Holding

Without a recorded satisfaction note under Section 153C, the jurisdictional Assessing Officer cannot invoke Sections 147/148 on material obtained from a search; the revenue may only use Sections 147/148 where independent evidence establishes escaped income.

Summary

The petitions arose from notices issued under Section 148 of the Income‑Tax Act after searches were conducted under Section 132/132A. The petitioners argued that when material concerning a third‑person is obtained in a search, the assessing officer must first record satisfaction under Section 153C before invoking the general reassessment provisions of Sections 147/148. The Court examined the statutory scheme, the non‑obstante clauses in Sections 153A and 153C, and the requirement to record a satisfaction note before proceeding under Section 153C. It held that without such a recorded satisfaction, the jurisdictional assessing officer cannot reopen assessments under Sections 147/148 on the basis of the search material alone. However, the revenue may resort to Sections 147/148 if independent information, not derived from the search, establishes escaped income. Accordingly, the Court dismissed the Group‑A petitions but allowed the Group‑B, C and D petitions, quashing the reopening orders while preserving the revenue’s right to proceed under Sections 147/148 where lawful.

Issues considered

Whether the jurisdictional Assessing Officer can reopen an assessment under Sections 147/148 of the Income‑Tax Act on material obtained from a search without a satisfaction note under Section 153C.
Whether the Assessing Officer of the searched person is mandated to record satisfaction under Section 153C before the material can be used for reassessment of a third‑person.
Whether the provisions of Sections 147/148 are barred by the non‑obstante clauses in Sections 153A and 153C when the material originates from a search.

Legislation cited

Finance Act, 2005
Finance Act, 2021
Income Tax Act, 1961s. 132, s. 132A, s. 147, s. 148, s. 153A, s. 153B, s. 153C, s. 153D

Subjects

Income‑Tax ActSection 147Section 148Section 153ASection 153CSearch and seizureReassessmentSatisfaction noteNon‑obstante clauseStatutory interpretation

Judgment

C/SCA/17933/2018 CAV JUDGMENT DATED: 07/01/2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

Reserved On : 22/12/2025
Pronounced On : 07/01/2026

R/SPECIAL CIVIL APPLICATION NO. 17933 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 17935 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 17938 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 17939 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 18983 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 18985 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 18986 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 18987 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 216 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 3563 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 3564 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 4890 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 5350 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 5422 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 5855 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 5858 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 5861 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 5864 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 5901 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17675 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 26206 of 2022
With

Page 1 of 44
C/SCA/17933/2018 CAV JUDGMENT DATED: 07/01/2026

R/SPECIAL CIVIL APPLICATION NO. 16341 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 16723 of 2025

FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI Sd/-
=============================================
Approved for Reporting Yes No
✔
=============================================
PARAS CHANDRESHBHAI KOTICHA
Versus
INCOME TAX OFFICER WARD - 1 (2)(2)
=============================================
Appearance:
MR TUSHAR HEMANI, SENIOR ADVOCATE WITH
MS VAIBHAVI PARIKH, MR MANISH J SHAH, JIMMY PATEL, MR S.N.
DIVATIA, MR B.S. SOPARKAR, MR DHINAL SHAH & MR.VIJAY PATEL,
ADVOCATES for the respective Petitioner(s)
MR VARUN K. PATEL, MR DEV PATEL, MR RUTVIJ PATEL, MR ADITYA
BHATT, MR. KARAN SANGHANI, MS. MAITHILI MEHTA, MR. MAUNIL G
YAJNIK(9346), SENIOR STANDING COUNSELS for the Respondent -
DEPARTMENT
=============================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
COMMON CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. The present group of petitions arise from the
proceedings/ notices issued to the respective petitioners under
Section 148 of the Income-tax Act, 1961 (hereinafter referred
to as “the Act”), reopening the assessment under Section 147
of the Act. The issue raised in the instant writ petitions arises
prior to the promulgation of the Finance Act, 2021, by which
the provisions of Sections 147 to 149 of the Act were
substituted with new Sections 147, 148, 148A and 149 of the
Act. It also removed Sections 153A to 153C of the Act and
merged them under Section 147 of the Act.

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2. The proceedings under Sections 147/148 of the Act stem
from search actions conducted under Section 132 of the Act or
from the requisitions made under Section 132A of the Act.

BRIEF FACTS :
3. It is the case of the petitioners that, when the
proceedings emanate from a search conducted under Sections
132/132A of the Act, the Assessing OfÏcer having jurisdiction
over the respective petitioners is mandatorily required to
follow the provisions of Sections 153A or 153C of the Act,
instead of switching over or resorting to the reopening of
assessment under Section 147 of the Act. It is also the case of
the petitioners that the Assessing OfÏcer of the searched
person has to mandatorily record satisfaction as prescribed
under Section 153C of the Act on the basis of material
forwarded by the Assessing OfÏcer of the searched person.
Only upon recording such satisfaction with respect to
incriminating material and after following the procedure
prescribed under Section 153C of the Act, the proceedings can
be initiated against a person other than the searched person. It
is contended that resort to Sections 147/148 of the Act is
permissible only in respect of material other than that
emanating from the search.

4. Thus, the core issue raised in the present petitions is the
legality of directly invoking the provisions of Sections 147/148
of the Act based on material obtained during a search
conducted under Sections 132/132A of the Act, without
resorting to proceedings under Section 153A or 153C of the
Act.

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5. The majority of the writ petitions, being Special Civil
Application Nos.18983 of 2019, 18985 of 2019, 18986 of 2019
and 18987 of 2019, arise from the search conducted by the
Assistant Commissioner of Income-tax, Central Circle-4, Surat,
pursuant to a search action on the K. Star Group. The writ
petitions being Special Civil Application Nos. 4890/2022,
5350/2022, 5855/2022, 5858/2022, 5861/2022, 5864/2022,
5901/2022, 26206/2022, 216/2022, 17675/2022 and
5422/2022 arise from the search action undertaken on the
Navratna Group. In Special Civil Application Nos. 17933,
17935, 17938 and 17939 of 2018, a search was conducted at
M/s. AfÒuence Commodities Pvt. Ltd. along with the petitioners.
Whereas the writ petitions being Special Civil Application Nos.
16341 of 2025 and 16723 of 2025 arise from the search at
Flamingo (Sanjay Govindram Agarwal).

6. Thus, a search under Section 132 of the Act was
conducted on the entities, i.e. the searched persons under
Section 153A of the Act, and the information / material was
derived / collected from such searches and forwarded to the
jurisdictional Assessing OfÏcers of the respective petitioners,
i.e. the other persons under Section 153C of the Act. However,
instead of recording satisfaction, the jurisdictional Assessing
OfÏcers proceeded to issue the impugned notices under
Section 148 of the Act for reopening the assessments.

SUBMISSIONS ON BEHALF OF THE PETITIONERS :

7. The learned advocates appearing for the respective
petitioners have advanced the following submissions:-

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8. Section 153C of the Act casts a mandatory obligation
upon the Assessing OfÏcer of the searched person to hand
over books of account, documents or assets seized or
requisitioned during the search, which belong to or pertain to a
person other than the searched person, to the Assessing
OfÏcer having jurisdiction over such other person. The
statutory mandate is evident from the plain language of
Section 153C of the Act, which provides that where the
Assessing OfÏcer is satisfied that :

(a) any money, bullion, jewellery or other valuable article
or thing seized or requisitioned belongs to; or

(b) any books of account or documents seized or
requisitioned pertain to, or any information contained
therein relates to, a person other than the person
referred to in Section 153A of the Act,

then such material shall be handed over to the Assessing
OfÏcer having jurisdiction over such other person.

9. Thus, it is contended that once the Assessing OfÏcer of
the searched person arrives at such satisfaction, he has no
discretion but to transmit the material to the jurisdictional
Assessing OfÏcer of the other person after recording
satisfaction. This statutory requirement is further reinforced by
Central Board of Direct Taxes (CBDT) Circular No. 24 of 2015,
which mandates recording of satisfaction by both the
Assessing OfÏcer of the searched person and the Assessing
OfÏcer of the other person.

