Search-Based Information Requires Section 153C Route: ITAT Quashes Reassessment under Section 147

S F Realty Ventures Private Limited Vs Assessing Officer (ITAT Mumbai)

Search-Based Information Requires Section 153C Route: ITAT Quashes Reassessment under Section 147

The Mumbai ITAT held that where the entire foundation of the reassessment is incriminating material seized during a search on a third party, the Assessing Officer cannot bypass the special machinery provisions of section 153C by invoking the general reassessment provisions under sections 147/148. In the present case, the reasons recorded for reopening were based exclusively on documents seized during the search conducted on the MAAD and AMEYA Groups, coupled with the satisfaction note forwarded by the jurisdictional Assessing Officer of the searched person alleging cash transactions of ₹1.50 crore involving the assessee. The Tribunal observed that the Assessing Officer himself had relied solely on the seized material while recording reasons to believe, making the search provisions directly applicable.

The Tribunal noted the divergence of judicial opinion, with the Revenue relying on the Delhi High Court decision in PCIT v. Naveen Kumar Gupta, while the assessee relied upon the Bombay High Court’s decision in Sejal Jewellery v. UOI and the Mumbai Bench decision in DCIT v. Ghanshyam Rashiklal Shah. Since the case fell within the territorial jurisdiction of the Bombay High Court, the Tribunal held itself bound by the ratio of Sejal Jewellery, which gives primacy to the special assessment mechanism under sections 153A/153C where proceedings are founded on search material. Accordingly, it held that the reassessment initiated under section 147 was without jurisdiction, quashed the reassessment proceedings, and allowed the assessee’s appeal without examining the merits of the addition under section 69C.

Cases Discussed

• PCIT v. Naveen Kumar Gupta (Delhi High Court), [2024] 168 taxmann.com 574 (Delhi)
• Sejal Jewellery v. UOI (Bombay High Court), [2025] 171 taxmann.com 846 (Bom.)
• DCIT v. Ghanshyam Rashiklal Shah (ITAT Mumbai), ITA No. 4707/Mum/2024 & CO No. 208/Mum/2024
• Amar Jewellers Ltd. vs. ACIT (Gujarat High Court), [2022] 137 taxmann.com 249 (Gujarat) / [2022] 444 ITR 97 (Gujarat)
• Abhisar Buildwell (P.) Ltd. (Supreme Court of India)
• Shyam Sunder Khandelwal
• PepsiCo India Holdings (Delhi High Court)
• Kabul Chawla
• G. Koteswara Rao (ITAT Visakhapatnam)
• Phool Chand Bajrang Lal (Supreme Court of India)

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income Tax (Appeals)-51, Mumbai [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’) for Assessment Year 2011-12, date of order 03.12.2025. The impugned order emanated from the order of the Ld. Income Tax Officer Ward 11(2)(1), (for brevity ‘Ld. AO’), order passed under Section 143(3) r.w.s. 147 of the Act, date of order 27.12.2018.

2. The assessee has taken the following grounds:

1. 0n the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) (“CIT (A)”) erred in confirming the action of the Assessing Officer (“AO”) in completing the assessment under section 143(3) read with section 147 of the Income-tax Act, 1961 (“the Act”) instead of section 153C of the Act.

2. Without prejudice, the CIT(A) erred in law and on facts in upholding the reopening under section 147, failing to appreciate that the reasons were recorded mechanically without independent application of mind or tangible material and the notice under section 148 was issued on the basis of a non-speaking and mechanical approval.

3. Without prejudice, the CIT(A) erred in law and on facts in confirming the action of the AO in making the alleged addition of Rs.1,50,00,000/- under section 69C of the Act without issuing a show cause notice and without providing copy of the seized material which forms the very basis of the addition made by the AO.

4. Without prejudice, the CIT(A) erred in law and on facts in upholding the addition of Rs.1,50,00,000 under section 69C of the Act for AY 2011-12, which was made merely on presumptions, without any material evidence and on pure conjectures and surmises. The CIT(A) further erred in confirming the action of the AO in not providing an opportunity to cross-examine the director of M/s Rashmi Ameya Development Housing and Estate Realtors Private Limited.

