Gujarat High Court
Devang Hiralal Vaghasia vs The Income Tax Officer, Ward 1(3)(1), ... on 11 February, 2026
Author: A. S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 19297 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 19304 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 19322 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 19333 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 19336 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 19345 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 19356 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 966 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 967 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 968 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 999 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 1000 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 1003 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 1006 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 3360 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
==========================================================
Approved for Reporting Yes No
√
==========================================================
DEVANG HIRALAL VAGHASIA
Versus
THE INCOME TAX OFFICER, WARD 1(3)(1), SURAT & ANR.
==========================================================
Appearance:
HIREN J TRIVEDI(8808) for the Petitioner(s) No. 1
KARAN G SANGHANI, SENIOR STANDING COUNSEL WITH MR. VARUN
PATEL, SENIOR STANDING COUNSEL for the Respondent(s) No. 1
NOTICE SERVED for the Respondent(s) No. 2
Page 1 of 17
Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026
NEUTRAL CITATION
C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026
undefined
==========================================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 11/02/2026
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA) 1 RULE returnable forthwith. Learned Senior Standing Counsels waives service of notice of rule on behalf of the respondent. Since common issue is involved in all the present writ petitions, the same were heard and analogusly decided by this common judgement. Special Civil Application No.19297 of 2023 is taken as a lead matter. Facts are borrowed from the said writ petition.
2 The petitioners are aggrieved by the notice issued under Section 153C of the Income-tax Act, 1961 (for short "the Act") dated 12.03.2023 (of Special Civil Application No. 19297 of 2023). All the notices issued under Section 153C of the Act emanates from the search undertaken on one Shree Kuberji Group of Surat on 06.02.2020 and seizure action undertaken under Section 132 of the Act.
2.1 During the course of the search, certain incriminating materials/documents were seized relating to the present petitioners. On the basis of such seized materials, the Assessing Officer initiated proceedings against the petitioner under Section 153C of the Act. Notice under Section 143(2) read with Section 142(1) of the Act for the Assessment Year 2020-21 was issued on 03.08.2023 along with a satisfaction note which was received through on-line portal.
Page 2 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined 2.2 The perusal of the satisfaction note reveals that it pertains to an information / material related to land situated at Block No.218, Antroli, admeasuring 15.95 vigha. It also mentions that total investment in the land works out to be Rs.39,87,50,000/- i.e. Rs.2.50 crores per vigha. It was recorded that 7% share of Block No.218, Antroli, Palsana, Surat, immovable property belongs to the searched person i.e. Sunny and his father. Accordingly, on the information derived from the incriminating material found from search person, the material was sent to the Jurisdictional Assessing Officer of the present petitioners and on receipt of such incriminating material, the Jurisdictional Assessing Officer of the petitioner upon verification from the Government Website AnyROR, further opined that the said land at Block No. 218, Antroli, has been divided further into two parts, one is Block No.218A admeasuring 25723 Sq.mtrs (10.82 vigha) and second one Block No.218B admeasuring 9485 Sq.mtrs (3.99 vigha). The total area of both the lands comes to 14.81 vigha and upon the basis of the chit found from searched persons, the rate of each vigha was taken as Rs.2,50,00,000/- and on the basis of the same the AO has arrived at the conclusion that the total value of both the lands comes to Rs.37,02,50,000/- and the registration of both the Blocks i.e. Block No.218A and Block No.218B have been completed on 13.10.2017 for a total consideration of Rs.8,36,00,000/- and Rs.3,08,26,250/- respectively.
2.3 The petitioner filed a detailed objection on 28.08.2023 against the initiation of proceedings under Section 153C of Page 3 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined the Act for the Assessment Years 2014-15 to 2020-21. Despite the aforesaid objections, the Assessing Officer of the petitioner chose to proceed with the assessment proceedings without disposing of the objections and issued notice under dated 03.08.2021 under Section 142(1) as well as under
Section 143(2) of the Act. Being aggrieved, the petitioner has challenged the same.
3 Learned advocate Mr.Hiren Trivedi appearing for the petitioner, has submitted that the notices issued by the Assessing Officer are required to be quashed and set aside in view of the settled legal precedent.
