Search-based reassessment under Section 147 was void where the proper route was the special search provision.

Reopening under Section 147 was held inapplicable where the assessment was initiated on information arising from a search in another case and the matter should have been considered, if at all, under the search-related special provision of Section 153C. The reassessment notice and the assessment made pursuant to it were treated as without jurisdiction and void. As the jurisdictional defect was decisive, the merits of the disallowance were not examined and were left open as academic.

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Issues: Whether reassessment under Section 147 of the Income-tax Act, 1961 was valid where the material relied upon arose from a search under Section 132 and the proper course, if any, was action under Section 153C of the Income-tax Act, 1961.

Analysis: The reopening was founded on information emerging from a search conducted in another case and the assessment itself proceeded on that basis. On these facts, the reassessment machinery under Section 147 was held inapplicable because the case was required to be dealt with under the special search-related provision. The reassessment notice and the assessment framed in pursuance of that notice were therefore treated as without jurisdiction and void. In view of that conclusion, the challenge to the disallowance on merits was not examined and was left open as academic.

Conclusion: The reassessment was quashed for want of jurisdiction, and the assessee succeeded.

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