RAJKUMAR SAHU,JHANSI V. INCOME TAX OFFICER WARD 2(3)(5), JHANSI

ITA 12/AGR/2026

AI Insights

The case involves multiple appellants who challenged the reassessment orders issued by the Income Tax Officer (ITO) following a search and seizure operation conducted on the P N Group in Guna, Madhya Pradesh. The primary legal issue was the validity of the jurisdiction assumed under section 147 of the Income Tax Act for reassessment, instead of proceeding under section 153C, which is specifically designed for cases involving third parties in search operations. The Tribunal examined the procedural adherence to sections 147, 148, 153A, and 153C of the Act, alongside relevant judicial precedents, and found that the necessary procedural steps, particularly the recording of satisfaction by the AO of the searched person, were not followed.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 845870 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Agra
• Assessment Year: 2020-2021
• Appeal Filed On: 05-01-2026
• Other Referred Cases: Paras Chandreshbhai Koticha & Ors Vs. ITO, Abhisar Buildwell (P) Ltd. vs. ITO, Dunakara Suvarna vs. Dy. CIT, Aditi Constructions vs. Dy. CIT, Shyam Sundar Khandelwal vs. Dy. CIT, Sejal Jewellery vs. Union of India, Navin Kumar Gupta vs. ITO, Heval Naveenbhai Patel vs. ITO, Amar Jewellers Ltd. vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: RAJENDRA SHARMA; MANUJ; INITIATING
• Keywords: Set aside; Reassessment proceedings; Unexplained investment; Document seized; Documents seized; Bogus purchase; Period of limitation; Search and seizure; Accommodation entries; Block assessment; Reason to believe; Time period of passing order; Bogus
• Section: 147; 148; 132; 153A; 69; 139

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (SMC) BENCH, AGRA BEFORE: SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI M BALAGANESH, HON’BLE ACCOUNTANT MEMBER ITA No. 43/Agr/2026 Assessment Year: 2018-19 Brijesh Narayanpura, Ashok Nagar, Madhya Pradesh-473331 Vs. ITO, Guna PAN : DKKPB1827B (Appellant) (Respondent) ITA No. 50/Agr/2026 Assessment Year: 2019-20 Dharamveer Rathore Shastri Market, Naya Pura, DR. S.P Jain ke Pass, Guna, Gwalior-473001, M.P. Vs. ITO, Guna PAN : CWNPR9153A (Appellant) (Respondent) ITA No. 10,11 & 12/Agr/2026 Assessment Year: 2018-19 Rajkumar Sahu, Main Road Chirgaon, Jhansi-284301, U.P Vs. ITO Ward 2(3)(1) & (5) PAN : GPMPS4731B (Appellant) (Respondent) Assessee by Shri Rajendra Sharma & Shri Manuj Sharma, Adv. Department by Shri Anil Kumar, Sr. DR Date of hearing 17.03.2026 Date of pronouncement 24.03.2026 Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 2 | P a g e ORDER PER BENCH 1. This is an appeal of the assessee arising out of the order of Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as ld.CIT(A)] in NFAC appeal Nos. NFAC/2017-18/10232090, NFAC/2018-19/10332601, NFAC/2017-18/10241146, NFAC/2018-19/10318758, NFAC/2019-20/10466203 dt 20.11.2025, 28.11.2025, 10.11.2025 of the A.Y. 2018-19, 2019-20 & 2020-21 against the order passed by National Faceless Assessment Centre/Unit (hereinafter referred to as the ld. A.O) u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). 2. All these appeals have identical issue and emanating out of the same search operation. Hence, they are taken up together and disposed of by this common order for the sake of convenience. 3. The identical issue raised by the assessee in all these appeals is challenging the validity of assumption of jurisdiction u/s. 147 of the Act and consequently framing of assessment by the ld A.O. u/s. 147 of the Act for various assessment orders instead of framing the assessment u/s 153C of the Act. 4. We have heard the rival submissions and perused the materials available on record. A search and seizure operation was conducted on P N Group, Guna on 09.01.2020. During the course of search and seizure operations, various incriminating documents regarding unsecured loans were seized. From the seized documents and enquiries revealed that cash has been deposited in assessee’s bank account and immediately transferred to Shri. Vinod Rathore of PN Group in the sum of Rs 20,00,000/- as unsecured loan. Since the assessee did not have the credit worthiness for advancing such unsecured loan, the genuineness of the Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 3 | P a g e transaction together with the credit worthiness was doubted. Accordingly, proceedings stood initiated on the assessee u/s. 148A of the Act and notice u/s. 148 of the Act was issued to the assessee. The assessee filed his return on 06.06.2022 declaring total income of Rs. 4,54,316/- which is the same income as was originally declared by the assessee u/s. 139 of the Act on 16.01.2019. The reassessment was concluded in the hands of assessee u/s. 147 r.w.s. 144B of the Act on 23.03.2023 after making an addition of Rs. 20,00,000/- on account of unexplained investment u/s. 69 of the Act towards unsecured loan. This action of the ld A.O. was upheld by the ld CIT(A). 