Third-party search material requires Section 153C, not regular reassessment, and writ relief remains available for jurisdictional error.

Where reassessment is founded solely on material seized in a search of a third party, the special search-based procedure applies and Section 153C must be used; recourse to Section 147 is not permissible. The text also notes that, because such action is without jurisdiction, the existence of an alternative appellate remedy does not bar writ intervention. The discussion concludes that notices and consequential assessment, demand, and penalty actions are liable to be quashed, while the revenue may proceed only in accordance with law.

---

---

Issues: (i) whether the reassessment was initiated solely on the basis of material seized from the premises of a third party; (ii) whether, in such a case, the revenue could proceed under Section 147 of the Income-tax Act, 1961 instead of Section 153C; and (iii) whether the writ petition was maintainable despite an alternative appellate remedy.

Issue (i): whether the reassessment was initiated solely on the basis of material seized from the premises of a third party.

Analysis: The reasons recorded for reopening referred to search and seizure action in the case of another person and stated that the petitioner was a beneficiary of non-genuine purchase bills discovered in that search. The reopening was therefore founded on third-party search material and not on independent material arising from the petitioner's own case.

Conclusion: The reassessment was held to have been initiated solely on the basis of material seized from the premises of a third party.

Issue (ii): whether, in such a case, the revenue could proceed under Section 147 of the Income-tax Act, 1961 instead of Section 153C.

Analysis: Sections 153A and 153C constitute a special search-based scheme with overriding effect over the regular reassessment provisions. Where incriminating material is seized from a third party, the proper course is to invoke Section 153C. The Court relied on the statutory scheme and prior authority to hold that resort to Section 147 in such circumstances is impermissible.

Conclusion: It was held that the revenue was bound to proceed under Section 153C and could not validly proceed under Section 147.

Issue (iii): whether the writ petition was maintainable despite an alternative appellate remedy.

Analysis: Since the impugned reassessment and consequential notices were issued without jurisdiction, the existence of an appeal did not bar writ intervention.

Conclusion: The writ petition was held to be maintainable.

Final Conclusion: The notices, assessment order, demand notice, and penalty notice were quashed, while liberty was reserved to the revenue to proceed in accordance with law.

Ratio Decidendi: When reassessment is founded solely on material seized in a search of a third party, the special procedure under Section 153C of the Income-tax Act, 1961 must be followed and recourse to Section 147 is without jurisdiction.

---