Section 153C jurisdiction requires valid satisfaction and nexus with seized material; regular assessment cannot replace the statutory route.

Section 153C jurisdiction depends on a valid satisfaction note and a clear nexus between seized material and the other person's income; here, the Tribunal found that basis defective because the same additions were made in both hands and the relied-upon seized document was not used in the assessment order, so the 153C assessment for AY 2016-17 was quashed. For AY 2017-18, the Tribunal held that once the applicable route was section 153C, a regular assessment under section 143(3) could not stand, and it was treated as void ab initio. The remaining grounds were left open as academic.

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Issues: (i) Whether the assessment framed under section 153C for assessment year 2016-17 was without jurisdiction and liable to be quashed; (ii) whether the assessment framed under section 143(3) for assessment year 2017-18 was valid when, on the Tribunal's reasoning, it ought to have been framed under section 153C.

Issue (i): Whether the assessment framed under section 153C for assessment year 2016-17 was without jurisdiction and liable to be quashed.

Analysis: The Tribunal held that the very basis for invoking section 153C was defective. The same additions were made substantively in the hands of the searched person and the assessee, showing that the satisfaction recorded for section 153C did not validly connect the seized material with the assessee's income. The assessment also relied on material from another person's search or survey without the requisite linkage to the assessee's section 153C proceedings, and the seized document referred to in the satisfaction note was not used in the impugned assessment order.

Conclusion: The assumption of jurisdiction under section 153C for assessment year 2016-17 was invalid, and the assessment was quashed in favour of the assessee.

Issue (ii): Whether the assessment framed under section 143(3) for assessment year 2017-18 was valid when, on the Tribunal's reasoning, it ought to have been framed under section 153C.

Analysis: The Tribunal applied the principle that the relevant search date for the assessee under section 153C is the date on which the seized material is handed over and proceedings are initiated against the other person. On that basis, the assessee's search year was treated as assessment year 2019-20. For assessment year 2017-18, the assessment could not proceed under section 143(3) once the section 153C route was the legally applicable one.

Conclusion: The assessment under section 143(3) for assessment year 2017-18 was held to be illegal and void ab initio in favour of the assessee.

Final Conclusion: Both appeals succeeded on the jurisdictional issue, and the other grounds were treated as academic and left open.

Ratio Decidendi: For section 153C, jurisdiction depends on a valid satisfaction note and a demonstrable nexus between the seized material and the other person's income; where the legally applicable assessment route is section 153C, an assessment framed under section 143(3) is unsustainable.

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