5. At the outset, we find the assessment proceedings on the assessee stood initiated u/s. 147 of the Act pursuant to the search and seizure operation carried out in the hands of PN Group on 09.01.2020, wherein certain documents pertaining/ relating to assessee herein were found. Hence the right course of action available to the revenue would be to proceed on the assessee by initiating proceedings u/s. 153C of the Act. Since the proceedings stood initiated u/s/ 147 of the Act, it was argued by the ld AR that the entire proceedings gets vitiated. In support of this proposition, the ld AR rightly relied on the decision of Hon’ble Gujarat High Court in the case of Paras Chandreshbhai Koticha & Ors Vs. ITO reported in (2026) 1 CTOCTR 47(Guj). The relevant operative portion of the said order is reproduced below:- “48. The aforesaid decisions of the Supreme Court and the Circular issued by the CBDT have been considered in numerous judgments. Unequivocally, the law mandates the recording of satisfaction by the AO of the ‘searched person’ (under s. 153A of the Act) at the stage of transmission of seized material to the jurisdictional AO of the ‘other person’ before assuming jurisdiction under s. 153C. 49. When incriminating material pertaining to a ‘third/other person’ is found during the course of a search conducted under s. 132/132A of the Act and such material is transmitted to the jurisdictional AO of such ‘other person’, the statute obliges the AO to record satisfaction on such material before proceeding further. The legislative scheme does not carve out any exception permitting the jurisdictional AO of the third person to assume jurisdiction under s. 153C of the Act in the absence of satisfaction recorded by the AO of the searched person in the first Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 4 | P a g e place, and, as a necessary corollary, unequivocally not under s. 147/148 of the Act as a second instance on the same material. 50. In other words, the absence of satisfaction recorded by the AO of the searched person does not vest jurisdiction in the AO of the third person to directly invoke the provisions of s. 147/148 of the Act on the incriminating material found during search, more particularly when the provisions of s. 153C of the Act are not followed. Such satisfaction is a statutory requirement and a jurisdictional precondition, and not a mere procedural formality. This position stands fortified by binding judicial precedents and the clarificatory Circular issued by the CBDT, which is binding on the Department. Scope of the proceedings under ss. 147/148, 153A & 153C r/w s. 132 of the Act. 51. Before we further delve into the issue raised before us, we may succinctly mention that in view of the Finance Act, 2021, the provisions of s. 153A (pertaining to the searched person) and s. 153C (pertaining to the other than the searched person) are not made applicable w.e.f. searches conducted after 31st March, 2021. This procedure has now been deleted from the statute in relation to searches conducted on or after 1st April, 2021. The Finance Act, 2021 has introduced a pari materia provision in s. 148 of the Act in respect of searches conducted after 1st April, 2021. 52. Sec. 153A to 153D were inserted vide the Finance Act, 2005 w.e.f. 1st June, 2003. Both the provisions of ss. 153A and 153C begin with non obstante clauses. Thus, the intention of the legislature is explicit that assessment or reassessment which emanates from incriminating material arising from a \"search\" unquestionably has to be undertaken under s. 153A for the searched person and under s. 153C for the other person, after recording satisfaction on such incriminating material. Secs. 147 and 148 are provisions relating to general assessment of income-tax, which empower the AO to reopen an assessment if income chargeable to tax has escaped assessment. The Finance Act, 2021 introduced completely new set of procedures and safeguards for these sections, moving from a subjective \"reason to believe\" to a more objective \"information based\" approach. 53. Learned counsels appearing for the respective parties have primarily premised their submissions on the Supreme Court judgment rendered in the case of Abhisar Buildwell (P) Ltd. (supra). This judgment has been followed/interpreted by various High Courts. While examining the scope and ambit of s. 153A of the Act, the Supreme Court has held as under : \"11. ……. The intention does not seem to be to reopen the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of s. 153A of the Act, 1961, in case of a search under s. 132 or requisition under s. 