5. The appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal on or before the final date of hearing.”

3. The Ld. AR filed a paper book comprising pages 1 to 181, which has been placed on record. The Ld. AR submitted that a search and seizure operation under Section 132 of the Act was conducted by the DDIT (Inv.), Unit-IV(1), on 31.07.2024 in the cases of the MAAD Group and the AMEYA Group. During the course of the search, certain incriminating documents were found and seized from the office premises of the MAAD Group, its group concerns, and its directors. The Ld. AR further submitted that incriminating documents were seized from the office premises of M/s. Maad Realtors & Infra Ltd., designated as Party A-2, Page 25, as well as from the residential premises of Shri Rajeev Patil. According to the seized material, the assessee had entered into cash transactions aggregating to Rs. 1.50 crore. In support of this contention, the Ld. AR invited our attention to the APB at pages 100 to 203, containing copies of the seized records evidencing the alleged cash transactions entered into by the assessee with the concerned parties. The Ld. AR further submitted that a satisfaction note was duly recorded by the Assistant Commissioner of Income Tax, Central Circle-3, Thane, on 27.03.2017. The relevant extract of the satisfaction note is reproduced below:

“To,

Income-tax Officer
Ward 11(2)(1)
R.No.425, AayakarBhavan
M.K.Road, Mumbai -400020

Sub: Information regarding various transactions carried out by M/s.S F Realty Ventures Pvt. Ltd. – AAKCS8412P-Reg.

A search action u/s.132 of the 1.T.Act, was carried out in MAAD Group and AMEYA Group of cases by the DDIT(Inv), Unit (IV(1) on 31.07.2014. During the course of search, incriminating documents were found and seized from the Office premises of MAAD group and its group concerns & Directors. During search, incriminating seized documents were found. The copy of the said incriminating seized documents were found in the office premises of M/s.Maad Realtors & Infra Ltd, D-II, Akansha Commercial Complex, Achole Road, Nalasopara (E) (Party A-2, Bundle-1, Page-25)

Similar Page was found and seized from the residence of Shri Rajeev Patil at Mauli Bungalow, Mhatre Wadi, Gaothan, Virar (W) of Ameya Group (Party No.A-14, Bundle No.1, Page-22) Copy enclosed.

Based on these incriminating documents, Shri Anil Gupta, Director of M/s Rashmi Ameya Development Housing & Estate Realtors Pvt. Ltd. admitted undisclosed income of Rs.38.50 crores for A.Y.2015-16 in the hands of M/s Rashmi Ameya Development Housing & Estate Realtors Pvt. Ltd. with when your assessee i.c. M/s.S.F.Realty Ventrues Pvt. Ltd. has entered into a cash transaction of Rs.1,50,00,000/-// Copy of statements of Anil Gupta, dated 02.08.2014 along with seized documents and assessment order in the case of M/s Rashmi Ameya Development Housing & Estate Realtors Pvt. Ltd. is enclosed herewith.

As the jurisdiction over the assessee M/s.S F Realty Ventures Pvt. Ltd. lies with you, copy of the above referred seized documents are forwarded herewith for necessary action at your end.

Encl.: As above.

(Anne Varghese)
Asstt. Commissioner of Income Tax
Central Circle – 3, Thane.”

4. The Ld. AR challenged the jurisdiction assumed by the Ld. AO for initiating reassessment proceedings under Section 148 of the Act. It was contended that the Ld. AO erred in invoking the provisions of Section 148, whereas the assessment ought to have been initiated under Section 153C of the Act, since the proceedings were founded upon incriminating material seized during the course of a search and a satisfaction note had been duly recorded. The Ld. AR submitted that once the jurisdictional conditions of Section 153C were satisfied, recourse to the provisions of Section 148 was legally impermissible. Consequently, the reassessment proceedings initiated under Section 148 stood vitiated, rendering the entire assessment liable to be quashed. The Ld. AR further pointed out that the Ld. AO himself had relied upon the incriminating seized material while recording the reasons to believe under Section 147 of the Act. In this regard, our attention was invited to page 11 of the APB, containing the reasons recorded by the Ld. AO. The relevant extract of the recorded reasons is reproduced below:

“Sir/Madam/ M/s,

Subject: Providing reasons recorded for reopening of assessment u/s 148 of the Income Tax Act, 1961-reg.