3.1 Reliance is placed on the judgement of the Delhi High Court in the case of Saksham Commodities Ltd vs. Income Tax Officer., reported in [2024] 161 taxmann.com 485 (Delhi), in the case of Sandhya Maulik Patel vs. Assistant Commissioner of Income-tax., reported in [2025] 181 taxmann.com 123 (Gujarat), and also in the decision of this Court in the case of Paras Chandreshbhai Koticha vs. Income-tax Officer., reported in [2026] 182 taxmann.com 204 (Gujarat).
3.2 On merits, it is submitted that the name of the petitioner does not figure in the documents seized from search person and the satisfaction recorded by the Jurisdictional Assessing Officer of the petitioner does not reconcile in any manner with the incriminating material. It is further submitted that the satisfaction note only refers to block number and further mentions that the information has been derived from the website AnyROR which did not form part of the seized Page 4 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined material from the searched person and hence the reliance placed upon the external data which is not seized cannot be relied upon for drawing the conclusion and for assuming the jurisdiction under Section 153C of the Act.
3.3 It is submitted that requirement of Section 153C of the Act, is that if an officer is satisfied that any books of accounts or documents seized or requisitioned, pertains to or any information contained therein relates to a person other than the person referred to in Section 153A, then, the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person. Thus, it is contended that the pre- requisite for invoking Section 153C of the Act is that the Assessing Officer of the searched person, after recording such satisfaction, may transmit the records/ documents/ chits/ papers etc., to the Assessing Officer having jurisdiction over such other person. In the instant case, despite specific request for sharing the satisfaction recorded by the Assessing Officer of Shri Sunny J. Patel and Shri Jayantihai B.Patel, i.e. the persons searched, the Assessing Officer has not shared the same. In the instant case, there is no satisfaction recorded by the Assessing Officer of Shri Sunny J. Patel and Shri Jayantibhai B.Patel.
3.4 It is further submitted that after receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other persons, the Jurisdictional Assessing Officer has to proceed to issue a notice after recording satisfaction that documents found during search Page 5 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined have any bearing on the income of the petitioner, but in absence of such satisfaction, initiation of assessment proceedings under Section 153C of the Act is invalid. It is stated that assessment under Section 153C of the Act can be initiated only if documents pertaining to the assessee are found during the course of action.
3.5 Thus, it is submitted by learned advocate Mr.Hiren Trivedi that the impugned notices and reopening of the assessment is required to be quashed and set aside.
4 In response to the aforesaid submissions, learned Senior Standing Counsel Mr.Karan Sanghani and learned Senior Standing Counsel Mr.Varun Patel have urged that the writ petitions may not be entertained at this stage and the notices issued under Section 153C of the Act may not be interfered with as they are appropriately issued.
4.1 It is submitted that the incriminating material which has been received by the Jurisdictional Assessing Officer of the petitioner would suggest that the petitioner is involved in purchase of the land in question on a far less value from the value which has been shown in the registration and the same has been verified from the government website AnyROR. It is submitted that the Assessing Officer of the searched person has recorded a satisfaction note with respect to the assessee on 11.11.2022 and the same was shared with the Jurisdictional Assessing Officer on 13.11.2022 and accordingly the Jurisdictional Assessing Officer has drawn the satisfaction note on 12.03.2023 before issuing notice under Section 153C Page 6 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined of the Act.
4.2 Further, it is submitted that from the information received in the seized material and upon assessment it was also known that during the search of the residence of the search person Shri Mukesh N Savaliya and his son Shri Arnav M. Savaliya, a pocket diary was found and seized which contained details of cash loan of Rs.147,37,41,799/- taken by Arnav Savaliya and interest paid in cash of Rs.9,24,76,162/-. Thus, it is submitted that subsequently during the course of assessment proceedings since it was known that there has been cash transactions involving the petitioner, the notices under Section 153C may not be set aside.
4.3 In support of his submissions learned Senior Standing Counsel has placed reliance on the judgement of the Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax, Central-3, vs. Abhisar Buildwell (P) Ltd., reported in [2023] 149 taxmann.com 399 (SC), by placing reliance on para 14(iii) he has submitted that it is always open for the Assessing Officer to 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 Assessing Officer without recording the satisfaction note.
4.4 Thus, it is urged that the writ petition may not be entertained.
Page 7 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined 5 We have heard the learned advocates appearing for the respective parties.
