Search-based reassessment requires meaningful hearing before best judgment finalisation, prompting fresh assessment after notice and opportunity.

A reassessment under section 153C based on search material was interfered with because the satisfaction note was recorded belatedly and the assessee was not given a meaningful opportunity before the best judgment assessment was finalised. Although the proceedings were not barred by limitation, the delay after the return was filed and the manner of completion showed that fairness required a further hearing. The assessment order was therefore treated as a show cause notice, and fresh assessment was directed after giving the assessee an opportunity to explain its case.

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Issues: Whether the impugned assessment order under section 153C of the Income-tax Act, 1961 warranted interference and consequential remand on the ground that the satisfaction note was recorded belatedly and the assessee had not been afforded an effective opportunity before the reassessment was concluded.

Analysis: The return for assessment year 2013-2014 had been filed years before the satisfaction note was recorded. The assessment stemmed from materials found in the course of a search under section 132 of the Income-tax Act, 1961, and the assessment was ultimately completed on a best judgment basis. Even though the proceedings were not found to be barred by limitation, the delayed recording of satisfaction, the time gap after filing of return, and the manner in which the assessment was completed cumulatively showed that the assessee should have been given an opportunity to explain its case before the reassessment was finalised.

Conclusion: The impugned assessment order was interfered with and was directed to be treated as a show cause notice, with a further opportunity of hearing and fresh assessment thereafter. The relief is in favour of the assessee.

Ratio Decidendi: Where a reassessment is completed on the basis of search material and best judgment, the assessment may be interfered with if the assessee has not been given a meaningful opportunity to be heard before the conclusion of the proceedings.

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