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income taking into consideration the incriminating material collected during the search and Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 5 | P a g e other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under s. 147/148 of the Act, subject to fulfilment of the conditions mentioned in s. 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under s. 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under s. 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. ….. 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under s. 132 or requisition under s. 132A, the AO assumes the jurisdiction for block assessment under s. 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under s. 132 or requisition under s. 132A of the Act, 1961. However, the completed/unabated assessments can be reopened by the AO in exercise of powers under s. 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under s. 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.\" 54. The Supreme Court, while discussing the interplay between the provisions of ss. 153A and 147/148, has held that, in case, during the search no incriminating material is found or in the case of completed/unabated assessments, the only recourse available to the Revenue would be to initiate reassessment proceedings under s. 147/148 of the Act, subject to fulfilment of the conditions mentioned in s. 147/148, as in such a situation, the Revenue cannot be left without any remedy. The Supreme Court has made these observations in relation to the \"searched person\" under s. 153A of the Act, and has carved out an exception for resorting to the provisions of s. 147/148 of the Act, subject to Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 6 | P a g e fulfilment of the conditions envisaged therein, in cases where no incriminating material is found. 55. \"Incriminating material\" would mean any evidence or proof which connects the assessee with involvement in a delinquency or any deliberate act of concealment/misdeclaration/diversion of funds/income. The Supreme Court has rendered the decision in the context of the provisions of s. 153A of the Act, which does not stipulate recording of a satisfaction note in the case of the searched person, since the incriminating material which directly involves the searched person is recovered, whereas it is mandatory to note the nature/details of incriminating material found having a link with the \"other person/third person\" for enabling the AO of such other person/third person to assume jurisdiction under s. 153C of the Act, which is not a requirement under s. 153A of the Act. The Supreme Court has clarified that the provisions of s. 147/148 of the Act can be resorted to if there is any other material available other than the incriminating material, which can suggest that the income has escaped assessment. 56. In the case of an \"other person\", the substratum of the reassessment/ assessment is the material supplied by the AO of the \"searched person\" only. Thus, the upshot of the discussion is that the jurisdictional AO of the \"other person\", in a search proceeding under s. 132/132A of the Act of a \"searched person\", does not have the privilege to assume jurisdiction under s. 147/148 of the Act on the basis of the incriminating material sent to him. Thus, there are twin conditions which restrict the jurisdictional AO from exercising powers under s. 147/148 in the case of an \"other person\", i.e., firstly, by relying on incriminating material bereft of a satisfaction note, and secondly, by placing reliance exclusively on such incriminating material. 57. In the case of most of the petitioners, it is noticed by us that the AO has not recorded satisfaction on the material recovered from the entities, i.e., the searched persons, and without recording such satisfaction on the incriminating material, proceedings under s. 147/148 of the Act have been resorted to, which, in our considered opinion, is in direct conflict with the provisions of s. 153C of the Act. The jurisdictional AO of the petitioners cannot directly invoke the provisions of s. 147/148 of the Act for reopening of the assessment unless he/she is in receipt of the satisfaction note on the incriminating material while exercising power under s. 153C of the Act. Apart from the material sent to the jurisdictional AO, if such officer has knowledge or information from other sources which tends to establish escapement of income, then, in such a case, the provisions of s. 147/148 of the Act can be resorted to, subject to fulfilment of the conditions. 