Search-based reassessment cannot replace section 153C when material relating to another person emerges from search proceedings.

Search-derived material relating to another person must be dealt with under the special search-assessment framework of sections 153A and 153C, which requires recording satisfaction before action is taken against the other person. Reassessment under sections 147/148 cannot be used to bypass that special mechanism where the reopening is founded exclusively on material unearthed in search proceedings. Only independent external material can justify reassessment under sections 147/148 in such circumstances. On that basis, the reassessment was held to be without jurisdiction and set aside.

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Issues: Whether, in a search-linked case where material relating to the assessee emerged from search proceedings, the Assessing Officer could validly assume jurisdiction and complete reassessment under sections 147/148 of the Income-tax Act, 1961 instead of proceeding under section 153C.

Analysis: The reassessment was founded on material unearthed in the course of search and seizure proceedings involving another person. The governing scheme of the Act treats search-based action against a searched person and a related other person as matters falling within the special framework of sections 153A and 153C. Where incriminating material pertaining to an other person is transmitted from the searched person, the statutory route is section 153C, which is conditioned upon the recording of satisfaction. General reassessment under sections 147/148 cannot be used as a substitute to bypass that special mechanism merely because the Revenue seeks to act on search material. The exception permitting reassessment under sections 147/148 survives only where there is independent material from an external source and not where the action is based exclusively on the search material that ought to have been dealt with under section 153C.

Conclusion: The reassessment framed under sections 147/148 was without jurisdiction and was liable to be quashed; the issue is decided in favour of the assessee.

Final Conclusion: The appeals succeeded and the reassessment proceedings were set aside, leaving the remaining grounds academic.

Ratio Decidendi: Search-derived material relating to an other person must be processed under the special search-assessment provisions, and reassessment under sections 147/148 cannot be invoked on that very material in lieu of section 153C unless there is independent material justifying such reopening.

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