Gujarat HC Quashes Section 148 Notice Based on Broker's Inquiry Register:

The Gujarat High Court has quashed a reassessment notice issued under Section 148 of the Income Tax Act after holding that a broker's seized inquiry register, without any corroborative material establishing a live nexus with the assessee, cannot form the sole basis for reopening an assessment.

The assessee had challenged the notice issued for AY 2022-23, wherein the Revenue alleged payment of on-money towards the purchase of land. The reassessment proceedings were initiated solely on the basis of an inquiry register seized during a search at the premises of a real estate broker.

The register contained a 2018 entry mentioning the survey number of the land and an indicative asking price, whereas the assessee had purchased only a part of the land through a registered sale deed executed in April 2021.

The assessee argued that the register merely recorded market inquiries, mentioned the name of an unrelated person, covered a larger extent of land than what was actually purchased, and contained nothing linking the alleged transaction to the assessee.

Allowing the writ petition, the High Court held that the seized register merely reflected a market inquiry recorded nearly twenty-eight months before the actual purchase and could not be treated as evidence of the assessee having paid any on-money.

The Court observed that the register neither referred to the assessee nor the co-purchasers, mentioned an unrelated person's name, covered a larger parcel of land than the one ultimately purchased, and was not supported by any corroborative material establishing undisclosed consideration.

Holding that reassessment proceedings cannot be founded on conjectures and surmises, the Court ruled that the essential live nexus between the seized material and the assessee was absent and, therefore, quashed the notice issued under Section 148.