58. When the legislature has provided a special mechanism for assessment or reassessment based on search material, having a specific limitation period, the same must be followed strictly and exclusively, and recourse to the general provisions of s. 147/148 is impermissible in respect of matters falling within the domain of the special provisions unless there are special circumstances carved out, as discussed hereinabove. Discussion on case law : Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 7 | P a g e 59. Albeit, numerous decisions are cited before us, it is noticed by us that the same are repetitive; hence, in order to avoid prolixity, we have dealt with only those which are relevant. The Rajasthan High Court, in the case of Shyam Sundar Khandelwal (supra), after considering the judgment of the Supreme Court in Abishar Buildwell (P) Ltd. (supra) and the judgment of the Karnataka High Court in case of Dunakara Suvarna vs. Dy. CIT (2023) 454 ITR 21 (Kar) and also in a decision of the Bombay High Court in case of Aditi Constructions vs. Dy. CIT (2023) 151 taxman.com 513 (Bom), has held as under : \"35. The Supreme Court in the case of Abhisar Buildwell (P) Ltd. (supra) while dealing with the provisions of s. 153A held that in case of absence of incriminating material seized during the search, the Department is not remediless for reassessing the unabated assessment on the basis of material received from the other sources and can proceed under s. 148. The decision does not support the contentions raised that s. 148 is rendered redundant if s. 153C is to be resorted to in the facts of the present case. 36. The Single Bench of this Court in the case of Vijay Kumar Mehta (supra) held that if the Department has chosen not to proceed under s. 153C, no right is created to the petitioner for getting the notice under s. 148 quashed. Moreover, learned Single Judge was not having the benefit of the decision of the Supreme Court in the case of Abhisar Buildwell (P) Ltd. (supra). The appeal against the order was dismissed having rendered infructuous in view of the subsequent developments that the assessment order was passed. 37. The decision of the Madras High Court in the case of Saloni Prakash Kumar (supra) is of no help to the respondents. The High Court held that s. 153C does not preclude issuance of notice under s. 148. The field of applicability of two sections was not the issue before the Court. 38. The petitioner relied upon the decision of the Karnataka High Court in the case of Sri Dinakara Suvarna (supra). It would be relevant to quote para 10 : \"10. Admittedly no proceedings were initiated under s. 153C of the Act. Thus, there is patent non-application of mind. It is relevant to note that the author of the diary Smt. Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri. Ashok Kumar Chowta had offered tax on lump- sum income.\" 39. Further reliance was placed upon the decision of the Bombay High Court in the case of M/s. Aditi Constructions (supra). The para 9 is quoted : \"9. We find that the jurisdictional conditions for invoking s. 147-148 are not satisfied as there is no failure to disclose material facts fully and truly. It is not in dispute that by the letter dt. 11th Sept., 2015 Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 8 | P a g e (Exh. H) the petitioner have submitted all the particulars along with supporting documents to the respondent No. 1. Hence the reasons to believe and a presumption based on the statement of Shri Bhanwarlal Jain (a third party) in the course of a search, that the loans of the entities were bogus or accommodation entries was clearly dispelled. Moreover, the specific provisions of s. 153C would prevail over the general provisions of s. 147 in the case of search on 3rd party.\" 40. In view of above discussion the notices issued under s. 148 and the impugned orders are quashed. However, the respondents shall be at liberty to proceed against the petitioners in accordance with law.\" 60. The aforesaid decision is followed by the Bombay High Court in the case of Sejal Jewellery vs. Union of India (2025) 171 taxmann.com 846 (Bom). 61. The respondent has placed reliance on the judgment of the High Court of Delhi in the case of Navin Kumar Gupta (supra). A careful reading of the facts of the judgment in the case of Navin Kumar Gupta (supra), as recorded by the Delhi High Court, would reflect that in the said case, a search was conducted under s. 132 of the Act against the searched person, and the material was forwarded by the AO to the AO of the third person. The jurisdictional AO of the third person also received a report from the Investigation Wing, Mumbai, regarding the assessee purchasing units of a penny stock during the financial year 2010-11, and based on the said information from the Investigation Wing, Mumbai, the AO of the third person issued a notice under s. 148 of the Act. In such facts, the Delhi High Court held that the proceedings under s. 148 of the Act were valid. 