Third-party search material must proceed under section 153C, not reassessment under sections 147 and 148, for related additions.

In a third-party search, incriminating material relatable to another person triggers the special assessment procedure under section 153C of the Income-tax Act, rather than the regular reassessment route under sections 147 and 148. The Tribunal relied on the binding High Court view that, where seized documents or digital material found in search proceedings of one group are connected to a different person, the reassessment initiated under section 148 is unsustainable for that material. The appellate order quashing the notice and deleting the additions was upheld, and the revenue's challenge failed on the jurisdictional issue.

---

---

Issues: Whether reassessment proceedings under section 148 of the Income-tax Act, 1961 were unsustainable where the material relied upon was seized in search proceedings against a third party and the case was held to fall within section 153C of the Income-tax Act, 1961.

Analysis: The Tribunal noted that the reassessment was founded on information emanating from seized documents and pen drives recovered during search proceedings of another group, and the assessee's case was treated as one where material relatable to the assessee had been found in the course of a third-party search. Relying on the binding High Court view, it accepted that where incriminating material belonging to or relatable to a person other than the searched person is found, the special procedure under section 153C applies and overrides the regular reassessment route under sections 147 and 148. On that basis, the Tribunal found no infirmity in the appellate order quashing the reassessment and deleting the additions.

Conclusion: The challenge to the quashing of notice under section 148 failed, and the assessee succeeded on the jurisdictional issue.

Final Conclusion: The reassessment and consequent additions were not sustained, and the revenue's appeals were dismissed.

Ratio Decidendi: Where incriminating material relatable to a person other than the searched person is found in a search, the special assessment mechanism under section 153C must be followed and the regular reassessment route under sections 147 and 148 cannot be used for that material.

---