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10. That upon handing over of such material, proceedings
under Section 153C of the Act stand automatically triggered.
At that stage, the Assessing OfÏcer of the ‘searched person’
cannot initiate proceedings under Sections 147/148 of the Act,
as he lacks jurisdiction over the ‘other person’. Equally, the
jurisdictional Assessing OfÏcer of the ‘other person’ has no
option to choose between initiating proceedings under
Sections 147/148 or under Section 153C of the Act, since the
statutory trigger for Section 153C of the Act already stands
activated upon transmission of material. Therefore, the
contention that the Assessing OfÏcer of the searched person or
Assessing OfÏcer of the other person can elect to proceed
either under Sections 147/148 or under Section 153C of the
Act is wholly misconceived and devoid of merit.

11. It is a settled principle of statutory interpretation that
where a special provision governs a particular subject matter,
the applicability of a general provision to that subject matter
stands impliedly excluded. Once a statute prescribes a special
mechanism, the general provisions yield to such special
provisions.

12. Applying this principle, it is further submitted that
Sections 153A and 153C of the Act are special provisions
having non-obstante clauses for assessment or reassessment
of income based on material seized during search proceedings
under Section 132 of the Act, and have an overriding effect on
Sections 147/148 of the Act. Consequently, reassessment in
respect of such seized material cannot be undertaken by
invoking the general provisions of Sections 147/148 of the Act.

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13. It is emphasized that Sections 147/148 have existed in
the statute book since the inception of the Act in 1961,
whereas Section 153C was introduced later by the Finance Act,
2005, with retrospective effect from 01.06.2003. The
legislative intent is accordingly explicit that assessments or
reassessments based on search material must be carried out
exclusively under Section 153C of the Act. Any contrary
interpretation would render the introduction of Section 153C of
the Act otiose and defeat the legislative purpose.

14. That the mandatory nature of this special machinery is
fortified by Section 153D of the Act, which requires prior
approval of an ofÏcer not below the rank of Joint Commissioner
before passing an assessment order based on searched
material. The legislature has thus consciously provided a
distinct and self-contained procedural framework for search-
based assessments under Sections 153A and 153C. Permitting
recourse to Sections 147/148 would bypass these statutory
safeguards, which could never have been the legislative intent.

15. Learned counsels further pointed out the provision of
Section 153B(1)(ii) of the Act, which prescribes the limitation
period for completing assessment in case of a person covered
under Section 153C of the Act, and it is submitted that the
limitation period commences not from the issuance of notice
under Section 153C, but from the date on which the seized
material is handed over to the Assessing OfÏcer having
jurisdiction over the ‘other person’.

16. In view of the aforesaid legislative scheme, it is
submitted that any interpretation permitting reassessment

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under Sections 147/148 on the basis of seized material would
defeat the very object of enacting Section 153C of the Act, and
such an interpretation ought to be eschewed.

17. In support of the aforesaid submissions, reliance is placed
on various judgments of the Supreme Court as well as this
Court. The same are as under

A. In the case of Khandubhai Vasanji Desai Vs. Deputy
Commissioner of Income Tax, (1999) 236 ITR 73
(Guj.).

B. In the case of Principal Commissioner of Income-tax,
Central-3 Vs. Abhisar Buildwell (P.) Limited, (2023)
454 ITR 212 (SC).

C. The Judgment of the High Court of Rajasthan in case
of Shyam Sundar Khandelwal Vs. Assistant
Commissioner of Income-tax, (2024) 161
taxman.com 255 (Rajasthan).

SUBMISSIONS ON BEHALF OF THE REVENUE :

18. In response to the aforesaid submissions, the learned
Senior Standing Counsels appearing for the respondent-
Department distinguished the judgments relied upon by the
petitioners and made the following submissions.

19. At the outset, it is submitted that the core issue arising
for consideration in the present group of petitions is whether,
where documents or information relating to a person other

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than the searched person (“other person”) have originated
from or are gathered during a search under Section 132 of the
Income-tax Act or requisition under Section 132A of the Act, it
is mandatory for the Assessing OfÏcer to invoke and assume
jurisdiction under Section 153C for assessment of such other
person or not, and whether the non-obstante clause in Section
153C bars the assumption of jurisdiction under Sections
147/148 in such cases or not.

20. That the answer to the aforesaid question is clearly in the
negative. According to the respondents, it is not mandatory in
all such cases to invoke Section 153C.

21. It is contended that documents or information originating
from or gathered during a search or requisition can form the
basis for assumption of jurisdiction either under Section 153C
of the Act or under Sections 147/148 of the Act, subject to
fulfillment of the respective statutory conditions. Both
provisions are enabling provisions intended to assess or
reassess escaped income.

22. The distinction between the two provisions was explained
as follows :
(i) Assumption of jurisdiction under Section 153C of the
Act is subject to fulfillment of mandatory conditions,
namely, recording of two satisfaction notes—first by the
Assessing OfÏcer of the searched person and second by
the jurisdictional Assessing OfÏcer of the other person;
and
(ii) Assumption of jurisdiction under Sections 147/148 of
the Act is subject to recording of “reasons to believe”

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regarding escapement of income, obtaining sanction of
the competent authority, adherence to limitation, and
other statutory safeguards.

Thus, it is contended that the mere fact that information
or documents emanate from a search does not mandatorily
compel the Assessing OfÏcer to invoke Section 153C of the Act.

23. Learned Senior Standing Counsel has further submitted
that Sections 147/148 of the Act constitute the general
provisions relating to assessment or reassessment of escaped
income and are applicable to all cases, including those where
information pertaining to the other person has originated from
a search or requisition. The non-obstante clause at the
beginning of Section 153C(1) of the Act cannot be construed to
impliedly exclude the operation of Sections 147/148 of the Act
in such cases.

24. That, except for the non-obstante clause, there is nothing
in the text of Section 153C of the Act which expressly or by
necessary implication bars recourse to Sections 147/148 of the
Act, where documents or information relating to another
person are found during search proceedings. Any such
interpretation, according to the respondent, would amount to
reading words into the statute, which is impermissible.

25. It is contended by the learned Senior Standing Counsel
that this issue is no longer res integra in view of the decision of
this Court in the case of Amar Jewellers Ltd. Vs. ACIT, (2022)
444 ITR 97 (Guj.), wherein the scope of Section 153A of the Act
has already been examined and interpreted.

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26. It is further submitted that the phrase “Where the
Assessing OfÏcer is satisfied…” employed in Section 153C(1) of
the Act itself indicates that invocation of Section 153C of the
Act is conditional and not automatic. There is no statutory
mandate requiring the Assessing OfÏcer to compulsorily record
satisfaction under Section 153C of the Act in every case where
documents or information relating to another person are found
during search or requisition.

27. According to the respondents, an interpretation which
completely excludes the applicability of Sections 147/148 of
the Act merely because the material originates from a search
would not only be contrary to the plain language of Section
153C of the Act, but would also defeat the very object of
reassessment provisions, which are intended to bring escaped
income to tax.

28. Further, it is submitted that the legislative intent is to
provide multiple statutory pathways, subject to fulfillment of
their respective preconditions, for assessment or reassessment
of income, and not to create an absolute embargo on the
exercise of jurisdiction under Sections 147/148 of the Act
merely because the information emanates from search
proceedings.

29. The respondent-Department has also raised the
predicament faced by it in case the recording of a satisfaction
note is held to be mandatory where numerous persons are
found to be involved, since it would not be possible to record
the same by different Assessing OfÏcers situated at various
places in the country, and the very intention of the legislature

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would get defeated. Hence, it is contended that in such cases,
the provisions of Sections 147/148 of the Act can always be
resorted to.

