Search-linked reassessment must follow the special statutory route, not section 147 as a substitute.

Reassessment under section 147 was held legally flawed where the additions were based exclusively on search material found in a third party's case. The analysis states that when escaped income is linked to incriminating material arising from a search, the Revenue must use the special statutory mechanism applicable to search material rather than the general reassessment route. Because no independent source of escapement information was used and the search-linked procedure was not adopted, jurisdiction under section 147 was invalid and the reassessment was quashed.

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Issues: Whether reassessment under section 147 of the Income-tax Act, 1961 was valid where the additions originated from search material relating to another person and the Revenue ought to have proceeded under section 153C of the Act.

Analysis: The search on a third party yielded material relating to the assessee. The reassessment was founded on that search-linked material rather than on an independent source of escapement information. In such a situation, the special scheme governing search-related action must be followed, and the general reassessment provision cannot be used to bypass the statutory route applicable to material emanating from a search. Where the Revenue relies exclusively on search material and does not adopt the special procedure contemplated for such material, the assumption of jurisdiction under section 147 is legally flawed.

Conclusion: The reassessment proceedings under section 147 were without jurisdiction and were quashed in favour of the assessee.

Ratio Decidendi: Where escaped income is sought to be assessed on the basis of incriminating material arising from a search, the Revenue must invoke the special statutory mechanism applicable to search material and cannot resort to section 147 as a substitute for that procedure.

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