62. In the said case, the Delhi High Court held that the non obstante clause of s. 153C of the Act would not be applicable, as the AO did not assume jurisdiction under s. 153C of the Act. 63. So far as the aforesaid proposition of law is concerned, there cannot be any cavil, as it is always open to the AO to invoke the provisions of s. 147/148 of the Act on the basis of material received which does not form part of the incriminating material sent to him by the AO of the searched person. This is precisely the case of the petitioners before us. 64. As recorded hereinabove, it is a settled legal precedent and a statutory obligation upon the jurisdictional AO of the third person, i.e., the assessees/ petitioners, to record his satisfaction, and there is no escape from recording satisfaction on the incriminating material sent to him by the AO of the searched person, who was subjected to search under s. 132 of the Act. 65. Reliance is also placed by the respondent-department on the decision in the case of Heval Naveenbhai Patel (supra). The facts of the said case suggest that in a search undertaken of a searched person, the AO of the third person came to know that the assessee had not filed any return of income, and hence an opinion was formed that where no return of income has been furnished by the assessee, though his total income or the total income of any other person in Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 9 | P a g e respect of which he is assessable under the Act exceeds the maximum amount not chargeable to tax, it would be deemed to be a case where income chargeable to tax has escaped assessment. Such opinion was formed on the basis of material sent to the jurisdictional AO of the third person (assessee). In such facts, details and documents relating to land transactions were obtained from the sub- registrar for the purpose of identifying the beneficiaries in the transaction with the searched person, and the Division Bench of this Court upheld the action of reopening the assessment by invoking the provisions of s. 148 of the Act. The Division Bench held that the AO of the searched person, while passing the assessment order under s. 153A or prior thereto, is required to record his satisfaction about the material, and if such material reveals any undisclosed income of a person other than the searched person, he has to transmit such documents/material along with his satisfaction note to the AO having jurisdiction over such other person (third person). Ultimately, in paragraph No. 35, the Co- ordinate Bench has held as under : \"35. Indisputably in the case on hand, the search was undertaken prior to 1st June, 2015. If that be so then, it is clear that before issuing the notice under s. 153C of the Act, the primary condition has to be fulfilled and which is that the money, bullion, documents, etc., seized should belong to such other person. If this condition is not satisfied, no proceedings could be taken under s. 153C of the Act. The seized documents do not belong to the two writ applicants herein but were seized from the premises of the Venus Group. It is not the case of the Revenue that the seized documents are in handwriting of the two writ applicants. In such circumstances, the AO could not have initiated proceedings under s. 153C of the Act but based on the information, could be said to be justified in reopening the assessment for the reasons assigned and referred to above\" 66. In the case of Amar Jewellers Ltd. (supra), while examining the provisions of ss. 153A and 147 of the Act, it is held as under : \"55. Thus, having regard to the aforesaid discussion, we have reached to the conclusion that the argument of Mr. Hemani as regards the non obstante clause contained in s. 153A and its effect is without any merit. It is difficult for us to take the view that the non obstante clause in s. 153A excludes the very applicability of ss. 147 and 148 respectively of the Act. We are in agreement with the submission of Mr. Bhatt, the learned senior counsel appearing for the revenue that the non obstante clause in s. 153A should be understood as merely dispensing with the procedural aspect of s. 147 of the Act. 84. …… (c) To say that the assessment undertaken under s. 153A of the Act can never be reopened under s. 147 of the Act, would be an incorrect statement of law. 67. As recorded by the Division Bench of this Court in the case of Amar Jewellers Ltd. (supra), it is noted that a search was undertaken under s. 132 of the Act on a searched person, i.e., the Amar Group, and proceedings under s. 153A of the Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 10 | P a