30. In support of the aforesaid submissions, reliance is placed
on the following judicial precedents :

(i) In the case of PCIT Vs. Naveen Kumar Gupta (2024)
168 Taxmann.com 574 (Delhi), paragraphs 3, 4, 5, 9, 13,
35 to 48, 53 to 62 and 65;

(ii) In the case of PCIT Vs. Agroha Fincap Ltd. (2025) 179
taxmann.com 185(Delhi), paragraphs 4, 5, 10 and 12 to
17.

31. With regard to the decision of the Supreme Court in the
case of Abhisar Buildwell (P.) Ltd.(supra), the learned
Senior Standing Counsels have clarified as under:-

(i) The said decision deals with assessment of the
searched person under Section 153A and not with
assessment of an “other person” under Section 153C;

(ii) As noted in paragraph 5 of the judgment, the question
before the Supreme Court was whether, in the case of
completed or unabated assessments of the searched
person, additions could be made in the absence of
incriminating material found during search or requisition;

(iii) Reference was made to paragraph Nos.7, 13 and 14
of the judgment to submit that the Supreme Court has
not examined or adjudicated upon the issue arising in the
present petitions, namely, whether invocation of Section

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153C is mandatory in all cases where documents or
information relating to another person are found during
search proceedings.

Accordingly, it is submitted that the reliance placed by
the petitioners on the judgment in the case of Abhisar
Buildwell (P.) Ltd. (supra) is misplaced.

SUBMISSIONS OF THE REVENUE IN SCA NO.17675/2022
and SCA NO.5422/2022.

32. Learned Senior Standing Counsel Mr. Aditya Bhatt
appearing for the respondent in the writ petitions being Special
Civil Application Nos.17675 of 2022 and 5422 of 2022
submitted that, in the case of the present petitioners, a search
and seizure action under Section 132 of the Act was conducted
on the Navratna Group on 11.04.2017. During the course of
the search, a laptop belonging to one Shri Murlidhar Marutibhai
Trivedi was seized, from which a digital Excel file bearing the
name “x10000226.xls” was recovered.

33. It is contended that the “reason to believe” recorded by
the Assessing OfÏcer is not founded merely on the raw data
contained in the seized Excel sheet. Rather, it is fundamentally
premised upon a post-search development, namely, the
proceedings before the Income Tax Settlement Commission
(ITSC). The searched entity, Navratna Organisers and
Developers Pvt. Ltd. (NODPL), approached the ITSC (Income
Tax Settlement Commission) by filing a settlement application.
In the said application, NODPL (Navratna Organiser and
Developer Pvt. Ltd.) made a categorical admission that it had

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accepted “on-money” (cash consideration) for the sale of
residential units/villas in its project known as “Kalhaar Blues
and Greens”. Further, NODPL reconciled the entries contained
in the seized Excel file (x10000226.xls) with its own list of
purchasers and admitted that the entries reflected actual cash
receipts received from buyers.

34. Learned Senior Standing Counsel Mr.Bhatt has further
submitted that the actionable material against the petitioners
is not the seized Excel file per se, but the subsequent and
voluntary admission made by the builder before the ITSC. This
admission, according to the respondent, constitutes
independent “information” which came into the possession of
the Assessing OfÏcer after the conclusion of the search. It is
this post-search information that the petitioner had allegedly
paid cash consideration of Rs. 2,33,28,500/-, which formed the
basis for recording “reason to believe” and issuance of notice
under Section 148 of the Act.

35. Thus, the foundation for reopening is the corroborated
admission before the Settlement Commission, and not merely
a seized document. Such admission, as it was contended, does
not fall within the expression “books of account or documents
seized” so as to mandatorily attract Section 153C of the Act.

36. On the aforesaid factual premise, it is submitted that
invocation of Section 148 of the Act is:

(i) Factually justified, as it is based on post-search
information arising from the ITSC proceedings;

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(ii) Legally sustainable, as Section 153C is not attracted
to material or information that comes into existence or is
generated after the search; and
(iii) Consistent with legislative intent, which preserves
Sections 147/148 as a remedial mechanism to bring
escaped income to tax where the statutory conditions for
invoking search assessment provisions are not strictly
satisfied.

Thus, it is contended that Section 153C of the Act is
confined to seized material belonging to or pertaining to
another person, whereas admissions before the ITSC constitute
a distinct evidentiary source capable of independently
triggering reassessment proceedings.

37. In support of the aforesaid submissions, learned Senior
Standing Counsel Mr.Bhatt has placed reliance on the following
decisions :
A. In the case of Amar Jewellers Ltd.(supra)

B. In the case of Principal Commissioner of Income
Tax Vs. Agroha Fincap Ltd. (2025) 179
taxmann.com 185 (Delhi);

C.In the case of Heval Navinbhai Patel Vs. Income Tax
OfÏcer (2021) 126 taxmann.com 82 (Gujarat);

D.In the case of Naveen Kumar Gupta(supra).

Placing reliance on the judgment of the Supreme Court in
the case of Union of India vs. Rajeev Bansal (2024) 167

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taxmann.com 70 (SC), it was submitted that where a statute
expressly confers power or imposes a duty on a particular
authority, such power or duty must be exercised strictly in the
manner prescribed.

38. On that premise, it was further contended that the
jurisdictional Assessing OfÏcer of the petitioners was
competent to invoke Sections 147/148 of the Act on the basis
of post-search information, and that the search conducted
under Section 132 of the Act does not, by itself, prohibit the
exercise of reassessment jurisdiction when the statutory
requirements of Section 153C of the Act are not attracted.

ANALYSIS AND CONCLUSION :

39. We have heard the learned advocates appearing for the
respective parties.

40. The twin issues, which arise for our consideration in the
present group of writ petitions, are namely:

(a) Whether the jurisdictional Assessing OfÏcer, upon
receipt of incriminating material pertaining to an
assessee (other person) from the Assessing OfÏcer of the
searched person, can reopen the assessment under
Sections 147/148 of the Act without there being any
satisfaction recorded on such material by the Assessing
OfÏcer of the searched person and without resorting to
the provisions under Section 153C of the Act or not ; and

(b) Whether the searched person (under Section 153A)
can be subjected to reopening of assessment under

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Sections 147/148 of the Act on the basis of incriminating
material found during the search or not.

41. In order to appreciate the aforesaid issues, it would be
apposite to examine the scheme and interplay of the relevant
provisions, namely Sections 132, 147, 153A and 153C of the
Act.

ASPECT OF RECORDING SATISFACTION NOTE UNDER
SECTION 153C AND ITS IMPACT ON SECTIONS 147/148.

42. Section 132 of the Act empowers the Income-tax
authorities to conduct search and seizure operations where the
statutory conditions prescribed therein are satisfied.

43. Section 153A of the Act prescribes the procedure to be
followed in cases where a search is initiated under Section 132
or a requisition is made under Section 132A. Sections 153A,
153B and 153C were inserted by the Finance Act, 2003 with
effect from 01.06.2003, thereby introducing a distinct and
special code for assessment and reassessment in search-
related cases.

44. Section 153A of the Act opens with a non-obstante clause
overriding Sections 139, 147, 148, 149, 151 and 153 of the
Act. Further, Section 153C of the Act provides that assessment
of income of any other person, i.e. a third party, shall be
undertaken thereunder, and all the petitioners fall under this
provision. The relevant portions of Sections 153A, 153B and
153C of the Act are as under :

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“SECTION 153A : Assessment in case of search or
requisition.

