Search material belonging to a third party required section 153C, making reopening under section 147 invalid.

Reopening under section 147 was impermissible where the recorded reasons showed reliance on seized material from a search conducted in a third party's case. On those facts, section 153C was the specific jurisdictional mechanism for assessment of a person other than the searched person, and the use of section 147 could not substitute it. The issue was treated as jurisdictional and therefore capable of being raised at any stage. Applying binding jurisdictional precedent and coordinate bench authority, the assessment framed under section 143(3) read with section 147 was held invalid and bad in law.

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Issues: Whether the assessment framed under section 143(3) read with section 147 of the Income-tax Act, 1961 was valid when the reopening was based on seized material found in the course of search in the case of a third party, requiring invocation of section 153C instead.

Analysis: The reopening reasons expressly referred to information received from the Central Circle along with specific seized material and page references, showing that the foundation of the proceedings was search material belonging to another person. Section 153C provides the specific mechanism for assessment where seized documents or assets belong to or pertain to a person other than the searched person. The issue was held to be jurisdictional in nature and therefore capable of being raised at any stage. Following the binding jurisdictional precedent and coordinate bench view, recourse to section 147 on these facts was held impermissible.

Conclusion: The assessment framed under section 143(3) read with section 147 was held invalid and bad in law, in favour of the assessee.

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