Sections 147/148 cannot be invoked on seized search material without the required Section 153C satisfaction.

The petitioner filed a return for Assessment Year 2014–15 on 29 April 2015, declaring total income of ₹1,71,85,170, including short-term capital gain of ₹16,93,430 from the sale of land.

Following a search of the Akshar Group on 23 September 2015, documents were found recording an alleged cash payment of ₹2,41,35,600 to the landowners, in addition to ₹1,80,00,000 paid by cheque.

The respondent issued a notice under Section 148A(b), and, after the petitioner replied, passed an order under Section 148A(d) and issued a notice under Section 148, both dated 28 July 2022.

The petitioner challenged those actions, arguing that the reassessment was based solely on search material and that the statutory route was Section 153C.

The judgment refers to Assessment Year 2013–14 in paragraph 1 but to the petitioner’s 2014–15 return in paragraph 2; it does not resolve that discrepancy.

1. Whether the Assessing Officer could invoke Sections 147 and 148 on the basis of incriminating material found in a search of another person, where no satisfaction note had been recorded or communicated under Section 153C.

2. Whether the impugned Section 148 notice and Section 148A(d) order were liable to be quashed as without jurisdiction.

The Court applied Sections 147 and 148 of the Income Tax Act, 1961, concerning reassessment, alongside Section 153C, which provides the assessment route for an “other person” where seized material relates to that person.

Relying on Paras Chandreshbhai Koticha v. Income-tax Officer, [2026] 182 taxmann.com 204 (Gujarat), the Court stated that the Assessing Officer of the searched person must record satisfaction on the seized material and communicate it to the jurisdictional Assessing Officer of the other person.

Where such satisfaction is recorded and the material is transmitted, the other person is to be proceeded against under Section 153C, not Sections 147 and 148.

Reassessment under Sections 147 and 148 remains available on material from an independent source, including material collected after the search.

The Court found that the reassessment was founded solely on material seized during the search of the Akshar Group and that there was no satisfaction recorded by the Assessing Officer of the searched person in respect of that material.

Applying Paras Chandreshbhai Koticha, it held that the Revenue could not use Sections 147 and 148 to reassess the petitioner on that search material; the absence of a satisfaction note did not make those provisions an alternative route for doing so.

It quashed and set aside the Section 148 notice and the Section 148A(d) order, both dated 28 July 2022.