[(1)] Notwithstanding anything contained in section 139,
section 147, section 148, section 149, section 151 and section
153, in the case of a person where a search is initiated under
section 132 or books of account, other documents or any
assets are requisitioned under section 132A after the 31st day
of May, 2003 but on or before the 31st day of March, 2021],
the Assessing OfÏcer shall-

(a) issue notice to such person requiring him to furnish
within such period, as may be specified in the notice,
the return of income in respect of each assessment year
falling within six assessment years and for the relevant
assessment year or years] referred to in clause (b), in
the prescribed form and verified in the prescribed
manner and setting forth such other particulars as may
be prescribed and the provisions of this Act shall, so far
as may be, apply accordingly as if such return were a
return required to be furnished under section 139;

(b) assess or reassess the total income of six
assessment years immediately preceding the
assessment year relevant to the previous year in which
such search is conducted or requisition is made [and for
the relevant assessment year or years]:

153B – Time limit for completion of assessment under
section 153A -

(1) Notwithstanding anything contained in section 153, the
Assessing OfÏcer shall make an order of assessment or
reassessment,-

(a) in respect of each assessment year falling within six
assessment years referred to in clause (b) of [sub-
section (1) of section 153A], within a period of two years
from the end of the financial year in which the last of
the authorisations for search under section 132 or for
requisition under section 132A was executed;

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(b) in respect of the assessment year relevant to the
previous year in which search is conducted under
section 132 or requisition is made under section 132A,
within a period of two years from the end of the financial
year in which the last of the authorisations for search
under section 132 or for requisition under section 132A
was executed :

[Provided that in case of other person referred to in
section 153C, the period of limitation for making the
assessment or reassessment shall be the period as
referred to in clause (a) or clause (b) of this sub-section
or one year from the end of the financial year in which
books of account or documents or assets seized or
requisitioned are handed over under section 153C to the
Assessing OfÏcer having jurisdiction over such other
person, whichever is later.]

SECTION 153C : Assessment of income of any
other person

[(1)] Notwithstanding anything contained in section 139,
section 147, section 148, section 149, section 151 and
section 153, where the Assessing OfÏcer is satisfied that
any money, bullion, jewellery or other valuable article or
thing or books of account or documents seized or
requisitioned belongs or belong to a person other than
the person referred to in section 153A, then the books of
account or documents or assets seized or requisitioned
shall be handed over to the Assessing OfÏcer having
jurisdiction over such other person and that Assessing
OfÏcer shall proceed against each such other person
and issue such other person notice and assess or
reassess income of such other person in accordance
with the provisions of [sub-section (1) of section
153A] :]

[Provided that in case of such other person, the
reference to the date of initiation of the search under
section 132 or making of requisition under section 132A
in the second proviso to section 153A shall be construed
as reference to the date of receiving the books of
account or documents or assets seized or requisitioned

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by the Assessing OfÏcer having jurisdiction over such
other person.

(2) Where books of account or documents or assets
seized or requisitioned as referred to in sub-section (1)
has or have been received by the Assessing OfÏcer
having jurisdiction over such other person after the due
date for furnishing the return of income for the
assessment year relevant to the previous year in which
search is conducted under section 132 or requisition is
made under section 132A and in respect of such
assessment year-

(a) no return of income has been furnished by such
other person and no notice under sub-section (1) of
section 142 has been issued to him, or

(b) a return of income has been furnished by such other
person but no notice under sub-section (2) of section
143 has been served and limitation of serving the notice
under sub-section (2) of section 143 has expired, or

(c) assessment or reassessment, if any, has been made,

before the date of receiving the books of account or
documents or assets seized or requisitioned by the
Assessing OfÏcer having jurisdiction over such other
person, such Assessing OfÏcer shall issue the notice and
assess or reassess total income of such other person of
such assessment year in the manner provided in section
153A.]”

45. Thus, the use of the expression “the Assessing OfÏcer is
satisfied” in Section 153C mandates the recording of
satisfaction on the incriminating material sent to him/her by
the Assessing OfÏcer of the searched person. The law relating
to the recording of satisfaction by the Assessing OfÏcer of the
searched person and its transmission to the jurisdictional
Assessing OfÏcer is no longer res integra. The Supreme Court

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in the case of Manish Maheshwari vs. Asstt.Commissioner of
Income Tax with Indore Construction (Pvt.) Limited vs.
Commissioner of Income Tax and Another, 2007 (3) SCC 794,
on a similar issue arising of non-recording of satisfaction note
in the old provision of section 158BD(153C) of the Act has held
thus:

“12 The conditions precedent for invoking the provisions of Sec.
158BD, thus, are required to be satisfied before the provisions of the
said chapter are applied in relation to any person other than the
person whose premises had been searched or whose documents and
other assets had been requisitioned u/s. 132A of the Act.
xxx xxx xxx
16 Law in this regard is clear and explicit. The only question which
arises for our consideration is as to whether the notice dated
06.02.1996 satisfies the requirements of Sec. 158BD of the Act. The
said notice does not record any satisfaction on the part of the
Assessing Officer. Documents and other assets recovered during
search had not been handed over to the Assessing Officer having
jurisdiction in the matter.

17 No proceeding u/s. 158BC had been initiated. There is, thus, a
patent non-application of mind. A prescribed form had been utilized.
Even the status of the assessee had not been specified. It had only
been mentioned that the search was conducted in the month of
November 1995. No other information had been furnished. The
provisions contained in Chapter XIVB are drastic in nature. It has
draconian consequences. Such a proceeding can be initiated, it
would bear repetition to state, only if a raid is conducted. When the
provisions are attracted, legal presumptions are raised against the
assessee. The burden shifts on the assessee. Audited accounts for a
period of ten years may have to be reopened.

18 A large number of decisions of various High Courts have been
cited at the bar. We would, at the outset, refer to a decision of the
Gujarat High Court in Khandubhai Vasanji Desai and Others V/s.
Deputy Commissioner of Income-Tax and Another, 1999 236 ITR 73.
Therein, it was clearly held :

"This provision indicates that where the Assessing Officer who is
seized of the matter and has jurisdiction over the person other than
the person with respect to whom search was made u/s. 132 or whose

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books of account or other documents or any assets were
requisitioned u/s. 132A, he shall proceed against such other person
as per the provisions of Chapter XIV-B which would mean that on
such satisfaction being reached that any undisclosed income belongs
to such other person, he must proceed to serve a notice to such
other person as per the provisions of sec. 158BC of the Act. If the
Assessing Officer who is seized of the matter against the raided
person reaches such satisfaction that any undisclosed income
belongs to such other person over whom he has no jurisdiction,
then, in that event, he has to transmit the material to the Assessing
Officer having jurisdiction over such other person and in such cases
the Assessing Officer who has jurisdiction will proceed against such
other person by issuing the requisite notice contemplated by Sec.
158BC of the Act.
xxx xxx xxx
21 As the Assessing Officer has not recorded its satisfaction, which
is mandatory; nor has it transferred the case to the Assessing Officer
having jurisdiction over the matter, we are of the opinion that the
impugned judgments of the High Court cannot be sustained, which
are set aside accordingly. The appeals are allowed. However, in the
facts and circumstances of the case, there shall be no order as to
costs.”

46. Subsequently, the Supreme Court in the case of CIT vs.
Calcutta Knitwears [(2014) 362 ITR 673 (SC)], has recognized
three stages of recording such satisfaction, namely:

(a) at the time of or along with the initiation of
proceedings against the searched person under Section
158BC of the Act;
(b) along with the assessment proceedings under Section
158BC of the Act; and
(c) immediately after the assessment proceedings are
completed under Section 158BC of the Act in respect of
the searched person.

Accordingly, the Central Board of Direct Taxes issued
Circular No.24/2015 dated 31.12.2015, clarifying the procedure

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to be followed for initiation of proceedings under Section 153C
of the Act.

