Reassessment cannot be sustained on surmises, conjectures, or unverified third-party documents without establishing a direct nexus with the assessee.

The petitioner purchased land in Village Tajpur in 2016 from one Shahnur Kothawala for Rs. 1.11 Crores

Simultaneously, the Trivedi family, who had prior claims to the land, challenged mutation entries. Following a settlement and withdrawal of a civil suit, the Trivedi family executed a sale deed in favor of the petitioner in October 2019 for Rs. 80 Lakhs

The petitioner filed his return for A.Y. 2019-20 declaring an income of Rs. 48,15,420/-

On 22.10.2024, a survey under Section 133A was conducted on third-party entities (M/s. Crown Decor Pvt. Ltd. and Olympic Decor LLP), where a digital PDF of an undated complaint by a broker (Ramesh Suthar) and images of handwritten cash receipts were found in an employee’s mobile phone

Based on this, the Revenue issued notice under Section 148A(1) alleging the petitioner paid Rs. 4.68 Crores in cash as "unaccounted income"

The petitioner challenged the subsequent order under Section 148A(3) and Section 148 notice dated 20.06.2025

1. Whether the Revenue was justified in initiating reassessment proceedings based on third-party digital data and an unverified, undated complaint without establishing a direct link to the petitioner

2. Whether the impugned order under Section 148A(3) was sustainable when the primary source of information (the author of the complaint) was not examined

The court applied the provisions of Section 148A and Section 148 of the Income Tax Act, 1961, which govern the procedure for conducting inquiries and issuing notices for reassessment where income has escaped assessment

The court relied on the evidentiary principle that reassessment cannot be based on mere "surmises and conjectures" or "uninvestigated" allegations found in the possession of unrelated third parties

The Court observed that the Revenue's entire case rested on a PDF file found in the phone of Shri Praful Bhatt (an employee of Olympic Decor) and an undated complaint by Ramesh Suthar

The Court noted that the petitioner had no connection with the surveyed entities (Crown Decor or Olympic Decor) or the individuals whose devices were searched

Crucially, the Court found that the author of the complaint, Ramesh Suthar, was never summoned or examined by the Assessing Officer to verify the claims of cash transactions

Furthermore, the statements of the petitioner and Mr. Trivedi recorded during the inquiry did not support the allegation of cash payments

The Court reasoned that the digital image of a cash receipt did not indicate receipt by the petitioner or the sellers, concluding that the link between the search material and the petitioner was non-existent

The Court answered the issues in favor of the petitioner, quashing the notice under Section 148A(1), the order under Section 148A(3), and the notice under Section 148 dated 20.06.2025. Rule was made absolute