SAGAR MUKESH SHETH vs INCOME TAX OFFICER , WARD 2(1)(2) , RAJKOT

C/SCA/7026/2026 JUDGMENT DATED: 08/05/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7026 of 2026

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MR. JUSTICE MAULIK J.SHELAT Sd/-
=============================================
Approved for Reporting Yes No
✔
=============================================
SAGAR MUKESH SHETH
Versus
INCOME TAX OFFICER , WARD 2(1)(2) , RAJKOT & ANR.
=============================================
Appearance:
MR S.N. SOPARKAR, SENIOR ADVOCATE WITH MR MANYA ANJARIA,
AND MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
MR MAUNIL G YAJNIK(9346) for the Respondent(s) No. 1,2
=============================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE MAULIK J.SHELAT

Date : 08/05/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. RULE returnable forthwith. Learned Senior Standing
Counsel Mr.Maunil Yajnik, waives service of notice of rule for
respondents.
2. The present writ petition has been filed challenging the
notice issued under Section 148 of the Income Tax Act, 1961
(for short, “the Act”) dated 27.03.2026.
3. The petitioner filed his return of income for Assessment
Year 2022-23. It appears that a search and seizure was
conducted on Bsafal Group and City Estate Groups under
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C/SCA/7026/2026 JUDGMENT DATED: 08/05/2026
section 132/132A of the Act and some material was collected
in such search and during the course of search, it was found
that M/s.City Estate Management India, a Real Estate Broker, is
providing broking service to Bsafal Group.
4. It is alleged that the cash transactions in real estate was
being done by selling various lands/plots etc. in and around
Ahmedabad city. The details of address, name of person,
survey numbers of the land in question and the market rate of
property were unearthed during such proceedings. Post
search, the statement of one Shri Pravin Nagjibhai Bavadiya
was recorded by the revenue, the relevant extract of the
statement recorded under Section 131 of the Act dated
27.12.2021 is incorporated in the impugned notice. Based on
such material, the revenue has reopened the assessment by
issuing the notice under Section 148 of the Act.
5. Learned Senior Advocate Mr.Soparkar, appearing with
learned advocate Mr.Manya Anjaria, for the petitioner has
submitted that the seized material has no nexus with the
transaction carried out by the petitioner. It is submitted that
the respondent has relied upon seized material referring to a
sale deed dated 12.10.2021 and has adopted a rate of
Rs.17,000/- per sq. yard solely from the loose paper and on
that basis to concluded the property rate at Rs.16,00,11,502/-,
hence a huge amount of on-money was paid in cash.
6. It is further submitted that the petitioner purchased the
land on 12.10.2021, which was non-agricultural land, and that
the respondent- authority has relied upon wholly irrelevant and
incorrect facts, as the petitioner had no transaction dated
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11.08.2017. Hence, the seized material has no nexus with the
petitioner, and the entire payment for the land purchased on
12.10.2021 was made through banking channels.
7. It is submitted that the petitioner had not entered into
any transaction with Bsafal Group, City Estate Management
India, or City Procon Realtors Private Limited. The petitioner
had purchased the parcel of agricultural land situated at Shela
during the year under consideration. The said land was
purchased for a total consideration of Rs.2,00,00,000/-.
8. It is further submitted that the seized material is dated
11.08.2017, whereas the petitioner purcahsed the non-
agricultural land on 12.10.2021, which is subsequent to the
date reflected in the seized material. Thus, the petitioner has
no connection whatsoever with the said material, and there is
no live link between the seized material and the petitioner.
9. In support of his submissions, learned Senior Advocate
Mr.Soparkar, has placed reliance on the judgment of this Court
in the case of Naliniben Jagdishkumar Gandhi vs. Income Tax
Officer , (2026) 183 taxmann.com 126 (Gujarat).
10. Vehemently opposing the present writ petition, the
submissions advanced as recorded here-in-above, the learned
Senior Standing Counsel Mr. Maunil Yajnik has submitted that
as per the provisions of Section 148 of the Act, more
particularly Clause 4 below Explanation 2, it cannot be said
that the information, which is unearthed during the search
proceedings from the concerned broker, does not pertain or
pertains to any information contained therein relates to the
assessee.
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11. It is submitted that the legislature has deliberately used
the expansive phrases "pertains to" and "relate to". Unlike the
stringent requirement of "belongs to" under the erstwhile
Section 153C of the Act regime and hence, as per the decision
of the Supreme Court in the case of Raymond Woollen Mills
Limited Vs. Income-tax Officer , [1999] 236 ITR page 34 (SC),
the revenue has only to see whether there was a prima facie
some material on the basis of which the department could
reopen the case and the sufficiency or correctness of the
material is not a thing to be considered at the stage of
issuance of notice.
12. Further reliance is also placed by learned Senior Standing
Counsel Mr.Maunil Yajnik on the decision of the Supreme Court
in the case of Assistant Commissioner of Income-tax vs. Rajesh
Jhaveri Stock Brokers (P.) Ltd. , [2007] 291 ITR 500 (SC) and it
is submitted that the only question which is required to be
examined at the stage of issuance of notice is whether there
was relevant material on which a reasonable person could
have formed a requisite belief.
13. Reliance is also placed on the decision of the Supreme
Court in the case of Anshul Jain vs. Principal Commissioner of
Income-tax, [2022] 143 taxmann.com 38 (SC). It is submitted
that in the present case, the documents / incriminating
material which have been recovered during the search
proceeding, cannot be said to be dumb documents, devoid of
