Reassessment jurisdiction fails without statutory satisfaction, clear notice, and correct search-based procedure under income-tax law.

Reassessment notices issued after three years require strict satisfaction of section 149(1)(b), including material showing escaped income in the form of an asset, expenditure, or qualifying book entry, and the notices were invalid where only alleged undisclosed receipts and estimated profit were recorded. Notices under section 148 were also defective where they ambiguously failed to identify whether the assessee was the searched person or another person, reflecting non-application of mind, and were invalid. Search-related assessments framed under section 143(3) without following the reassessment route under sections 147 and 148, and without the required approval under section 148B, were unsustainable and were quashed.

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Issues: (i) Whether reassessment notices issued after three years were invalid for want of satisfaction of the conditions in section 149(1)(b) of the Income-tax Act, 1961, including that the alleged escaped income was represented in the form of an asset or expenditure; (ii) Whether the notices under section 148 were vitiated for ambiguity and non-application of mind in not clearly stating whether the assessee was the person searched or a person other than the searched person; (iii) Whether assessment orders framed under section 143(3) without issuing notice under section 148 and without approval under section 148B, despite a search action, were sustainable.

Issue (i): Whether reassessment notices issued after three years were invalid for want of satisfaction of the conditions in section 149(1)(b) of the Income-tax Act, 1961, including that the alleged escaped income was represented in the form of an asset or expenditure.

Analysis: For the earlier years, the notices were issued beyond three years from the end of the relevant assessment years. In such cases, the statutory gateway under section 149(1)(b) applies only if the Assessing Officer possesses material revealing that the escaped income is represented in the form of an asset, expenditure, or an entry in the books of account, and the amount is fifty lakh rupees or more. The recorded reasons and the reassessment orders showed estimation of profit on alleged undisclosed receipts, but did not establish that the income was represented in the form of an asset or qualifying expenditure. The mandatory jurisdictional condition was therefore not demonstrated.

Conclusion: The reassessment notices and the consequential reassessments for the years covered by this issue were held invalid, in favour of the assessee.

Issue (ii): Whether the notices under section 148 were vitiated for ambiguity and non-application of mind in not clearly stating whether the assessee was the person searched or a person other than the searched person.

Analysis: For the later years, the notices used alternative and uncertain language about whether the assessee was searched or whether the material pertained to another person. The statutory scheme requires the Assessing Officer to apply his mind to the correct jurisdictional basis before issuing notice. Ambiguous drafting on such a foundational jurisdictional fact reflected casualness and non-application of mind. The notice was therefore treated as legally defective.

Conclusion: The notices under section 148 for these years were held invalid, in favour of the assessee.

Issue (iii): Whether assessment orders framed under section 143(3) without issuing notice under section 148 and without approval under section 148B, despite a search action, were sustainable.

Analysis: For the search-related assessment years, the statutory scheme after the Finance Act, 2021 required proceedings to be taken under section 147 read with section 148, and, where applicable, with prior approval under section 148B. A regular assessment under section 143(3) could not be sustained where the case was required to be dealt with under the special reassessment framework arising from search-related information. The assessments were therefore passed without following the correct statutory route.

Conclusion: The section 143(3) assessments for these years were quashed, in favour of the assessee.

Final Conclusion: The reassessments for the earlier years were annulled for failure to satisfy the limitation-based jurisdictional conditions, the reassessments for the later years were struck down for defective and non-speaking jurisdictional notices, and the search-related section 143(3) assessments were set aside for non-compliance with the mandatory reassessment procedure.

Ratio Decidendi: Where reassessment is initiated beyond three years, the revenue must strictly show that the escaped income is represented in the statutory forms prescribed by section 149(1)(b); and where search-based reassessment is invoked, the jurisdictional notice and the assessment must conform to the correct statutory channel with clear application of mind and the required prior approval.

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