Gujarat High Court Quashes Reassessment Notice Under Section 148 for Lack of Proof

The Gujarat High Court has set aside an income tax reopening notice issued under section 148 of the Income Tax Act, 1961, because there were no reasons to continue the case.

The assessing officer (AO) had issued a notice under section 148 of the Income-tax Act to the assessee company, Specific Worldwide LLP. The issue was related to the purchase of an immovable property.

When the matter reached the High Court, the Income Tax Department presented a communication dated 08.01.2026, written by the Commissioner of Income Tax to the Principal Commissioner of Income Tax, where it was mentioned that after checking the records, the investments in the property were made through regular banking channels, which was also shown in the bank statements and Form 26AS, including TDS Deduction.

The department in that communication had clarified that, despite the interim relief given by the court, any order that is in favour of the petitioner can always be passed. It also mentioned that the process to withdraw the notice had already started.

However, even after one month, no official order withdrawing the notice was produced before the court. Based on the observations mentioned in the said communication, the court concluded that no income had escaped the assessment. Therefore, the assessee’s appeal was allowed.