s.153C — Assessment of a person other than the searched person
The route by which material seized in someone else's search is used to assess a third person — and the satisfaction note it depends on.
Applies only to searches initiated up to 31 March 2021, alongside section 153A. For searches between 1 April 2021 and 31 August 2024 the reassessment provisions govern; for searches from 1 September 2024, the functional successor is the block-assessment provision on undisclosed income of any other person (section 295 of the Income-tax Act, 2025).
Income-tax Act, 1961
s.153C
Income-tax Act, 2025
No equivalent — successor is s.295
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 153C of the Income-tax Act, 1961 permitted assessment of a person other than the one searched, where money, bullion, jewellery or other valuables seized belong to, or books of account or documents seized pertain to, or information contained in them relates to, that other person. It requires a satisfaction recorded by the Assessing Officer of the searched person, and then a satisfaction by the Assessing Officer of the other person that the material has a bearing on the determination of that person's total income. The first proviso substitutes the date on which the material is received by the latter officer for the date of the search, and the Supreme Court has held that the six assessment years are reckoned from that date of receipt. The validity of the satisfaction note is a jurisdictional question that precedes any question of quantum. Section 153C applies only to searches initiated up to 31 March 2021; later searches are dealt with under reassessment (to 31 August 2024) or block assessment (from 1 September 2024), the functional successor to section 153C in the block scheme being section 295 of the Income-tax Act, 2025.
What the provision does
Conferred jurisdiction over a third person on the basis of material seized in another's search, subject to a recorded satisfaction at both ends and to the year computation running from receipt of the material.
Threshold questions
- Is there a satisfaction recorded by the Assessing Officer of the searched person
- Is there a separate satisfaction recorded by the Assessing Officer of the other person
- On what date was the material handed over — the relevant years run from that date
- Does the seized material actually pertain to, or relate to, the other person
- Where both persons share an Assessing Officer, was satisfaction still recorded in both capacities
In practice
The recurring disputes.
Absence or inadequacy of the satisfaction note
The note must exist on the file, must be recorded by the right officer at the right stage, and must show application of mind to why the material pertains to the other person. Its absence is not curable by argument in appeal.
Computation of the relevant years
Because the first proviso to section 153C(1) substitutes the date the Assessing Officer of the other person receives the material for the date of the search, and the Supreme Court has held that the six assessment years are reckoned from that date of receipt, the years assessable under section 153C are frequently different from those in the searched person's own assessment. Orders often get this wrong.
Whether the material is incriminating at all
A document merely mentioning a third person is not necessarily material pertaining to them, still less material showing undisclosed income. The distinction between relevance and incrimination is a live one.