47. The Supreme Court, in the case of Super Malls Private
limited vs. Principal Commissioner of Income Tax, 8, New
Delhi, 2020 (4) S.C.C. 581, has reiterated the aforesaid
proposition of law. It is held thus:

“7.1 It cannot be disputed that the aforesaid requirements are held
to be mandatorily complied with. There can be two eventualities. It
may so happen that the Assessing Officer of the searched person is
different from the Assessing Officer of the other person and in the
second eventuality, the Assessing Officer of the searched person and
the other person is the same. Where the Assessing Officer of the
searched person is different from the Assessing Officer of the other
person, there shall be a satisfaction note by the Assessing Officer of
the searched person and as observed hereinabove that thereafter
the Assessing Officer of the searched person is required to transmit
the documents so seized to the Assessing Officer of the other
person. The Assessing Officer of the searched person simultaneously
while transmitting the documents shall forward his satisfaction note
to the Assessing Officer of the other person and is also required to
make a note in the file of a searched person that he has done so.
However, as rightly observed and held by the Delhi High Court in
the case of Ganpati Fincap (supra), the same is for the
administrative convenience and the failure by the Assessing Officer
of the searched person, after preparing and dispatching the
satisfaction note and the documents to the Assessing Officer of the
other person, to make a note in the file of a searched person, will
not vitiate the entire proceedings under Section 153C of the Act
against the other person. At the same time, the satisfaction note by
the Assessing Officer of the searched person that the documents etc.
so seized during the search and seizure from the searched person
belonged to the other person and transmitting such material to the
Assessing Officer of the other person is mandatory. However, in the
case where the Assessing Officer of the searched person and the
other person is the same, it is sufficient by the Assessing Officer to
note in the satisfaction note that the documents seized from the
searched person belonged to the other person. Once the note says
so, then the requirement of Section 153C of the Act is fulfilled. In
case, where the Assessing Officer of the searched person and the
other person is the same, there can be one satisfaction note

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prepared by the Assessing Officer, as he himself is the Assessing
Officer of the searched person and also the Assessing Officer of the
other person. However, as observed hereinabove, he must be
conscious and satisfied that the documents seized/recovered from
the searched person belonged to the other person. In such a
situation, the satisfaction note would be qua the other person. The
second requirement of transmitting the documents so seized from
the searched person would not be there as he himself will be the
Assessing Officer of the searched person and the other person and
therefore there is no question of transmitting such seized documents
to himself.”

48. The aforesaid decisions of the Supreme Court and the
Circular issued by the CBDT have been considered in
numerous judgments. Unequivocally, the law mandates the
recording of satisfaction by the Assessing OfÏcer of the
‘searched person’ (under Section 153A of the Act) at the stage
of transmission of seized material to the jurisdictional
Assessing OfÏcer of the ‘other person’ before assuming
jurisdiction under Section 153C.

49. When incriminating material pertaining to a ‘third/other
person’ is found during the course of a search conducted under
Sections 132/132A of the Act and such material is transmitted
to the jurisdictional Assessing OfÏcer of such ‘other person’,
the statute obliges the Assessing OfÏcer to record satisfaction
on such material before proceeding further. The legislative
scheme does not carve out any exception permitting the
jurisdictional Assessing OfÏcer of the third person to assume
jurisdiction under Section 153C of the Act in the absence of
satisfaction recorded by the Assessing OfÏcer of the searched
person in the first place, and, as a necessary corollary,
unequivocally not under Sections 147/148 of the Act as a
second instance on the same material.

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50. In other words, the absence of satisfaction recorded by
the Assessing OfÏcer of the searched person does not vest
jurisdiction in the Assessing OfÏcer of the third person to
directly invoke the provisions of Sections 147/148 of the Act on
the incriminating material found during search, more
particularly when the provisions of Section 153C of the Act are
not followed. Such satisfaction is a statutory requirement and a
jurisdictional pre-condition, and not a mere procedural
formality. This position stands fortified by binding judicial
precedents and the clarificatory Circular issued by the CBDT,
which is binding on the Department.

SCOPE OF THE PROCEEDINGS UNDER SECTIONS 147/
148, 153A AND 153C READ WITH SECTION 132 OF THE
ACT.

51. Before we further delve into the issue raised before us,
we may succinctly mention that in view of the Finance Act,
2021, the provisions of Section 153A (pertaining to the
searched person) and Section 153C (pertaining to the other
than the searched person) are not made applicable w.e.f.
searches conducted after 31st March, 2021. This procedure
has now been deleted from the statute in relation to searches
conducted on or after 1st April, 2021. The Finance Act, 2021
has introduced a pari materia provision in Section 148 of the
Act in respect of searches conducted after 1st April, 2021.

52. Sections 153A to 153D were inserted vide the Finance
Act, 2005 with retrospective effect from 01.06.2003. Both the
provisions of Sections 153A and 153C begin with non-obstante
clauses. Thus, the intention of the legislature is explicit that
assessment or reassessment which emanates from

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incriminating material arising from a “search” unquestionably
has to be undertaken under Section 153A for the searched
person and under Section 153C for the other person, after
recording satisfaction on such incriminating material. Sections
147 and 148 are provisions relating to general assessment of
income tax, which empower the Assessing OfÏcer to reopen an
assessment if income chargeable to tax has escaped
assessment. The Finance Act, 2021 introduced completely new
set of procedures and safeguards for these sections, moving
from a subjective “reason to believe” to a more objective
“information-based” approach.

53. Learned counsels appearing for the respective parties
have primarily premised their submissions on the Supreme
Court judgment rendered in the case of Abhisar Buildwell
(P.) Ltd. (supra). This judgment has been followed/
interpreted by various High Courts. While examining the scope
and ambit of Section 153A of the Act, the Supreme Court has
held as under :

“11. xxx..x...The intention does not seem to be to re-open the
completed/unabated assessments, unless any incriminating material
is found with respect to concerned assessment year falling within
last six years preceding the search. Therefore, on true interpretation
of Section 153A of the Act, 1961, in case of a search under section
132 or requisition under section 132A and during the search any
incriminating material is found, even in case of unabated/completed
assessment, the AO would have the jurisdiction to assess or reassess
the 'total income taking into consideration the incriminating
material collected during the search and other material which would
include income declared in the returns, if any, furnished by the
assessee as well as the undisclosed income. However, in case during
the search no incriminating material is found, in case of
completed/unabated assessment, the only remedy available to the
Revenue would be to initiate the reassessment proceedings under
sections 147/48 of the Act, subject to fulfilment of the conditions

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mentioned in sections 147/148, as in such a situation, the Revenue
cannot be left with no remedy. Therefore, even in case of block
assessment under section 153A and in case of unabated/completed
assessment and in case no incriminating material is found during
the search, the power of the Revenue to have the reassessment
under sections 147/148 of the Act has to be saved, otherwise the
Revenue would be left without remedy.

xxxxxx xxxxxxx xxxxxxx

14. In view of the above and for the reasons stated above, it is
concluded as under:

(i) that in case of search under section 132 or requisition under
section 132A, the AO assumes the jurisdiction for block assessment
under section 153A;

(ii) all pending assessments/reassessments shall stand abated;

(iii) in case any incriminating material is found/unearthed, even, in
case of unabated/completed assessments, the AO would assume the
jurisdiction to assess or reassess the 'total income' taking into
consideration the incriminating material unearthed during the
search and the other material available with the AO including the
income declared in the returns; and
(iv) in case no incriminating material is unearthed during the
search, the AO cannot assess or reassess taking into consideration
the other material in respect of completed assessments/unabated
assessments. Meaning thereby, in respect of completed/unabated
assessments, no addition can be made by the AO in absence of any
incriminating material found during the course of search under
section 132 or requisition under section 132A of the Act, 1961.
However, the completed/unabated assessments can be re-opened by
the AO in exercise of powers under sections 147/148 of the Act,
subject to fulfilment of the conditions as envisaged/mentioned under
sections 147/148 of the Act and those powers are saved.

The question involved in the present set of appeals and review
petition is answered accordingly in terms of the above and the
appeals and review petition preferred by the Revenue are hereby
dismissed. No costs.”

54. The Supreme Court, while discussing the interplay
between the provisions of Sections 153A and 147/148, has
held that, in case, during the search no incriminating material

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is found or in the case of completed/unabated assessments,
the only recourse available to the Revenue would be to initiate
reassessment proceedings under Sections 147/148 of the Act,
subject to fulfillment of the conditions mentioned in Sections
147/148, as in such a situation, the Revenue cannot be left
without any remedy. The Supreme Court has made these
observations in relation to the “searched person” under
Section 153A of the Act, and has carved out an exception for
resorting to the provisions of Sections 147/148 of the Act,
subject to fulfillment of the conditions envisaged therein, in
cases where no incriminating material is found.