g e Act were initiated, as it was found by the AO of the searched person that there were some bogus purchases made by the assessee. Such information was received from the Investigation Wing, Mumbai, as well as the Investigation Wing, Surat. Thus, initially, after the search was undertaken, a notice under s. 153A of the Act was issued by the AO to the searched person, and thereafter, on receiving information from the Investigation Wings, proceedings under s. 148 of the Act were invoked seeking reopening of the assessment. In such a factual backdrop, the Court held that the proposition that once an assessment under s. 153A of the Act is undertaken, the assessment can never be reopened under s. 147 of the Act would be an incorrect statement of law. 68. Both ss. 153A and 153C begin with non obstante clauses, referring to the provisions of ss. 147 and 148 of the Act. As held by the Rajasthan High Court in the case of Shyam Sunder Khandelwal (supra), these provisions have an overriding effect over the regular provisions of assessment or reassessment. The provisions of s. 147 can be invoked by the AO if he has reason to believe that any income has escaped assessment for any assessment year. This facet is different from the knowledge acquired of undisclosed income from the incriminating material collected during search and seizure. Hence, it is not open to the AO to invoke the provisions of s. 147/148 of the Act for reopening the assessment on the incriminating material gathered during search and seizure under s. 132/132B of the Act, when the special provisions beginning with non obstante clauses are engrafted in the statute. 69. We do not endorse the submission of the Revenue expressing its predicament for bypassing the statutory provisions of ss. 153A and 153C of the Act and directly invoking the provisions of s. 147/148 of the Act in cases where the names of numerous assessees surface during search. The statute does not provide such shortcuts. Merely because the Revenue faces numerous assessees whose names have been unearthed during search and whom it believes have evaded tax, the statutory provisions cannot be bypassed. The Latin maxim \"Quando aliquid prohibetur ex directo, prohibetur et per obliquum\" deciphers to mean \"What cannot be done directly cannot be done indirectly.\" This legal principle is a foundation of the legal system, as it safeguards the interests of citizens. The law cannot be bypassed through incidental means if such actions are directly forbidden by law. It is trite that when a statute vests certain power in an authority to be exercised in a particular manner, that authority has to exercise such power by following the manner prescribed in the statute, and any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Analysis and opinion on the facts of the captioned writ petitions : 70. Having discussed the contours of ss. 132, 147, 148, 153A and 153C of the Act, we shall now examine the facet of recording of satisfaction notes and the invocation of reassessment proceedings under s. 147/148 of the Act in the respective petitions. Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 11 | P a g e 71. The captioned petitions can be divided in to four groups, whose petitioners are subjected to reassessment as under : (A) The petitioners in whose case the information has emerged from the search/raid conducted at Navratna Group (NODPL). (B) The petitioners in whose case the information has emerged from the search/ raid conducted at K-Star Group. (C) The petitioners in whose case the information has emerged from the search/raid conducted at Flamingo (Sanjay Govindram Agarwal). (D) The petitioners in whose case the search was conducted during the search/raid conducted at Affluence Commodities (P) Ltd. 72. Group-A : Since most of the writ petitions belong to Group-A (Navratna Group), we are analyzing the legality of reassessment under s. 147/148 of the Act. In these writ petitions, the facts suggest that pursuant to the warrant issued in the name of one Murlidhar Marutibhai Trivedi, who is a shareholder of Navratn Infrastructure, a search was undertaken at his residence and at Navratna Organisers & Developers (P) Ltd. (NODPL) on 11th April, 2017. During the search at the residence of Murlidhar Trivedi, backup data was taken from his laptop, and a digital Excel sheet was recovered. This Excel file contained details of the Kalhaar Scheme such as unit number, area of unit, selling price of land, construction cost, amount received from purchasers, etc. Thereafter, during the proceedings before the Income Tax Settlement Commission (ITSC), the Navratna Group submitted a list of purchasers (from financial year 2011-12 to 2016-17), wherein the unit number, name of purchaser, date of execution of sale deed, cost