[Opinion] Section 153C as Jurisdictional Gateway in Search Cases

Adv. Parveen Kumar Bansal – [2026] 187 taxmann.com 974 (Article)

Introduction
The decision of the Gujarat High Court in Paras Chandreshbhai Koticha v. Income Tax Officer [2026] 182 taxmann.com 204/485 ITR 628 (Gujarat) represents a significant contribution to the evolving jurisprudence governing the relationship between search assessments and reassessment proceedings under the Income-tax Act, 1961. The judgment addresses a recurring controversy that has frequently arisen in tax litigation, namely, whether the Revenue can invoke the general reassessment provisions contained in Sections 147 and 148 on the basis of material unearthed during a search conducted under Sections 132 or 132A, or whether it is bound to follow the special statutory mechanism prescribed under Sections 153A and 153C before the amendment being made by the Finance Act,2021. In resolving this controversy, the Court was required to examine the scope of reassessment powers, the jurisdictional significance of the satisfaction note to be recorded as contemplated under Section 153C, the impact of the Supreme Court’s decision in PCIT v. Abhisar Buildwell P. Ltd. [2023] 149 taxmann.com 399/293 Taxman 141/454 ITR 212 (SC)/ 225 DTR 105 (SC), and whether search-related information can form the basis of reassessment proceedings.

The controversy assumes considerable importance because it arose under the legal regime that existed prior to the amendments introduced by the Finance Act, 2021. Prior to the amendment being made w.e.f 1.4.2021, Parliament had enacted a separate and self-contained code for search assessments through Sections 153A to 153C, where the search had taken place from 1.6.2003. These provisions were designed to deal specifically with assessments arising from search and seizure operations and were accompanied by their own jurisdictional requirements, procedural safeguards and limitation provisions. The legislative intent behind the introduction of these provisions was to create a specialised assessment mechanism distinct from the ordinary assessment and reassessment provisions contained elsewhere in the Act. Consequently, a fundamental question arose as to whether the Revenue could bypass this special statutory machinery and directly invoke the general reassessment provisions whenever incriminating material discovered during a search indicated possible escapement of income.

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