Facts
The petitioner filed his income tax return for A.Y. 2019-20 on 27.09.2019
Source reference: p. 2On 15.02.2019, the petitioner and a joint purchaser bought agricultural land at Moje Racharda for Rs. 1,12,00,000/-
Source reference: p. 2Following a search action under Section 132 of the Income Tax Act at the premises of a real estate broker (City Estate Management India), authorities seized an inquiry register containing a noting dated 28.11.2018 regarding the same land survey number but listing an "asking rate" significantly higher than the sale deed value
Source reference: p. 2-3Based solely on this noting and the broker's statement, the Respondent issued a notice under Section 148 on 27.03.2025, alleging the petitioner paid "on-money" of over Rs. 3.32 crores
Source reference: p. 3The petitioner challenged the notice, arguing there was no live link between the seized material and his actual transaction
Source reference: p. 4-5Issues
1. Whether the noting in a third-party broker's inquiry register, which predates the actual transaction and mentions an unrelated individual, constitutes "information suggesting escapement of income" under Section 148 to justify reopening assessment
Source reference: p. 3 / para 4.12. Whether the jurisdictional requirement that seized material must "pertain to" or "relate to" the assessee was satisfied
Source reference: p. 5 / para 5.2Law Applied
Section 148 of the Income Tax Act, 1961, regarding the reopening of assessment based on "information" suggestings escapement
Source reference: p. 2Explanation 2(iv) to Section 148, which deems information to exist when seized documents "pertain to" or "relate to" the assessee
Source reference: p. 7Evidentiary presumptions under Sections 132(4A) and 292C of the Act regarding the truthfulness of seized documents
Source reference: p. 6, 10Precedent from Naliniben Jagdishkumar Gandhi v. ITO, which requires a "live link" connecting the assessee to the seized material beyond mere survey numbers
Source reference: p. 12Reasoning
The court found that the "live link" was absent because the register noting dated 28.11.2018 predated the petitioner’s registered sale deed of 15.02.2019 by nearly three months
Source reference: p. 9The broker himself admitted in a statement under Section 131 that such registers merely listed "asking rates" for land available for sale rather than concluded transactions
Source reference: p. 10Crucially, the register entry mentioned "Sanjay Thakkar," a person unknown to the petitioner, and referred to a different land area than what was actually purchased
Source reference: p. 11The court observed that the Revenue failed to conduct any inquiry with the person named in the register before targeting the petitioner
Source reference: p. 12Consequently, the statutory presumption under Section 292C was rebutted by the broker's own testimony that entries often represented market surveys rather than financial realities
Source reference: p. 10-11Holding
The Court held that the reassessment was based on mere conjectures and surmises without a direct or indirect nexus between the seized document and the petitioner
The court answered the issues in the negative, ruling that the jurisdictional conditions for reopening the assessment were not met
Source reference: p. 14The impugned notice dated 27.03.2025 under Section 148 for A.Y. 2019-20 was quashed and set aside
Source reference: p. 14The petition was allowed and the Rule was made absolute
Source reference: p. 14Original Court PDF
CHAKRAVARTI MAHESH PATELvsINCOME TAX OFFICER WARD-4(2)(1)
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