Please refer to the above the recorded for issuing notice u/s 148 are reproduced herein under:-

1. The assessee filed original return of income for A. Y. 2011-12 on 26/09/2011 declaring loss of Rs.2.15.547/-. The return was processed u/s. 143(1) of the I. T. Act, 1961.

2. In this case, the information is received from ACIT, Central Circle-3, Thane vide letter dated 27/03/2017 as under.

“A search action u/s. 132 of the I. T. Act, was carried out in MAAD Group and AMEYA Group of cases by the DDIT(Inv.), Unit -IV(1) on 31/07/2014. During search, incriminating documents were found and seized from the office premises of MAAD group and its group concerns and Directors. During the search, incriminating seized documents were found. The copy of the said incriminating seized documents were found in the office premises of M/s. Maad Realtors & Infra Ltd. D-II, Akansha Commercial Complex, Achole Road, Nalasopara (E) (Party A-2, Page-25). Similar page was found and seized from the residence of Shri. Rajeev Patil at MauliBunglow, MhatreWadi, Gaothan, Virar (W) of Ameya Group (Party No. A-14, Bundle No. 1, page-22) copy enclosed. Based on these incriminating documents, Shri. Anil Gupta, Director of M/s. RashmiAmeya Development Housing & Estate Realtors Pvt Ltd admitted undisclosed income of Rs.38.50 crores for A.Y. 2015-16 in the hands of M/s. RashmiAmeya Development Housing & Estate Realtors Pvt Ltd with whom your assessee i.e. M/s. S. F. Realty Ventures Pvt Ltd has entered into a cash transaction of Rs. 1,50,00,000/-“

3. Section 147 of the Act contemplates three primary conditions for the initiation of reassessment proceedings:

• • • There should be a reason to believe that
    • Income chargeable to tax, has
    • Escaped assessment

3.1 The under signed has carefully applied his mind to the facts and circumstances of the there is apparently clear escapement of assessment of such income in the hands of the assessee company. case. The information in possession of the undersigned gives a substantial basis for the formation of a reason to believe to initiate reassessment u/s 147 of the Act. Further,

4. In view of the above, I have reason to believe that the income chargeable to tax amounting to Rs.1,50,00,000/- has escaped assessment in the case within the meaning of section 147 of the I. T. Act, 1961 for the failure on the part of the assessee to disclosed fully and truly all material facts necessary for assessment for the previous year relevant to A.Y. 2011-12. Hence it is fit case for initiation of proceedings u/s. 147 of the I. T. Act, 1961 by issuing notice u/s. 148 of the I. T. Act, 1961.”.

It is may also be noted that the case has been reopened after taking prior approval of the Pr.CIT-11, Mumbai as required u/s. 151 of the I.T. Act and accordingly, the notice u/s.148 issued. Thus, reasons for re-opening the assessment are duly provided to you.”

5. The Ld. AR submitted that the aforesaid legal issue had been specifically raised before the Ld. CIT(A). However, after considering the submissions of the assessee, the Ld. CIT(A) rejected the ground and upheld the validity of the reassessment proceedings. The relevant extract of the order passed by the Ld. CIT(A) is reproduced below:

“6.3. As regards the contention of the appellant that the AO should have invoked the provisions of Section 153C instead of 148, facts of the case as in para above make it clear that the seized documents belong to RADHERPL in which the appellant is one of the counter parties. In the seized material obtained during the search on the third party, the document in question contained a list of various names, one of which incidentally included the name of the appellant. The document was not found to be exclusively or predominantly in the name of the appellant, nor did it bear any indication of ownership, custody or control traceable to the appellant. In such circumstances, the document cannot be said to “belong” to the appellant within the meaning of section 153C. The mere presence of the appellant’s name, along with several other persons, only indicates that the seized material may have reference or relation to the appellant but does not establish ownership so as to mandatorily trigger section 153C. Since the necessary condition of a document “belonging to” the appellant is absent, the jurisdiction under section 153C is not attracted. The AO was therefore justified in exercising jurisdiction under section 147/148 based on information received from the searched-party AO, and the notice issued under section 148 is valid.”