5.1 The established facts from the pleadings and from the documents on record reveal that a search was undertaken at Shree Kuberji Group of Surat on 06.02.2020, and incriminating materials relating to the present petitioners was found and a satisfaction note with respect to the present petitioners was shared with the Jurisdictional Assessing Officer on 13.11.2022. Further, the Jurisdictional Assessing Officer of the petitioner also has drawn the satisfaction note on 12.03.2023 before issuing notice under Section 153C of the Act and the same has been shared with the assessee.
5.2 A perusal of the satisfaction note would reveal that the entire transactions mentioned therein relates to the land situated at Block No.218, Antroli, admeasuring 15.95 vigha and the total land investment in the land is mentioned as Rs.39,87,50,000/- of the searched persons. All this incriminating material relating to the land and the investment therein by the search person was sent to the Jurisdictional Assessing Officer of the petitioners. The Jurisdictional Assessing Officer, upon verification from the government website AnyROR noticed that the said land at Block No.218 of Antroli has been divided further in two parts and the total area of both lands comes to 14.81 vigha and upon the basis of a chit found from the search person, the rate of each vigha is determined as Rs.2,50,00,000/- and on the basis of the same, he has arrived that the total value of both the lands comes to Rs.37,02,50,000/- and the registration of both the blocks has Page 8 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined been completed on 13.10.2017 for a total consideration of Rs.8,36,00,000/- and Rs.3,08,26,250/- respectively.
5.3 Accordingly, on the basis of the information received from the website AnyROR, the Assessing Officer has further derived the names of 11 purchasers of Block No.218A vide registration No.15741 of 2017 which includes the names of the petitioners. Similarly for Block No.218B by the registration No.15754 of 2017, he has named 11 assessees. On the basis of such information from the website AnyROR, an opinion is formed by the Jurisdictional Assessing Officer that unaccounted investments are made by the buyers as well as unaccounted income is received by the sellers which comes to Rs.18,69,00,000/-, which needs to be taxed accordingly. Similarly, for block No.218B, the amount is derived at Rs.6,89,23,750/-.
5.4 Unquestionably, on the perusal of the satisfaction note we find that the name of the petitioners are totally absent in the chit which was found and also from the material which was recovered from the search person i.e. Shree Kuberji Group of Surat (Shri Sunny J Patel and Shri Jayantibhai Patel). The Assessing Officer has premised his opinion on the basis of the information available from the government website AnyROR which was not in any manner found or was part of the incriminating documents / papers found from Shree Kuberji Group of Surat. In the case of Sandhya Maulik Patel (supra), on an identical issue, this Court has held thus:
Page 9 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined "13. Thus, the AO in his satisfaction has positively recorded that he ascertained from the "public domain" that the said land was purchased by the petitioners. The AO presumed that since the seller entered into the MoU for Rs.39,32,25,000/-, he could not have entered into a sale with the petitioners for Rs.12,00,00,000/-
without receiving on-money. The MoU found from mobile images shared between Dilip Patel, Ashok Atmaram Patel (proposed seller) and Dhiren R. Bharwad (proposed purchaser) disclosed the sale of Survey No.329 for Rs.39.32 crores. The searched person, i.e. the broker, in his statement before the AO asserted that he did not broker the land deal and only supplied 7/12 Form and Form No.6 showing land entries post search. Thus, these forms were not seized during the search but were handed over by the broker to the AO post search. After these were supplied, the AO obtained the sale deed information from the public domain. It is pertinent to note that there was no incriminating material found during the search having a nexus with the petitioners. Thus, the information/documents collected by the AO from the broker or seller cannot be said to create a live link involving the petitioners, and the presumption of escaped assessment based on the difference between Rs.39.32 crores and Rs.12 crores is unsustainable.
14. In the present case, the search conducted against Shri Dhaval Teli (searched person) did not yield any document relating to undisclosed income "relating to" or "pertaining to" the petitioners. Hence, the satisfaction recorded by the AO roping the petitioners into assessment proceedings on the basis of digital data impounded during the search, which has no nexus with the petitioners, is required to be quashed and set aside. Thus, the AO has acted de hors the provisions of Section 153C of the Act. Reliance placed by the Revenue on the judgement of the Apex Court in Vikram Sujitkumar Bhatia (supra) does not assist them, since the issue before the Apex Court pertained to the applicability of the amendment brought to Section 153C by the Finance Act, 2015 to searches conducted before 01.06.2015."
