Gujarat High Court Quashes Income Tax Notices Against Sandhya Maulik Patel

Court Rules No Direct Nexus Found Between Petitioner and Incriminating Material Seized During Search

In a significant judgment, the Gujarat High Court has quashed the income tax notices issued against Sandhya Maulik Patel under Section 153C of the Income-tax Act, 1961, following a search operation. The division bench, comprising Justices A.S. Supehia and Pranav Trivedi, delivered the verdict on November 24, 2025.

The case revolves around a search conducted on October 15, 2019, at the premises of a land broker, Shri Dhaval Teli, in Ahmedabad, which led to the issuance of notices to Sandhya Maulik Patel by the Assistant Commissioner of Income Tax, Central Circle 2(3), Ahmedabad. The authorities alleged undisclosed investments by Patel based on the digital data acquired during the search.

However, the court found that the incriminating material, particularly an MoU related to a land deal, did not establish a direct or indirect nexus with Sandhya Maulik Patel. The material in question was related to transactions between third parties and did not involve the petitioner's name or any direct evidence linking her to the alleged undisclosed income.

The court emphasized that the satisfaction recorded by the Assessing Officer (AO) was devoid of concrete evidence connecting Patel to the incriminating documents. The AO's presumption of on-money involvement, based on the discrepancy between the sale consideration mentioned in the MoU and the registered deed, was deemed unsustainable.

The court highlighted that the information and documents relied upon by the AO were obtained post-search and not during the search itself, thereby failing to satisfy the provisions of Section 153C regarding the assessment of undisclosed income for a person other than the one searched.

In its analysis, the court reiterated that the lack of a direct nexus between the seized material and the petitioner warranted the quashing of the impugned notices. Consequently, the writ petitions filed by Sandhya Maulik Patel were allowed, and the rule was made absolute with no order as to costs.

The judgment underscores the necessity of a direct link between incriminating evidence and the assessee for proceedings under Section 153C, reinforcing the safeguards against unwarranted assessments based on mere presumptions.

Bottom Line:

Income Tax - Section 153C of the Income-tax Act, 1961 - Assessment proceedings based on search against third person - Assessment notice issued to petitioners quashed as there was no incriminating material found during the search having a direct nexus with the petitioners.

Statutory provision(s): Section 153C of the Income-tax Act, 1961

Sandhya Maulik Patel v. Assistant Commissioner Of Income Tax, Central Circle 2(3), Ahmedabad, (Gujarat)(DB) : Law Finder Doc Id # 2816634