AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 1789
X X X X Extracts X X X X
X X X X Extracts X X X X
....it petition, the petitioner has challenged the assessment order dated 25.03.2026, in pursuance of a notice dated 31.03.2025 issued under Second explanation to Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961'), which was issued on the basis of material recovered during a search conducted at the premises of M/s Kuantum Papers Limited. 2. Mr. Gautam Swarup, learned counsel for the petitioner invited Court's attention towards copy of the order dated 18.02.2026 passed by Punjab and Haryana High Court and pointed out that proceedings in the case of searched person (M/s Kuantum Papers Limited) have been stayed. 3. He argued that when the proceedings against the person searched have been stayed by the High....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 8. Learned SSC further argued that even if it is presumed that Punjab and Haryana High Court would ultimately quash the search proceedings, then also, the proceedings against the petitioner, cannot be annulled inasmuch as the petitioner is being proceeded with pursuant to material recovered from the searched place or from searched person. He argued that it is so far settled that even if the search is declared invalid or illegal, the material found and recovered during the search can be used as evidence and made basis for assessment. 9. Learned SSC lastly argued that the writ petition is misconceived, even if considered on merits. 10. In rejoinder, learned counsel for the petitioner argued that the respondents have proceeded again....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e relied upon, even if the search is declared illegal. 15. The petitioner's argument based on the interim order granted by Punjab and Haryana High Court is absolutely untenable in law. Grant of interim order is only a prima facie view of the matter and until and unless the search is declared illegal and void, one cannot say or claim that the search is illegal. The grant of interim order by the Punjab and Haryana High Court, therefore, does not confer any right upon the petitioner to say that proceedings against him are void. 16. Furthermore, the legality of the initiation of proceedings against the petitioner has to be examined as on the date, when the proceedings were triggered i.e. 31.03.2025. It is important to note that on 31.03.2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the basic provisions of Section 148 of the Act of 1961, the assessment order is void as the search has been declared invalid. 21. According to us, both the contingencies mentioned under Section 148 of the Act of 1961 could have been applied against the petitioner - the Assessing Officer could simply proceed against the petitioner on the basis of the documents which had come to his hands, pursuant to the search taking the same to be made 'information or material' or could have proceeded against the petitioner under Second explanation of Section 148 of the Act of 1961 on the basis of said search. 22. We are firmly of the view that simply because there are certain yardsticks or barriers for issuance of notice under Section 148 of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s contemplated under Section 132(1) of the Act of 1961 and the search was found to be a product of "mere pretence", rendering the search proceedings as invalid. Contrarily, the impugned notice in the present case was issued under second explanation to Section 148 of the Act of 1961, read with clause (iv) ibid. The subsequent interim stay granted to the searched person by the Punjab and Haryana High Court, does not, by itself divests the Assessing Officer of the jurisdiction that was validly exercised on the date of issuance of the notice or annuls his order in any manner. 26. In paragraph 25 of Echjay Industries (supra), the Bombay High Court had clarified that the Revenue remains at liberty to utilize the information or material gathere....