Thus, it was not permissible for the Jurisdictional Assessing Officer to invoke the provisions of Section 153C by placing reliance on the material which was in public domain and was not forming part of the seized material from the search person, and arrive at a conclusion that the income has escaped assessment.
Page 10 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined 5.5 There is another facet in the present matter which stems out from the averments made in the affidavit-in-reply and which does not form part of the satisfaction note i.e. regarding the details of cash loan of Rs.147,37,41,799/- by one Arnav Savaliya and interest paid in case of Rs.9,24,76,162/- which has been derived from a search conducted on searched persons and from a pocket diary seized and recovered from them. This facts of the cash loan of one Arnav Savaliya which has been derived from a pocket diary and seized material, unquestionably neither forms the part of the satisfaction note nor any other satisfaction note in this regard has been formed by the Jurisdictional Assessing Officer. Thus, it appears that this information was never supplied to the Jurisdictional Assessing Officer by the Assessing Officer of the search person. It is also not in dispute that the incriminating material relates to the land and the details of cash loans as mentioned in the affidavit-in-reply emanates from same search against Shree Kuberji Group, Surat.
6 It is vehemently contended by learned Senior Standing Counsels that it is always open for the Jurisdictional Assessing Officer to place reliance on the seized material from the search person during the course of the assessment and there is no need of recording the satisfaction note again as required under Section 153C of the Act. In support of his submissions, as recorded hereinabove they have placed reliance on the judgement of the Apex Court in the case of Abhisar Buildwell (supra), more particularly paragraph 14(3). This Page 11 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined Court in the judgement rendered in case of Paras Chandreshbhai Koticha (supra), has already dealt with the ratio laid down by the Hon'ble Supreme Court in the case of Abhisar Buildwell (supra).
6.1. At this stage, we may refer to the observations of this Court in the case of Paras Chandreshbhai Koticha (supra), wherein, this Court, on an identical facts after examination of the provisions of Section 153A, 153B and 153C and after considering the judgements of the Supreme Court, it is held thus:
The relevant observations of the Hon'ble Supreme Court and the intention of the legislation in framing the provisions of Section 153A and 153C are summarized by this Court as follows:
"49. When incriminating material pertaining to a 'third/other person' is found during the course of a search conducted under Sections 132/132A of the Act and such material is transmitted to the jurisdictional Assessing Officer of such 'other person', the statute obliges the Assessing Officer to record satisfaction on such material before proceeding further. The legislative scheme does not carve out any exception permitting the jurisdictional Assessing Officer of the third person to assume jurisdiction under Section 153C of the Act in the absence of satisfaction recorded by the Assessing Officer of the searched person in the first place, and, as a necessary corollary, unequivocally not under Sections 147/148 of the Act as a second instance on the same material.
50. In other words, the absence of satisfaction recorded by the Assessing Officer of the searched person does not vest jurisdiction in the Assessing Officer of the third person to directly invoke the provisions of Sections 147/148 of the Act on the incriminating material found during search, more particularly when the provisions of Section 153C of the Act are not followed. Such satisfaction is a statutory requirement and a jurisdictional pre- condition, 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.
Page 12 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined ..... ....... ......
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 Section 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 Assessing Officer of such other person/third person to assume jurisdiction under Section 153C of the Act, which is not a requirement under Section 153A of the Act. The Supreme Court has clarified that the provisions of Sections 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 Assessing Officer of the "searched person" only. Thus, the upshot of the discussion is that the jurisdictional Assessing Officer of the "other person", in a search proceeding under Sections 132/132A of the Act of a "searched person", does not have the privilege to assume jurisdiction under Sections 147/148 of the Act on the basis of the incriminating material sent to him. Thus, there are twin conditions which restrict the jurisdictional Assessing Officer from exercising powers under Sections 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 Assessing Officer 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 Sections 147/148 of the Act have been resorted to, which, in our considered opinion, is in direct conflict with the provisions of Section 153C of the Act. The jurisdictional Assessing Officer of the petitioners cannot directly invoke the provisions of Sections 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 Section 153C of the Act. Apart from the material sent to the jurisdictional Assessing Officer, 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 Sections 147/148 of the Act can be resorted to, subject to fulfillment of the conditions.Page 13 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026
NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined
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 Sections 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.
...... ........ .........