6. The Ld. AR argued and contend that the identical issue was duly considered by the Hon’ble Bombay High Court in the case of Sejal Jewellery vs U01 reported in [2025] 171 taxmann.com 846 (Boni.), relevant para 22 to 23 is reproduced as below:

“22. Applying the principles of law as discussed hereinabove, we are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers Pvt. Ltd. and in such search and seizure action, materials were seized and such materials were further explored and enquired. Such enquiry revealed significant information in regard to M/s. Green Valley Gems Pvt. Ltd., which according to the Revenue had provided accommodation entries to the petitioner, in which it was also revealed that Green Valley Gems Pvt. Ltd. was a shell company. We do not find that the record would indicate something which is not on the basis of such new materials gathered under the search and seizure action under Section 132. If this be the case, then certainly the provisions of Section 153C read with Section 153A would be applicable, as held by the Supreme Court in Abhisar Buildwell (P) Ltd. (supra) when the Court interpreted the effect and purport of Section 153C and 153A, as also held by the Rajasthan High Court in Shyam Sunder Khandelwal (supra).

23. Insofar as Mr. Suresh Kumar’s contention supporting the proceedings under Section 147 and 148 of L.T. Act are concerned, for the aforesaid reasons, such contention would in fact go contrary to the intention of the legislature as depicted by the provisions of Section 153A and 153C of the I.T. Act. There would not be any difficulty in accepting the proposition as canvassed by Mr. Suresh Kumar, referring to the decision of the Supreme Court in Phool Chand Bajrang Lal (supra), however, the facts in the present case are distinct. There cannot be any doubt on the position in law when the Revenue intends to proceed purely on materials relevant for an action under Section 148 read with Section 147. We have already observed that the provisions of Sections 147, 148 vis-a-vis Section 153A and Section 153 are quite compartmentalized. To avoid any overlapping of these provisions, the legislature in its wisdom has thought it appropriate to provide for an independent effect, to be given under Section 153A read with Section 153C by incorporating the “non-obstante” clause, in these provisions, which carves out an exception to any normal/regular action being resorted under Section 147.”

7. The identical issue was duly considered by the Coordinate Bench of ITAT Mumbai in the case of DCIT vs Ghanshyam Rashiklal Shah ITA No.4707/Mum/2024 & CO No.208/Mum/2024, date of pronouncement 21.04.2025. The relevant observations of the Bench are reproduced as below:

“8. We heard the rival submission and perused the documents available on record. The legal issue is agitated before us whether the initiation of reassessment proceedings under Section 147 of the Act, is not legally sustainable in the present case. The foundation of the reopening rests entirely on documents seized during the search and seizure operation conducted on a third party, namely the Ameya Group of Virar. As per the express scheme of the Act, where documents seized in a search pertain to or belong to a person other than the searched party, the appropriate and mandatory course of action is to proceed under Section 153C and not under Section 147.

The documents cited in the assessment order (Paragraph 4) clearly form part of the material seized from the premises of the Ameya Group. No new or independent information was unearthed by the Ld. AO in the normal course of assessment proceedings. Furthermore, the Ld. AO, despite initiating the reassessment on the basis of alleged cash receipts, ultimately made additions on an entirely different ground, namely cash payments-thus deviating from the recorded reasons. Such divergence between the recorded reasons and the eventual addition undermines the very jurisdiction assumed under Section 147. It is further submitted that the Ld. AO did not establish that the documents “belonged” to the assessee, as required under the law prevailing at the relevant time to invoke Section 153C. However, if the pre­conditions of Section 153C were not met, the invocation of Section 147 based solely on the same documents amounts to circumvention of the statutory safeguards embedded in Section 153C. Allowing such a course of action would render Section 153C otiose, defeating the purpose of the special procedure laid down by the legislature.