any evidential value. It is submitted that the material which
was seized specifically mentions the names of the brokers or
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third parties and the same reveal the link between the
petitioner and the land dealing, by paying the on- money.
Thus, it is urged that, at this stage, the Court may not interfere
with the reopening of the assessment.
14. We have heard the learned advocates appearing for the
respective parties at length.
15. A search under Section 132 of the Act was conducted on
Bsafal Group and City Estate Group on 28.09.2021 and during
the search, it is the case of the revenue that incriminating
documents and digital data were seized. Post search, a
statement of one Shri Pravin Nagjibhai Bavadia was recorded
after he was confronted with the documents found and seized
from the premise of the City Estate Management, which is a
broker, dealing with land deals in the city of Ahmedabad.
Statement under Section 131 of the Act of Shri Pravin
Nagjibhai Bavadiya are incorporated in the impugned notice. A
specific question No.14, was asked to him with regard to the
documents found during the search and in response, he has
submitted that ‘I confirm that the documents were found and
seized from the premises of the propriety entity City Estate
Management’ It is further responded by him that sometimes
the clients come with their land documents or title deeds and
there might be such types of documents which are also seized
with the above annexures and these belonged to the clients
and not to him. Question No. 26, when he was confronted with
the annexures, he has referred that such annexure contained
the details of lands/plots available for sale at different locations
of Ahmedabad and each entry contains the details of land,
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location, village, taluka, survey number, area, rate, owner of
the land, etc., and he doesn't know the current status
regarding the sale of the land. From the seized material, a
loose paper chit was found, which makes reference to Survey
No.101 situated at Moje Shela, which was purchased by the
petitioner on 12.10.2021. The relevant contents of the said chit
are as under:
11.08.17
102
Moje:- Shela TP 3
S.No.39, 6000 s.y Rate:19,500/-
“ 64/B 14352 s.y Rate: 17,000/-
“ 101, 7395 s.y Rate: 17,000/-
“ 465,20449 s.y Rate: 17,000/-
P.N. Bavadiya
16. Thus, the Assessing Officer, after calculating the amount
per square yard on the basis of the figures referred to in the
chit, concluded that the total value was Rs.16,00,11,502/-. By
comparing the said amount with the sale consideration of
Rs.2,00,00,000/- reflected in the sale deed dated 12.10.2021,
it was further concluded that the differential amount had been
paid in cash as “on-money”. The respondent has, however, not
established any connection.
17. A bare perusal of the chit reveals that it does not contain
any names or identifiable figures, and the same is dated
11.08.2017. After a gap of almost four years, the petitioner
purchased the land vide sale deed dated 12.10.2021. We fail to
understand how the Assessing Officer has alleged payment of
“on-money” by the petitioner after four years, by arriving at a
rate of Rs.17,000/- per square yard. The entire calculation
appears to have been made on the basis of data collected from
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C/SCA/7026/2026 JUDGMENT DATED: 08/05/2026
“Any RoR”, a Government website reflecting details of sale
deeds. The respondents have also not disputed that the
transaction undertaken by the petitioner was in accordance
with his share. The survey number mentioned in the loose
paper is linked with the petitioner by the revenue by gathering
information from the government Website “Any RoR”, which
records the details of the sale deeds. It is true that the cash
transactions are done in a clandestine manner using coded
script, however, the revenue, before re-opening the
assessment has to establish a live link of the assessee on the
basis of seized material only. The expression “ relates to” and
“pertains to” used in Clause(iv) to Explanation 2 to Section 148
of the Act cannot be used in vacuum. The revenue after the
seizure of incriminating material is under an obligation to
analyze such material, in light of attendant circumstances and
record relevancy and a prima facie opinion linking such
material establishing escapement of income at the hands of
the assessee. The information which is derived from the
incriminating material in the instant case, does not establish
live-link. The information is absolutely vague and unspecific
and the rate mentioned in the loose-paper is attempted to be
imposed upon the petitioner after a period of four years on the
basis of sale deed registered on 12.10.2021. The statement of
Shri Bavadiya does not mention the name of the petitioner.
There is no link, even remotely, found with Bsafal Group or City
Estate Management India or City Procon Realtors Private
Limited. All these aspects are very relevant, and are required
to be examined before roping the petitioner in re-assessment.
Thus, in our considered opinion, the provisions of Section 148
of the Act are not attracted, hence the action of the
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respondents in re-opening of the assessment requires to be
quashed.
18. We are conscious about the legal precedent as set out by
the Supreme Court in the decisions which are cited by the
revenue. At the stage of notice of re-opening of the
assessment, albeit , the Court cannot go into the sufficiency of
evidence, however, simultaneously the Court has to examine
the aspect as to whether there is even prima facie some
material, which could enable the department to reopen the
assessment. In the present case, the reopening is based on a
vague, irrelevant, and non-specific information.
19. The writ petition, accordingly, succeeds . The impugned
notice under Section 148 of the Act dated 27.03.2026 is
quashed and set aside. Rule made absolute.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(MAULIK J.SHELAT,J)
MAHESH/04
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