76. We answer the issues by summarizing the observations as under :
A) It is mandatory for the Assessing Officer of a "searched person" (Section 153A of the Act) to record satisfaction on the incriminating material found during the search under Sections 132/132A of the Act and communicate the same to the jurisdictional Assessing Officer of the "other/third person".
B) In the absence of any satisfaction note recorded by the Assessing Officer of the searched person, the jurisdictional Assessing Officer of the other person cannot assume jurisdiction under Section 153C of the Act solely on the basis of material sent to him by the Assessing Officer of the searched person. In other words, the "other person" cannot be subjected to assessment/ reassessment under Section 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 Assessing Officer of the "other/searched person" (Section 153C) can invoke the provisions of Sections 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 Assessing Officer is to proceed under Section 153C of the Act and not under Sections 147/148 of the Act.
D) In the case of assessees who are subjected to reassessment under the provisions of Section 153A of the Act, the Assessing Officer cannot switch over or invoke the provisions of Sections 147/148 of the Act on the basis of incriminating material found during the search and seizure conducted under Sections 132 or 132A of the Act. However, the Revenue cannot be restricted, barred, or left remediless from invoking the provisions of Sections 147/148 of the Act, subject to fulfillment of the conditions mentioned therein, Page 14 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined and the assessment can be reopened on the basis of material collected post-search from any other independent source."
6.2 Thus, we may reiterate that any incriminating material pertaining to a third / other persons like the petitioner is found during the course of the search conducted under Section 132 / 132A of the Act and such material is transmitted to the Jurisdictional Assessing Officer of such other person, the statute obliges the Assessing Officer to record satisfaction on such material before proceeding further. The legislative scheme does not carve out any exception permitting the Jurisdictional Assessing Officer of the third person who assume jurisdiction under Section 153C of the Act in absence of satisfaction recorded by the Assessing Officer of the search person in the first place and as necessary corollary unequivocally not under Section 147/148 of the Act as a second instance on the same material.
6.3 Thus, the Jurisdictional Assessing Officer cannot assume his jurisdiction and issue notices under Section 153C without recording the satisfaction note on the incriminating material on which he has placed reliance. On a query raised by this Court, learned Senior Standing Counsels appearing for the revenue, have fairly conceded that no satisfaction note has been recorded by the Assessing Officers relating to cash transactions, which is found from the seized material, i.e. pocket diary. In the present case, the respondents for the first time in the affidavit-in-reply have made an endeavour to rope in the petitioners on from the information derived from a Page 15 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026 NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined pocket diary found and seized containing the cash loan transactions from the searched persons. The affidavit is blissfully silent as to whether such material was supplied to the Jurisdictional Assessing Officer or if the same is supplied, it does not mention about the recovery of such pocket diary from a search conducted of Shree Kuberji Group of Surat and the same having been sent to the Jurisdictional Assessing Officer of the petitioners. Thus, the incriminating material could not have been relied upon by the Jurisdictional Assessing Officer bereft of any satisfaction note recorded.
6.4 We may, at this stage, clarify that as held by the Hon'ble Supreme Court in the case of Abhisar Buildwell (supra), though the same relates to the proceedings under Section 153A to the searched person, this Court has already clarified in the decisions rendered in case of Paras Chandreshbhai Koticha (supra), that the jurisdictional Assessing Officer of the "other/searched person" (Section 153C) can invoke the provisions of Sections 147/148 of the Act only on the basis of material available to him from other sources, but the "other person" cannot be subjected to assessment/ reassessment under Section 153C of the Act on the material received by the Assessing Officer sans a satisfaction note, and such material having been supplied to the assessee. Thus, the attempt made by the revenue for the first time before this Court through an Affidavit by placing reliance on the incriminating material of pocket diary, bereft of satisfaction note, is de hors the scheme of section 153C of the Act.
Page 16 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026NEUTRAL CITATION C/SCA/19297/2023 JUDGMENT DATED: 11/02/2026 undefined 7 For the foregoing reasons, the impugned notices dated 12.03.2023, issued under Section 153C of the Act in each petitions are hereby quashed and set aside. Rule is made absolute with no order as to costs.
(A. S. SUPEHIA, J) (PRANAV TRIVEDI,J) BIMAL /3 Page 17 of 17 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Wed Feb 18 2026 Downloaded on : Fri Mar 13 20:31:34 IST 2026