of land and construction, etc., were mentioned. The said list was compared with the Excel file recovered from the laptop of Shri Murlidhar, and it was observed by the authorities that NODPL had maintained proper records of all receipts in cash as well as through cheque on the sale of units/villas in the Kalhaar Scheme. NODPL, in its application before the ITSC, admitted that it had received \"onmoney\" (cash) for the sale of units/villas at the \"Kalhaar Blues and Greens\" project, wherein it was disclosed that the purchasers had paid huge amounts in cash. Thereafter, the Dy. CIT, Central Circle-1(1), Ahmedabad, vide communication dt. 5th March, 2021, conveyed to the respective Jurisdictional AOs (JAOs) to analyze the data and ascertain the names of the purchasers from the Excel sheet submitted by the Navratna Group, from the sale deed value, registration number and dates, and accordingly to take necessary remedial action to protect the interest of the Revenue. Thus, in the proceedings before the ITSC, and on admission of the Navratna Group post-search, the JAOs were directed to analyse the data of the purchasers, which ultimately disclosed the cash transactions undertaken by the petitioners. Albeit, the original source of incriminating material against the petitioners is the Excel sheet recovered during the search from Shri Murlidhar, however, the names and the factum of cash transactions were revealed during the proceedings before the ITSC, that too on an application filed by the Navratna Group admitting the cash transactions from Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 12 | P a g e the petitioners. Thus, the information regarding payment of cash was received post-search on the basis of the admission, since during the search the names of the petitioners were never revealed from the incriminating material (Excel sheet). Only when the data supplied by the Navratna Group was compared with the Excel sheet, the exact details emerged. In such circumstances, there was no occasion for the AO of the searched entity to record satisfaction and forward it to the jurisdictional AO of the petitioners. The proceedings under s. 147/148 of the Act were initiated subsequently on the directions issued by the Dy. CIT, Central Circle-1(1), Ahmedabad, vide communication dt. 5th March, 2021. Thus, the material information of names and cash transactions unearthed by the Jurisdictional AOs (JAOs) subsequently on the basis of data supplied by the Navratna Group before the settlement commission constitutes an independent source, and hence such information/material is sufficient to trigger action under s. 147/148 of the Act. Therefore, the Revenue is justified in reopening the assessment under s. 147/148 of the Act on the information received subsequently. 73. Group B : The petitioners of this group are subjected to reassessment under s. 147/148 of the Act on the basis of incriminating material found during the search at the K-Star Group. There is no satisfaction note recorded by the AO of this entity, and the material has been merely supplied to the JAO of the petitioners, who has invoked the provisions of s. 148 of the Act. Hence, the power under s. 147/148 cannot be invoked by the JAO in the absence of a satisfaction note. There is no independent material, or any material gathered post-search from any other source, apart from the material found during the search at the K- Star Group, pointed out to us. 74. Group-C : Similar is the position of the petitioners of this group to that of Group-B. The information/incriminating material to the JAO of the petitioners has been transmitted by the AO of Flamingo (Sanjay Govindram Agarwal) without recording a satisfaction note. No independent material, or any material gathered post-search apart from the material found during the search, has been pointed out to us. 75. Group-D : It is interesting to note that in the writ petitions being Special Civil Appln. Nos. 17933, 17935, 17938 and 17939 of 2018, the assessments for the asst. yrs. 2011-12 to 2014-15 are sought to be reopened by resorting to the provisions of s. 147/148 of the Act on the basis of the search conducted and the panchnama drawn on the petitioners. The contents of the impugned notice and the affidavit-in reply filed by the AO reveal that during the search and survey action conducted on 18th Dec., 2014 covering many commodity traders, where one of them was Affluence Commodities (P) Ltd., Dhiren A. Shah and Amee D. Shah Ltd., a search was also conducted at the business premises of the petitioners. The writ petitioners in these writ petitions were subjected to search under s. 132 of the Act and hence fall under the provisions of s. 153A of the Act, and not under s. 153C of the Act. Incriminating material in the form