The legal position taken by the Department, relying on subsequent judicial pronouncements in case of Hon’ble Delhi High Court in Naveen Kumar Gupta (supra), particularly post-amendment interpretations, does not apply to the facts of the present case, as the action of reopening was undertaken in 2019 in respect of AY 2012-13, and the requisite threshold under the unamended Section 153C was not fulfilled. Judicial precedents cited by the appellant-including ruling of Hon’ble Apex Court in Abhisar &indwell (P.) Ltd (supra), Hon’ble Jurisdictional High Court in Sejal Jewellary (supra) and Coordinate bench of ITAT-Visakhapatnam in G. Koteswara Rao (supra)-strongly support the contention that where the seized documents do not belong to the assessee, the invocation of Section 147 in lieu of Section 153C is improper.

In view of the above legal and factual matrix, the assumption of jurisdiction under Section 147 by the issuance of notice under Section 148 dated 30.03.2019 is invalid and without legal sanction. Consequently, the reassessment proceedings, and the resultant additions made therein, are liable to be quashed in their entirety.

Accordingly, assessee’s grounds in Cross-Objection are allowed, and the reassessment proceedings held to be void ab initio.”

8. The Ld. DR argued that the ground raised by the assessee was not properly framed and, if the assessee intended to challenge the jurisdiction on the basis of Section 153C, it ought to have raised a separate additional ground to that effect. It was further contended that the Ld. AO had validly assumed jurisdiction under Section 148 of the Act and that the provisions of Section 153C were not applicable to the facts of the present case. Accordingly, the Ld. DR supported the orders of the revenue authorities and prayed that the jurisdiction assumed under Section 148 be upheld. The Ld. DR contended that assessee’s contention that only Section 153C (and not 147) could be used because the info came from a search, is not supported by the law as it stood or as it stands now. It is true that Section 153C is a special procedure for assessing third-party search cases, but it does not bar the normal provisions of 147 where its stringent preconditions are not met. The critical distinction is that, at the time of this case, the law required that seized documents or assets must “belong to” the other person for Section 153C to be triggered. In this case, the seized documents, albeit pertaining to the as asessee’s transactions, were undeniably owned and maintained by the MAAD Group & Ameya Group (the searched parties). They were not books or assets handed over to the assessee or originating from him legally, they did not “belong” to. The Ld. CIT(A) examined this in detail and concluded that the provisions of section 153C are not attracted for the singular reason that the relevant seized documents do not belong to the appellant. The AO is correct to invoke section 147. This finding is firmly in line with judicial precedents (e.g. PepsiCo India Holdings (Delhi HC), which interpreted “belongs to” narrowly). In fact, it was precisely the recognized loophole (documents pertaining to a third party but not “belonging” to him) that allowed the Department to resort to Section 147 in such cases. Subsequent legal developments: The Bench may be aware that Section 153C was amended in 2015 (to refer to items that “pertain to” the other person), and the Supreme Court has since held that amendment retrospective. However, even post-amendment, courts have held that Section 153C does not bar action under Section 147. The Delhi High Court in PCIT vs. Naveen Kumar Gupta reported in [2024] 168 taxmann.com 574 (Delhi) [20-11-2024) has explicitly affirmed. The relevant observation contended in the following paragraphs are reproduced as below:-

“58. In a case where pursuant to search conducted under Section 132 of the Act or requisition made under Section 132A of the Act in respect of another person (searched person), assets, documents or books of account, which either belong to the assessee or contain information pertaining to the said assessee, are found. And, the same are handed over to the AO of the assessee; he would subject to satisfaction of the other jurisdictional conditions stipulated under Section 153C of the Act, having the jurisdiction to make a reassessment/assessment of the income of the assessee under Section 153C of the Act. However, the same does not mean that he is bound to exercise the said jurisdiction. In the event, the AO does not assume it’s jurisdiction to proceed with making an assessment/ reassessment under Section 153C of the Act, recourse to Section 147/148 is not ousted. The non obstante provision kicks-in only on the AO assuming the jurisdiction under Section 153C of the Act, that is, if the AO exercises its jurisdiction to initiate the machinery provisions of Section 153C of the Act to make an assessment/reassessment of the assessee’s income for the stipulated period. The non obstante provisions do no come into play, if the AO does not take recourse to provision of Section 153C of the Act.