55. “Incriminating material” would mean any evidence or
proof which connects the assessee with involvement in a
delinquency or any deliberate act of concealment/
misdeclaration/ diversion of funds/income. The Supreme Court
has rendered the decision in the context of the provisions of
Section 153A of the Act, which does not stipulate recording of
a satisfaction note in the case of the searched person, since
the incriminating material which directly involves the searched
person is recovered, whereas it is mandatory to note the
nature/details of incriminating material found having a link
with the “other person/third person” for enabling the Assessing
OfÏcer of such other person/third person to assume jurisdiction
under Section 153C of the Act, which is not a requirement
under Section 153A of the Act. The Supreme Court has clarified
that the provisions of Sections 147/148 of the Act can be
resorted to if there is any other material available other than
the incriminating material, which can suggest that the income
has escaped assessment.

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56. In the case of an “other person”, the substratum of the
reassessment/assessment is the material supplied by the
Assessing OfÏcer of the “searched person” only. Thus, the
upshot of the discussion is that the jurisdictional Assessing
OfÏcer of the “other person”, in a search proceeding under
Sections 132/132A of the Act of a “searched person”, does not
have the privilege to assume jurisdiction under Sections
147/148 of the Act on the basis of the incriminating material
sent to him. Thus, there are twin conditions which restrict the
jurisdictional Assessing OfÏcer from exercising powers under
Sections 147/148 in the case of an “other person”, i.e., firstly,
by relying on incriminating material bereft of a satisfaction
note, and secondly, by placing reliance exclusively on such
incriminating material.

57. In the case of most of the petitioners, it is noticed by us
that the Assessing OfÏcer has not recorded satisfaction on the
material recovered from the entities, i.e. the searched persons,
and without recording such satisfaction on the incriminating
material, proceedings under Sections 147/148 of the Act have
been resorted to, which, in our considered opinion, is in direct
conflict with the provisions of Section 153C of the Act. The
jurisdictional Assessing OfÏcer of the petitioners cannot
directly invoke the provisions of Sections 147/148 of the Act for
reopening of the assessment unless he/she is in receipt of the
satisfaction note on the incriminating material while exercising
power under Section 153C of the Act. Apart from the material
sent to the jurisdictional Assessing OfÏcer, if such ofÏcer has
knowledge or information from other sources which tends to

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establish escapement of income, then, in such a case, the
provisions of Sections 147/148 of the Act can be resorted to,
subject to fulfillment of the conditions.

58. When the legislature has provided a special mechanism
for assessment or reassessment based on search material,
having a specific limitation period, the same must be followed
strictly and exclusively, and recourse to the general provisions
of Sections 147/148 is impermissible in respect of matters
falling within the domain of the special provisions unless there
are special circumstances carved out, as discussed
hereinabove.

DISCUSSION ON CASE LAW :-
59. Albeit, numerous decisions are cited before us, it is
noticed by us that the same are repetitive; hence, in order to
avoid prolixity, we have dealt with only those which are
relevant. The Rajasthan High Court, in the case of Shyam
Sundar Khandelwal (supra), after considering the judgment
of the Supreme Court in Abishar Buildwell (P.) Limited
(supra) and the judgment of the Karnataka High Court in case
of Shri Dinkara Suvarna Vs. DCIT, 2023 454 ITR 21 (Karnataka)
and also in a decision of the Bombay High Court in case of Aditi
Constructions vs. Dy. CIT, 2023 151 taxman.com 513, has held
as under : -

“35. The Supreme Court in the case of Abhisar Buildwell (P.) Ltd.
(supra) while dealing with the provisions of section 153A held that in
case of absence of incriminating material seized during the search,
the department is not remediless for reassessing the unabated
assessment on the basis of material received from the other sources
and can proceed under section 148. The decision does not support
the contentions raised that section 148 is rendered redundant if

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section 153C is to be resorted to in the facts of the present case.

36. The Single Bench of this Court in the case of Vijay Kumar Mehta
(supra) held that if the Department has chosen not to proceed under
section 153C, no right is created to the petitioner for getting the
notice under section 148 quashed. Moreover, learned Single Judge
was not having the benefit of the decision of the Supreme Court in
the case of Abhisar Buildwell (P) Ltd. (supra). The appeal against the
order was dismissed having rendered infructuous in view of the
subsequent developments that the assessment order was passed.

37. The decision of the Madras High Court in the case of Saloni
Prakash Kumar (supra) is of no help to the respondents. The High
Court held that section 153C does not preclude issuance of notice
under section 148. The field of applicability of two sections was not
the issue before the Court.

38. The petitioner relied upon the decision of the Karnataka High
Court in the case of Sri Dinakara Suvarna (supra). It would be
relevant to quote Para-10:

“10. Admittedly no proceedings were initiated under section 153C of
the Act. Thus, there is patent non-application of mind. It is relevant
to note that the author of the diary Smt. Soumya Shetty had passed
away prior to the date of search. It was argued on behalf of the
Revenue that Shri. Ashok Kumar Chowta had offered tax on lump-
sum income.”

39. Further reliance was placed upon the decision of the Bombay
High Court in the case of Mis. Aditi Constructions (supra). The para-
9 is quoted:-

"9. We find that the jurisdictional conditions for invoking section
147-148 are not satisfied as there is no failure to disclose material
facts fully and truly. It is not in dispute that by the letter dated 11th
September 2015 (Exhibit H) the Petitioner have submitted all the
particulars along with supporting documents to the Respondent
No.1. Hence the reasons to believe and a presumption based on the
statement of Shri Bhanwarlal Jain (a third party) in the course of a
search, that the loans of the entities were bogus or accommodation
entries was clearly dispelled. Moreover, the specific provisions of S.
153C would prevail over the general provisions of section 147 in the
case of search on 3rd party."

40. In view of above discussion the notices issued under section 148
and the impugned orders are quashed. However, the respondents
shall be at liberty to proceed against the petitioners in accordance

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with law.”

60. The aforesaid decision is followed by the Bombay High
Court in the case of Sejal Jewellery vs. Union of India, (2025)
171 taxmann.com 846.

61. The respondent has placed reliance on the judgment of
the High Court of Delhi in the case of Navin Kumar Gupta
(supra). A careful reading of the facts of the judgment in the
case of Navin Kumar Gupta (supra), as recorded by the
Delhi High Court, would reflect that in the said case, a search
was conducted under Section 132 of the Act against the
searched person, and the material was forwarded by the
Assessing OfÏcer to the Assessing OfÏcer of the third person.
The jurisdictional Assessing OfÏcer of the third person also
received a report from the Investigation Wing, Mumbai,
regarding the assessee purchasing units of a penny stock
during the financial year 2010–2011, and based on the said
information from the Investigation Wing, Mumbai, the
Assessing OfÏcer of the third person issued a notice under
Section 148 of the Act. In such facts, the Delhi High Court held
that the proceedings under Section 148 of the Act were valid.

62. In the said case, the Delhi High Court held that the non
obstante clause of Section 153C of the Act would not be
applicable, as the Assessing OfÏcer did not assume jurisdiction
under Section 153C of the Act.

63. So far as the aforesaid proposition of law is concerned,
there cannot be any cavil, as it is always open to the Assessing
OfÏcer to invoke the provisions of Sections 147/148 of the Act

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on the basis of material received which does not form part of
the incriminating material sent to him by the Assessing OfÏcer
of the searched person. This is precisely the case of the
petitioners before us.

64. As recorded hereinabove, it is a settled legal precedent
and a statutory obligation upon the jurisdictional Assessing
OfÏcer of the third person, i.e. the assessees/petitioners, to
record his satisfaction, and there is no escape from recording
satisfaction on the incriminating material sent to him by the
Assessing OfÏcer of the searched person, who was subjected
to search under Section 132 of the Act.