of loose paper files was found during the search at the premises of the petitioners. The cases of these writ petitions are governed by the decisions of the Supreme Court in the case of Abhisar Buildwell (P) Ltd. (supra) and Amar Jewellers (supra). Thus, the AO was mandated by the provisions of s. 153A to follow the procedure prescribed Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 13 | P a g e therein on the basis of incriminating material found during the search conducted under s. 132 of the Act, and hence the statute prohibits him from switching over or resorting to the provisions of s. 148 of the Act from s. 153A unless there is material gathered from an independent source. Hence, such action is held to be illegal and without jurisdiction. However, as held by the Supreme Court and the Division Bench of this Court in the aforesaid decisions, it is always open for the Revenue to resort to the provisions of s. 147/148 of the Act, subject to fulfilment of the conditions mentioned therein and availability of material from an independent source from which the AO has \"reason to believe\" that income has escaped assessment 76. We answer the issues by summarizing the observations as under : (A) It is mandatory for the AO of a \"searched person\" (s. 153A of the Act) to record satisfaction on the incriminating material found during the search under s. 132/132A of the Act and communicate the same to the jurisdictional AO of the \"other/third person\". (B) In the absence of any satisfaction note recorded by the AO of the searched person, the jurisdictional AO of the other person cannot assume jurisdiction under s. 153C of the Act solely on the basis of material sent to him by the AO of the searched person. In other words, the \"other person\" cannot be subjected to assessment/reassessment under s. 153C of the Act on the material received by him sans a satisfaction note; hence, such an approach would be illegal, without jurisdiction, and liable to be quashed. (C) The jurisdictional AO of the \"other/searched person\" (s. 153C) can invoke the provisions of s. 147/148 of the Act only on the basis of material available to him from other sources, other than the incriminating material sent to him. In case a satisfaction note is recorded on the incriminating material and transmitted to him/ her, then the only recourse available to the jurisdictional AO is to proceed under s. 153C of the Act and not under s. 147/148 of the Act. (D) In the case of assessees who are subjected to reassessment under the provisions of s. 153A of the Act, the AO cannot switch over or invoke the provisions of s. 147/148 of the Act on the basis of incriminating material found during the search and seizure conducted under s. 132 or 132A of the Act. However, the Revenue cannot be restricted, barred, or left remediless from invoking the provisions of s. 147/148 of the Act, subject to fulfilment of the conditions mentioned therein, and the assessment can be reopened on the basis of material collected post-search from any other independent source. Order 77. On overall appreciation of the facts and analysis, the following order is passed: (1) The writ petitions of Group-A, being Special Civil Appln. Nos. 4890, 5350, 5855, 5858, 5861, 5864, 5901, 26206, 216, 17675 and 5422 of 2022, are dismissed. However, we clarify that the dismissal of the writ petitions shall not be Printed from counselvise.com ITA No.43,50,10,11&12/Agr/2026 14 | P a g e construed as detrimental to the petitioners in the reassessment proceedings, which shall proceed in accordance with law. Rule discharged. (2) The writ petitions of Groups B, C and D, being SCA Nos. 3563 & 3564 of 2022, 18983, 18985, 18986 & 18987 of 2019, 16341 & 16723 of 2025, 17933, 17935, 17938 and 17939 of 2018, are allowed. The impugned action of reopening the assessment is quashed and set aside, reserving liberty in favour of the Revenue to resort to proceedings under s. 147/148 of the Act, subject to fulfilment of the conditions mentioned therein, while keeping in mind the observations made by this Court. Rule made absolute to such extent. No order as to costs. 6. Respectfully following the same, we hold that assumption of jurisdiction u/s 147 of the Act by the ld AO is flawed and accordingly the reassessment proceedings are hereby quashed. Since the reassessment is quashed, the adjudication of other factual and legal grounds raised by the assessee become academic in nature and they are left open. 7. In the result, all the appeals of the assessee are allowed. Order pronounced in the open court on 24.03.2026 -Sd/- -Sd/- (MAHAVIR SINGH) (M BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 24.03.2026 *Aamir Siddiqui, PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra Printed from counselvise.com "