Reassessment notice invalid for third-party search material where mandatory satisfaction and prior approval were not recorded.

Reassessment under section 148 was invalid where additions were based on material seized from the search of another person, yet the Assessing Officer invoked the deeming fiction applicable to a search in the assessee's own case. The statutory framework required the officer to proceed under the correct clause for third-party search material, record the requisite satisfaction, and obtain prior approval before issuing notice. Because those jurisdictional steps were not followed and the recorded reasons did not meet the reopening conditions, the notice lacked legal validity and the resulting assessment was vitiated.

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Issues: Whether the reassessment notice issued under section 148 of the Income-tax Act, 1961 and the consequent assessment were valid when the additions were founded on material seized in the search of another person, without recording the satisfaction contemplated by the relevant deeming provision and without obtaining the requisite prior approval.

Analysis: The appeals arose from a search case in which the additions were made primarily on the basis of material recovered from the residential premises and laptop of the assessee's accounts manager. The reassessment was, however, initiated by invoking the deeming fiction applicable to a search in the assessee's own case. The statutory scheme under section 148, read with the proviso requiring information suggesting escapement of income for the relevant assessment year and the clauses dealing with search material belonging to or relating to another person, requires the Assessing Officer to proceed under the appropriate clause and to record the necessary satisfaction with prior approval before issuing notice. On the facts, the material used against the assessee was not found in the assessee's own search alone, and the Assessing Officer did not follow the procedure applicable to third-party search material. The reasons recorded therefore did not satisfy the jurisdictional conditions for reopening.

Conclusion: The reassessment notice was invalid and the assessment was vitiated. The issue is decided in favour of the assessee.

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