65. Reliance is also placed by the respondent-department on
the decision in the case of Heval Naveenbhai Patel (supra).
The facts of the said case suggest that in a search undertaken
of a searched person, the Assessing OfÏcer of the third person
came to know that the assessee had not filed any return of
income, and hence an opinion was formed that where no
return of income has been furnished by the assessee, though
his total income or the total income of any other person in
respect of which he is assessable under the Act exceeds the
maximum amount not chargeable to tax, it would be deemed
to be a case where income chargeable to tax has escaped
assessment. Such opinion was formed on the basis of material
sent to the jurisdictional Assessing OfÏcer of the third person
(assessee). In such facts, details and documents relating to
land transactions were obtained from the Sub-Registrar for the
purpose of identifying the beneficiaries in the transaction with
the searched person, and the Division Bench of this Court

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upheld the action of reopening the assessment by invoking the
provisions of Section 148 of the Act. The Division Bench held
that the Assessing OfÏcer of the searched person, while
passing the assessment order under Section 153A or prior
thereto, is required to record his satisfaction about the
material, and if such material reveals any undisclosed income
of a person other than the searched person, he has to transmit
such documents/material along with his satisfaction note to the
Assessing OfÏcer having jurisdiction over such other person
(third person). Ultimately, in paragraph No. 35, the Coordinate
Bench has held as under :-

“35. Indisputably in the case on hand, the search was undertaken
prior to 1-6-2015. If that be so then, it is clear that before issuing
the notice under section 153(C) of the Act, the primary condition has
to be fulfilled and which is that the money, bullion, documents etc.,
seized should belong to such other person. If this condition is not
satisfied, no proceedings could be taken u's. 153C of the Act. The
seized documents do not belong to the two writ applicants herein
but were seized from the premises of the Venus Group. It is not the
case of the revenue that the seized documents are in handwriting of
the two writ applicants. In such circumstances, the Assessing Officer
could not have initiated proceedings under section 153(C) of the Act
but based on the information, could be said to be justified in
reopening the assessment for the reasons assigned and referred to
above”

66. In the case of Amar Jewellers Limited (supra), while
examining the provisions of Sections 153A and 147 of the Act,
it is held as under :

“55. Thus, having regard to the aforesaid discussion, we have
reached to the conclusion that the argument of Mr. Hemani as
regards the non obstante clause contained in section 153A and its
effect is without any merit. It is difficult for us to take the view that
the non obstante clause in section 153A excludes the very
applicability of sections 147 and 148 respectively of the Act. We are
in agreement with the submission of Mr. Bhatt, the learned senior
counsel appearing for the revenue that the non obstante clause in

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section 153A should be understood as merely dispensing with the
procedural aspect of section 147 of the Act.

84.xx……
(c) To say that the assessment undertaken under Section 153A of
the Act can never be reopened under section 147 of the Act, would
be an incorrect statement of law.

67. As recorded by the Division Bench of this Court in the
case of Amar Jewellers Limited (supra), it is noted that a
search was undertaken under Section 132 of the Act on a
searched person, i.e. the Amar Group, and proceedings under
Section 153A of the Act were initiated, as it was found by the
Assessing OfÏcer of the searched person that there were some
bogus purchases made by the assessee. Such information was
received from the Investigation Wing, Mumbai, as well as the
Investigation Wing, Surat. Thus, initially, after the search was
undertaken, a notice under Section 153A of the Act was issued
by the Assessing OfÏcer to the searched person, and
thereafter, on receiving information from the Investigation
Wings, proceedings under Section 148 of the Act were invoked
seeking reopening of the assessment. In such a factual
backdrop, the Court held that the proposition that once an
assessment under Section 153A of the Act is undertaken, the
assessment can never be reopened under Section 147 of the
Act would be an incorrect statement of law.

68. Both Sections 153A and 153C begin with non-obstante
clauses, referring to the provisions of Sections 147 and 148 of
the Act. As held by the Rajasthan High Court in the case of
Shyam Sunder Khandelwal (supra), these provisions have an
overriding effect over the regular provisions of assessment or

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reassessment. The provisions of Section 147 can be invoked by
the Assessing OfÏcer if he has reason to believe that any
income has escaped assessment for any assessment year. This
facet is different from the knowledge acquired of undisclosed
income from the incriminating material collected during search
and seizure. Hence, it is not open to the Assessing OfÏcer to
invoke the provisions of Sections 147/148 of the Act for
reopening the assessment on the incriminating material
gathered during search and seizure under Sections 132/132B
of the Act, when the special provisions beginning with non-
obstante clauses are engrafted in the statute.

69. We do not endorse the submission of the Revenue
expressing its predicament for bypassing the statutory
provisions of Sections 153A and 153C of the Act and directly
invoking the provisions of Sections 147/148 of the Act in cases
where the names of numerous assessees surface during
search. The statute does not provide such shortcuts. Merely
because the Revenue faces numerous assessees whose names
have been unearthed during search and whom it believes have
evaded tax, the statutory provisions cannot be bypassed. The
Latin maxim “Quando aliquid prohibetur ex directo, prohibetur
et per obliquum” deciphers to mean “What cannot be done
directly cannot be done indirectly.” This legal principle is a
foundation of the legal system, as it safeguards the interests of
citizens. The law cannot be bypassed through incidental means
if such actions are directly forbidden by law. It is trite that
when a statute vests certain power in an authority to be
exercised in a particular manner, that authority has to exercise

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such power by following the manner prescribed in the statute,
and any exercise of power by statutory authorities inconsistent
with the statutory prescription is invalid.

ANALYSIS AND OPINION ON THE FACTS OF THE
CAPTIONED WRIT PETITIONS :-
70. Having discussed the contours of Sections 132, 147, 148,
153A and 153C of the Act, we shall now examine the facet of
recording of satisfaction notes and the invocation of
reassessment proceedings under Sections 147/148 of the Act
in the respective petitions.

71. The captioned petitions can be divided in to Four Groups,
whose petitioners are subjected to reassessment as under:

A) The Petitioners in whose case the information has
emerged from the search/raid conducted at Navratna
Group (NODPL).
B) The petitioners in whose case the information has
emerged from the search/raid conducted at K-Star
Group.

C) The petitioners in whose case the information has
emerged from the search/raid conducted at Flamingo
(Sanjay Govindram Agarwal).

D) The petitioners in whose case the search was
conducted during the search/raid conducted at
AfÒuence Commodities Pvt. Ltd

72. Group-A:- Since most of the writ petitions belong to
Group-A (Navratna Group), we are analyzing the legality of

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reassessment under Sections 147/148 of the Act. In these writ
petitions, the facts suggest that pursuant to the warrant issued
in the name of one Murlidhar Marutibhai Trivedi, who is a
shareholder of Navratna Infrastructure, a search was
undertaken at his residence and at Navratna Organisers and
Developers Pvt. Ltd. (NODPL) on 11.04.2017. During the search
at the residence of Murlidhar Trivedi, backup data was taken
from his laptop, and a digital Excel sheet was recovered. This
Excel file contained details of the Kalhaar Scheme such as unit
number, area of unit, selling price of land, construction cost,
amount received from purchasers, etc. Thereafter, during the
proceedings before the Income Tax Settlement Commission
(ITSC), the Navratna Group submitted a list of purchasers (from
F.Y. 2011–12 to 2016–17), wherein the unit number, name of
purchaser, date of execution of sale deed, cost of land and
construction, etc., were mentioned. The said list was compared
with the Excel file recovered from the laptop of Shri Murlidhar,
and it was observed by the authorities that NODPL had
maintained proper records of all receipts in cash as well as
through cheque on the sale of units/villas in the Kalhaar
Scheme. NODPL, in its application before the ITSC, admitted
that it had received “on-money” (cash) for the sale of
units/villas at the “Kalhaar Blues and Greens” project, wherein
it was disclosed that the purchasers had paid huge amounts in
cash. Thereafter, the Deputy Commissioner of Income Tax,
Central Circle-1(1), Ahmedabad, vide communication dated
05.03.2021, conveyed to the respective Jurisdictional
Assessing OfÏcers (JAOs) to analyze the data and ascertain the
names of the purchasers from the Excel sheet submitted by

