Third-party seized material must be assessed through reassessment, not section 143(3), when statutory approval requirements apply.

Where additions rest on documents seized from a third person, the Assessing Officer must use the reassessment framework and comply with the prescribed satisfaction and approval requirements; an assessment under section 143(3) cannot bypass that statutory route. The article notes that, for an assessment year prior to the search year, the Tribunal followed coordinate bench rulings treating third-party seized material as triggering deemed escapement only through reassessment provisions. Because the assessment in question was completed under section 143(3) on the basis of third-party documents and statements, the procedure adopted was contrary to law and the assessment was quashed.

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Issues: Whether an assessment framed under section 143(3) of the Income-tax Act, 1961 could be sustained when additions were made on the basis of documents seized from a third person, without invoking the reassessment framework and the approval contemplated under the statutory deeming provision.

Analysis: The dispute turned on the effect of material seized in the search of another person and used against the assessee. The assessment year involved was prior to the search year, and the additions were founded on third-party documents and statements. The statutory scheme referred to in the order treats such material as giving rise to deemed escapement only within the reassessment framework and subject to the prescribed satisfaction and approval. The Tribunal followed coordinate bench decisions holding that, where seized material from a third person is relied upon, the Assessing Officer must proceed under the reassessment provisions and cannot bypass that procedure by completing the matter under section 143(3). Since the assessment in the present case was made under section 143(3) on the basis of third-party seized material, the procedural route adopted was held to be contrary to law.

Conclusion: The assessment framed under section 143(3) was held to be invalid and was quashed, which was in favour of the assessee.

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