59. The non obstante clause as used in Section 153C of the Act cannot be read to completely exclude the provisions of Sections 143 or 147 of the Act in cases where the assessee’s income is sought to be assessed inter alia on the basis of the information found during search proceedings. However, it will not be open for the AO to take recourse to Section 147 of the Act, where the AO has taken steps under Section 153C of the Act. Thus, if the conditions for exercise of jurisdiction under Section 153C of the Act are satisfied and the AO issues a notice as required under Section 153C of the Act, any reassessment under Section 147 of the Act would obviously, be impermissible. This is because the Act does not contemplate parallel assessment proceedings. Where the AO is satisfied that the assets, material and documents forwarded by the AO of the searched person under Section 153C of the Act has a bearing on determination of the income of the assessee for any of the years, the AO shall proceed to issue a notice under Section 153C of the Act. By virtue of non obstante clause, the AO is not required to follow the procedural rigours of Section 148 of the Act. Subject to obtaining the approval under Section 153D of the Act, if necessary, the AO is not required to seek any approval from the specified authority, as required under Section 148/151 of the Act for issuing a notice under Section 153C of the Act and can proceed to assess / reassess income for the concerned assessment years.

60. However, if the AO does not take recourse to Section 153C of the Act but proceeds under Section 147 of the Act he would necessarily have to follow the due procedure as specified for initiating such proceedings.

61. The assumption that provisions of Section 153C of the Act precludes any proceeding under Section 147 of the Act by virtue of the non obstante clause, is unpersuasive. The scheme of Sections 153C of the Act indicates that the said provision was enacted to simplify the procedure, while maintaining the necessary safeguards, for assessment/reassessment in cases where assets belonging to the assessee or books of account or documents, which contain information pertaining to the assessee are found pursuant to a search conducted under Section 132 of the Act or requisition made under Section 132A of the Act, in respect of a person other than the assessee. This is subject to the same having a bearing on the determination of income of the assessee. The AO is neither require to record reasons for his belief that the income of the assessee for the concerned assessment year has escaped assessment nor does he require to seek further approvals as required under Section 148 of the Act. However, he must be satisfied that the assets seized or requisitioned or the documents, books of account or other material transmitted by the AO of the searched person belongs to or contains information, which has a bearing on the determination of the income of the assessee. The reassessment must be predicated on material held to be incriminating and the income assessed / reassessed must be relatable to the material found as held by this Court in Kabul Chawla and affirmed by the Supreme Court in Abhisar &indwell (P) Ltd. (supra).

62. In Shyam Sunder Khandelwal (supra) (and connected petitions), the Rajasthan High Court had interpreted the non obstante clause of Sections 153A and 153C to have an overriding effect on the legal provisions for assessment / reassessment including under Sections 139,147,148, 149 and 153 of the Act. We are unable to concur that the said provisions are overridden merely on account of assets, books of account, documents and material being seized or requisitioned which either belong to or contain information regarding a person other than the one searched. If the AO does not exercise the jurisdiction under Section 153C of the Act, recourse to the normal provisions of assessment or reassessment are not foreclosed. The provisions of Section 153C of the Act are enacted for the purpose of simplifying the procedure in search cases. The import of such provisions cannot be to oust the recourse to the normal provisions, which in any event are available for assessment / reassessment of an income of an assessee.”

