Third-party search material and reassessment: section 147 can apply where section 153C conditions are not met.

Where search material from third parties does not satisfy the statutory preconditions for section 153C action against a person other than the searched person, reassessment may still be sustained under section 147 if the Assessing Officer has independently received tangible information and recorded reasons to believe. The Tribunal noted that the seized diaries and documents were not found from the assessee and that the Investigation Wing forwarded the material before reassessment was completed through the prescribed procedure. It therefore rejected the contention that section 153C was the only permissible route and upheld the reassessment jurisdiction.

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Issues: Whether reassessment under section 147 of the Income-tax Act, 1961 was invalid for want of recourse to section 153C in respect of material seized during a search in the case of third parties.

Analysis: The reassessment was initiated on the basis of information emanating from search material found in the premises of third parties. The core dispute was whether such material, said to pertain to the assessee, could be proceeded against under the general reassessment provisions or only through the special search-assessment machinery. On the facts, the seized diaries and documents were not found from the assessee, and the record showed that the Investigation Wing had processed the material and forwarded information to the Assessing Officer, who then formed reasons to believe and completed reassessment after following the statutory procedure. The Tribunal held that, in the absence of material clearly showing that the seized documents belonged to, pertained to, or related to the assessee in the manner required for section 153C action, the special machinery was not attracted.

Conclusion: Reassessment under section 147 was held to be valid and the objection that section 153C alone could have been invoked was rejected.

Final Conclusion: The Tribunal upheld the reassessment jurisdiction and reversed the relief granted by the first appellate authority, thereby sustaining the assessment proceedings initiated by the Revenue.

Ratio Decidendi: Where seized material from a search does not satisfy the statutory preconditions for section 153C action against a person other than the searched person, the Assessing Officer may validly proceed under section 147 on the basis of independently received tangible information and recorded reasons to believe.

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