High Court Quashes 153C Notices: No Incriminating Material Linking Assessees to Land Deal Found in Search

Sandhya Maulik Patel and another petitioner challenged Section 153C notices for AYs 2014-15 to 2020-21. The notices stemmed from a 2019 search on a land broker, where digital images of an MoU for Survey No. 329 were found. The MoU mentioned only the seller and a proposed buyer and showed a consideration of Rs. 39.32 crore. The petitioners’ names did not appear anywhere.

The AO nevertheless presumed undisclosed investment because the petitioners later bought the same land for Rs. 12 crore, inferring a Rs. 27.32 crore “on-money” gap from public-domain records. The AO relied on the MoU and public documents to invoke Section 153C.

Main Issue: Whether Section 153C could be invoked when the seized material did not relate to the petitioners and the alleged link was based solely on assumptions and documents obtained outside the search.

HC’s Verdict: The High Court held that the very basis for Section 153C was missing. The MoU recovered in the search had no reference to the petitioners, and public-domain land records could not replace the statutory requirement that incriminating material must stem from the search and must pertain to the person assessed. The AO’s belief was found to be purely presumptive, driven by the difference between the MoU value and the later sale price.

The action was held to be outside the scope of Section 153C. The notices were quashed, and the writ petitions allowed.

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