153C of
the Act and not under Sections 147/148 of the Act.
4) In the case of assessees who are subjected to reassessment under
the provisions of Section 153A of the Act, the Assessing Officer
cannot switch over or invoke the provisions of Sections 147/148 of
the Act on the basis of incriminating material found during the
search and seizure conducted under Sections 132 or 132A of the
Act. However, the Revenue cannot be restricted, barred, or left
remediless from invoking the provisions of Sections 147/148 of the
Act, subject to fulfillment of the conditions mentioned therein, and
the assessment can be reopened on the basis of material collected
post-search from any other independent source.”
7. Thus, as per the observations mentioned herein above,
the only option available for the Jurisdictional Assessing Officer
to assume the jurisdiction on the incriminating material found
during the search proceedings under Section 132 of the Act, is
to reopen the assessment under the provision of Section 153C
of the Act and not under Sections 147/148 of the Act on the
basis of the incriminating material available to him after
recording the satisfaction.
8. We may also refer to the provision of Section 149 of the
Act, which existed prior to the amendment of the section vide
Finance Act, 2021. The same is as under:
Page 5 of 6
Uploaded by NEHA PRAJAPATI(HC01404) on Wed Sep 02 2026 Downloaded on : Wed Sep 02 18:39:02 IST 2026
C/SCA/5482/2023 (GJHC240190622023) JUDGMENT DATED: 01/09/2026
“149. Time limit for notice.- (1) No notice under section 148 shall be
issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment
year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end
of the relevant assessment year unless the Assessing Officer has in his
possession books of account or other documents or evidence which reveal
that the income chargeable to tax, represented in the form of-
(i) an asset;
(i) expenditure in respect of a transaction or in relation to an event or
occasion;
(iii) an entry or entries in the books of account,
which has escaped assessment amounts to or is likely to amount to fifty
lakh
rupees or more:
Provided that no notice under section 148 shall be issued at any time in
a case for the relevant assessment year beginning on or before Ist day of
April, 2021, if a notice under section 148 or section 153A or section 153C
could not have been issued at that time on account of being beyond the
time limit specified under the provisions of clause (b) of sub-section (1) of
this section or section 153A or section 153C, as the case may be, as they
stood immediately before the commencement of the Finance Act, 2021:
Provided further that the provisions of this sub-section shall not apply in
a case, where a notice under section 153A, or section 153C read with
section 153A, is required to be issued in relation to a search initiated under
section 132 or books of account, other documents or any assets
requisitioned under section 132A, on or before the 31st day of March,
2021:
9. Thus, as per the second proviso since the search under
Section 132 has been initiated before 31.03.2021, the
provision of Section 148 will not get attracted. Hence, the
present writ petition succeeds. The impugned notice and the
impugned order dated 31.07.2022 are hereby quashed and set
aside. Rule is made absolute. No order as to costs.
(A. S. SUPEHIA, J)
(VAIBHAVI D. NANAVATI,J)
NEHA /92
Page 6 of 6
Uploaded by NEHA PRAJAPATI(HC01404) on Wed Sep 02 2026 Downloaded on : Wed Sep 02 18:39:02 IST 2026