HC Quashes Reopening Based on Post-Sale Broker Entry

A real estate professional declared an income of Rs. 23.16 lakh for the assessment year 2019-20. During this time, he bought land in Village Godhavi for Rs.1.17 crore. Years later, a tax raid on the “B Safal Group” and a broking firm turned up an enquiry register. One entry from March 2019 listed the same survey number as the petitioner’s land but at a much higher price. Based solely on this, the Assessing Officer (AO) accused the taxpayer of paying Rs 8.67 crore in “on-money” (unaccounted cash) and issued a reassessment notice in March 2025.

Issue Before Court: Can the tax department reopen a case based on a broker’s note made months after a sale was finished, especially when that note doesn’t even mention the buyer?

HC Decided:  The High Court allowed the writ petition and threw out the reassessment, ruling that the tax department’s logic was completely backwards. The biggest flaw was the timeline: the petitioner finalised his purchase in October 2018, yet the broker’s entry, which listed the land as still “available for sale”, wasn’t written until March 2019. The Court pointed out that a note claiming a property is still on the market can’t be used as evidence for a deal that was closed five months earlier.

The Court also highlighted that the broker himself admitted these registers were just “wish lists” of indicative rates for available properties, not records of actual sales. Furthermore, the entry didn’t name the petitioner; it mentioned a completely different third party. The Judges made it clear that just matching a survey number isn’t enough to drag someone into a tax investigation. There has to be a “live nexus”, a direct, physical link between the evidence and the person. Since the department’s case was built on guesswork and mismatched dates, the Court set the notice aside.

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