The Court observed that if the AO of the searched person or other person does not choose to invoke 153C, “recourse to Section 147/148 is not ousted”. In this appeal, the Ld. AO of the searched person (MAAD & Ameya) did forward the evidence, but the Department, in its wisdom (and given timing constraints), proceeded under 147. There is no statutory provision that voids a 147 action in such circumstances section 153C’s non-obstante clause only means that if 153C is taken, it has priority over 147 for those years, not that 147 is prohibited if 153C is possible. This position is supported by other High Courts as well (e.g. Gujarat HC in Amar Jewellers Ltd. vs. ACIT reported in [2022] 137 taxmann.com 249 (Gujarat)/[2022] 444 ITR 97 (Gujarat)[31-01-2022] cited by Delhi HC). The assessee’s reliance on contrary ITAT rulings or the non obstante clause is misplaced because, as Delhi HC noted, the non-obstante clause applies only when the AO has assumed jurisdiction under 153C. Here, the AO did not (and could not, since the strict “belonging” test wasn’t satisfied). Therefore, the reopening is valid.

9. We have heard the rival submissions and carefully perused the material available on record. The short legal issue for our consideration is whether, on the facts of the present case, the Ld. AO was justified in invoking the provisions of Sections 147/148 of the Act, or whether the assessment ought to have been framed under Section 153C of the Act. The record reveals that the very foundation of the reassessment proceedings is the information received from the Assistant Commissioner of Income Tax, Central Circle-3, Thane, pursuant to a search conducted under Section 132 in the cases of the MAAD Group and the AMEYA Group. The reasons recorded by the Ld. AO unmistakably demonstrate that the belief regarding escapement of income was formed solely on the basis of incriminating documents seized during the course of the search and the satisfaction note forwarded by the jurisdictional Assessing Officer of the searched person. The assessee contends that once the proceedings are founded exclusively upon seized material emanating from a search, recourse could have been taken only under Section 153C of the Act, whereas the revenue maintains that the seized documents did not “belong to” the assessee and, therefore, the jurisdiction under Section 147 was rightly assumed. The Ld. CIT(A) accepted the revenue’s contention by holding that the seized documents merely referred to the assessee and did not belong to it. The issue is no longer res integra. The Hon’ble Bombay High Court in Sejal Jewellery (supra) and the Coordinate Bench of the Tribunal in Ghanshyam Rashiklal Shah (supra) have held that where the very basis of the assessment is the incriminating material unearthed during a search on a third party, the special machinery provisions contained in Sections 153A/153C assume primacy and resort to the general provisions of Sections 147/148 is impermissible. On the other hand, the revenue has relied upon the subsequent judgment of the Hon’ble Delhi High Court in Naveen Kumar Gupta (supra), wherein it has been held that if the Assessing Officer does not assume jurisdiction under Section 153C, recourse to Sections 147/148 is not automatically barred. Since the present case falls within the territorial jurisdiction of the Hon’ble Bombay High Court, we are bound by the law declared by the jurisdictional High Court. Subsequent judicial pronouncements in case of Hon’ble Delhi High Court in Naveen Kumar Gupta (supra), particularly post-amendment interpretations, does not apply to the facts of the present case, as the action of reopening was undertaken in 2019 in respect of AY 2011-12, and the requisite threshold under the unamended Section 153C was not fulfilled. The reasons recorded by the Ld. AO clearly establish that the reassessment proceedings are founded entirely upon the seized documents and the satisfaction note received from the Assessing Officer of the searched person, without there being any independent tangible material with the Ld. AO. In such circumstances, following the ratio laid down by the Hon’ble Bombay High Court in Sejal Jewellery (supra), we hold that the assumption of jurisdiction under Sections 147/148 of the Act is not sustainable in law. Consequently, the reassessment proceedings initiated under Section 148 and the assessment framed pursuant thereto are liable to be quashed. Accordingly, the legal ground raised by the assessee is allowed. Since we have quashed the reassessment proceedings on the jurisdictional issue, the other grounds raised on the merits of the additions have become academic and, therefore, require no adjudication.

10. In the result, the appeal of the assessee bearing ITA No.1098/Mum/2026 is allowed.

Order pronounced in the open court on 16^th day of July 2026.