Reassessment under Sections 147/148 cannot rely solely on third-party search material without the required Section 153C satisfaction.

The petitioner challenged notices under Section 148 of the Income-tax Act, 1961, reopening its assessments for A.Ys. 2013–14 and 2014–15.

The notices followed a search of the Sadbhav Group on 6 April 2017, during which material concerning the petitioner was found; the petitioner’s objections to reopening were rejected by order dated 22 February 2022.

The petitioner contended that, because the reopening relied on search material relating to it as an “other person,” the Revenue could not proceed under Section 148 instead of following Section 153C.

1. Whether the Assessing Officer could reopen the petitioner’s assessments under Section 148 on the basis of incriminating material found during a search of another person, without following Section 153C.

2. Whether the notices and the order rejecting the petitioner’s objections were liable to be quashed where the reopening relied solely on that search material and no satisfaction note had been recorded.

Sections 147 and 148 of the Income-tax Act govern reassessment, while Section 153C provides the special procedure for assessment or reassessment of an “other person” on the basis of material found during a search of a searched person; the special search-related provisions, which operate notwithstanding Sections 147 and 148, must be followed where the case falls within their scope.

Relying on Paras Chandreshbhai Koticha v. Income Tax Officer, [2026] 182 taxmann.com 204 (Gujarat), the Court held that the Assessing Officer of the searched person must record satisfaction concerning material relating to the “other person” and communicate it to that person’s jurisdictional Assessing Officer. In the absence of that satisfaction, the latter cannot invoke Section 153C; nor may that officer use Sections 147/148 to reopen an assessment solely on the same search material. Sections 147/148 may, however, be invoked on the basis of independent material from other sources.

The Court found that the reassessment was based on incriminating material recovered during searches of the Sadbhav Group and M/s Veer Procon Ltd., and that no additional or independent material had been relied upon.

Applying Paras Chandreshbhai Koticha, the Court held that the Revenue could not bypass the Section 153C procedure and use Section 148 on the same search material in the absence of a satisfaction note. The Assessing Officer’s rejection of the jurisdictional objection merely because approval under Section 151 had been obtained did not address that defect.

The Court quashed and set aside the notices dated 31 March 2021 and the order dated 22 February 2022. Both writ petitions succeeded, with no order as to costs.