Case: Atul Vijay Madan v. DCIT
ITA No.: 1529/PUNE/2024
Date: 7 May 2025
Bench: ITAT Pune
Counsel for Appellant: CA Sanket Milind Joshi
The Income Tax Appellate Tribunal, Pune Bench, in a recent ruling, reaffirmed a vital principle of tax law — when information arises from a search conducted on a third party, the Department must proceed under Section 153C, not Section 148. This order, pronounced in Atul Vijay Madan v. DCIT, strengthens the jurisprudence surrounding jurisdictional discipline in direct tax proceedings.
In this case, the Revenue sought to reopen the assessment by issuing a notice under Section 148 based on material found during a search on another individual. Representing the assessee, CA Sanket Milind Joshi argued that once the information is derived from a third-party search, the only lawful path is through Section 153C — and that invoking Section 148 amounts to a jurisdictional error.
The ITAT Pune agreed with the assessee’s contention. It observed that Section 153C is a special provision specifically meant for assessments arising out of third-party search materials. Resorting to Section 148 in such cases circumvents the legislative intent and undermines procedural safeguards.
The Bench held that:
“If assessment proceedings are initiated based on information found during a search on a third party, the Department must resort to the special provisions of Section 153C. A notice issued under Section 148 in such a scenario is bad in law.”
Accordingly, the reassessment proceedings were quashed.
At first glance, this may appear to be a technical point. But it reaffirms a larger principle — procedure in tax law is not a mere formality; it is a safeguard of justice. The ruling strengthens the position that special provisions (Sections 153A and 153C) take precedence over general reassessment provisions like Section 147 and 148. It ensures that jurisdictional requirements are strictly followed and that taxpayers are not subjected to irregular proceedings.
Appearing on behalf of the assessee, CA Sanket Milind Joshi emphasized the clear legislative intent behind creating separate codes for search-related assessments. His arguments focused on ensuring that assessments triggered by third-party search information are conducted only through Section 153C, preserving the integrity of the law.
This decision also aligns with similar views expressed by other ITAT Benches across India, including Mumbai, Delhi, and Hyderabad, adding consistency to judicial interpretation in direct tax litigation.
Search-based information must follow Section 153C.
Notices under Section 148 based on third-party search are invalid.
Jurisdictional compliance is not procedural formality — it’s a legal requirement.
The case adds strength to existing jurisprudence on procedural fairness.
The Atul Vijay Madan v. DCIT ruling by ITAT Pune is a strong reminder that procedure defines fairness in taxation. By insisting that the Department follow the right statutory route, the Tribunal upholds not only the letter of the law but also its spirit. It ensures that every reassessment stands on lawful ground — and that in the pursuit of revenue, the rule of law remains paramount.
Author: CA Chinmayy Pathak - Editorial Team, Sanket Milind Joshi & Co.
Category: Direct Tax Litigation / Recent ITAT Decisions
Tags: #ITATPune, #Section 153C, #Section 148, #Direct Tax Litigation, #Income Tax, #Chartered Accountant, #Reassessment, #Search Assessment, #Pune Bench, #Sanket Milind Joshi