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the Navratna Group, from the sale deed value, registration
number and dates, and accordingly to take necessary remedial
action to protect the interest of the Revenue. Thus, in the
proceedings before the ITSC, and on admission of the Navratna
Group post-search, the JAOs were directed to analyze the data
of the purchasers, which ultimately disclosed the cash
transactions undertaken by the petitioners. Albeit, the original
source of incriminating material against the petitioners is the
Excel sheet recovered during the search from Shri Murlidhar,
however, the names and the factum of cash transactions were
revealed during the proceedings before the ITSC, that too on
an application filed by the Navratna Group admitting the cash
transactions from the petitioners. Thus, the information
regarding payment of cash was received post-search on the
basis of the admission, since during the search the names of
the petitioners were never revealed from the incriminating
material (Excel sheet). Only when the data supplied by the
Navratna Group was compared with the Excel sheet, the exact
details emerged. In such circumstances, there was no occasion
for the Assessing OfÏcer of the searched entity to record
satisfaction and forward it to the jurisdictional Assessing
OfÏcer of the petitioners. The proceedings under Sections
147/148 of the Act were initiated subsequently on the
directions issued by the Deputy Commissioner of Income Tax,
Central Circle-1(1), Ahmedabad, vide communication dated
05.03.2021. Thus, the material information of names and cash
transactions unearthed by the Jurisdictional Assessing OfÏcers
(JAOs) subsequently on the basis of data supplied by the
Navratna Group before the Settlement Commission constitutes

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an independent source, and hence such information/material is
sufÏcient to trigger action under Sections 147/148 of the Act.
Therefore, the Revenue is justified in reopening the
assessment under Sections 147/148 of the Act on the
information received subsequently.

73. Group-B :- The petitioners of this group are subjected to
reassessment under Sections 147/148 of the Act on the basis
of incriminating material found during the search at the K-Star
Group. There is no satisfaction note recorded by the Assessing
OfÏcer of this entity, and the material has been merely
supplied to the JAO of the petitioners, who has invoked the
provisions of Section 148 of the Act. Hence, the power under
Sections 147/148 cannot be invoked by the JAO in the absence
of a satisfaction note. There is no independent material, or any
material gathered post-search from any other source, apart
from the material found during the search at the K-Star Group,
pointed out to us.

74. Group-C:- Similar is the position of the petitioners of this
group to that of Group-B. The information/incriminating
material to the JAO of the petitioners has been transmitted by
the Assessing OfÏcer of Flamingo (Sanjay Govindram Agarwal)
without recording a satisfaction note. No independent material,
or any material gathered post-search apart from the material
found during the search, has been pointed out to us.

75. Group-D:- It is interesting to note that in the writ
petitions being Special Civil Application Nos. 17933 of 2018,
17935 of 2018, 17938 of 2018, and 17939 of 2018, the

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assessments for the Assessment Years 2011–12 to 2014–15
are sought to be reopened by resorting to the provisions of
Sections 147/148 of the Act on the basis of the search
conducted and the panchnama drawn on the petitioners. The
contents of the impugned notice and the afÏdavit-in-reply filed
by the Assessing OfÏcer reveal that during the search and
survey action conducted on 18.12.2014 covering many
commodity traders, where one of them was AfÒuence
Commodities Pvt. Ltd., Dhiren A. Shah and Amee D. Shah Ltd.,
a search was also conducted at the business premises of the
petitioners. The writ petitioners in these writ petitions were
subjected to search under Section 132 of the Act and hence
fall under the provisions of Section 153A of the Act, and not
under Section 153C of the Act. Incriminating material in the
form of loose paper files was found during the search at the
premises of the petitioners. The cases of these writ petitions
are governed by the decisions of the Supreme Court in the
case of Abhisar Buildwell (P.) Ltd. (supra) and Amar
Jewellers (supra). Thus, the Assessing OfÏcer was mandated
by the provisions of Section 153A to follow the procedure
prescribed therein on the basis of incriminating material found
during the search conducted under Section 132 of the Act, and
hence the statute prohibits him from switching over or
resorting to the provisions of Section 148 of the Act from
Section 153A unless there is material gathered from an
independent source. Hence, such action is held to be illegal
and without jurisdiction. However, as held by the Supreme
Court and the Division Bench of this Court in the aforesaid
decisions, it is always open for the Revenue to resort to the
provisions of Sections 147/148 of the Act, subject to fulfillment

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of the conditions mentioned therein and availability of material
from an independent source from which the Assessing OfÏcer
has “reason to believe” that income has escaped assessment

76. We answer the issues by summarizing the observations
as under :

A) It is mandatory for the Assessing OfÏcer of a “searched
person” (Section 153A of the Act) to record satisfaction
on the incriminating material found during the search
under Sections 132/132A of the Act and communicate the
same to the jurisdictional Assessing OfÏcer of the
“other/third person”.

B) In the absence of any satisfaction note recorded by the
Assessing OfÏcer of the searched person, the
jurisdictional Assessing OfÏcer of the other person cannot
assume jurisdiction under Section 153C of the Act solely
on the basis of material sent to him by the Assessing
OfÏcer of the searched person. In other words, the “other
person” cannot be subjected to assessment/
reassessment under Section 153C of the Act on the
material received by him sans a satisfaction note; hence,
such an approach would be illegal, without jurisdiction,
and liable to be quashed.

C) The jurisdictional Assessing OfÏcer of the “other/searched
person” (Section 153C) can invoke the provisions of
Sections 147/148 of the Act only on the basis of material
available to him from other sources, other than the
incriminating material sent to him. In case a satisfaction

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note is recorded on the incriminating material and
transmitted to him/her, then the only recourse available
to the jurisdictional Assessing OfÏcer is to proceed under
Section 153C of the Act and not under Sections 147/148
of the Act.

D) In the case of assessees who are subjected to
reassessment under the provisions of Section 153A of the
Act, the Assessing OfÏcer cannot switch over or invoke
the provisions of Sections 147/148 of the Act on the basis
of incriminating material found during the search and
seizure conducted under Sections 132 or 132A of the Act.
However, the Revenue cannot be restricted, barred, or
left remediless from invoking the provisions of Sections
147/148 of the Act, subject to fulfillment of the conditions
mentioned therein, and the assessment can be reopened
on the basis of material collected post-search from any
other independent source.

:: ORDER ::
77. On overall appreciation of the facts and analysis, the
following order is passed :-

1) The writ petitions of Group-A, being Special Civil
Application Nos. 4890 of 2022, 5350 of 2022, 5855 of
2022, 5858 of 2022, 5861 of 2022, 5864 of 2022, 5901
of 2022, 26206 of 2022, 216 of 2022, 17675 of 2022
and 5422 of 2022, are dismissed. However, we clarify
that the dismissal of the writ petitions shall not be
construed as detrimental to the petitioners in the

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reassessment proceedings, which shall proceed in
accordance with law. Rule discharged.

2) The writ petitions of Groups B, C and D, being SCA
Nos. 3563 of 2022, 3564 of 2022, 18983 of 2019,
18985 of 2019, 18986 of 2019, 18987 of 2019, 16341
of 2025, 16723 of 2025, 17933 of 2018, 17935 of
2018, 17938 of 2018 and 17939 of 2018, are allowed.
The impugned action of reopening the assessment is
quashed and set aside, reserving liberty in favour of
the Revenue to resort to proceedings under Sections
147/148 of the Act, subject to fulfillment of the
conditions mentioned therein, while keeping in mind
the observations made by this Court. Rule made
absolute to such extent. No order as to costs.

Sd/-
(A. S. SUPEHIA, J)

Sd/-
(PRANAV TRIVEDI,J)
MAHESH/01, 02, 03

Original copy of this order has been signed by the Hon'ble Judges.
Digitally signed by: MAHESH OMPRAKASH BHATI(HC01086), PRIVATE SECRETARY, at High Court of Gujarat on 07/01/2026 17:42:56

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