Income Tax | Search Means Search, Not ‘Other Person’: Section 153C Collapses When the Assessee Himself Is Searched: Karnataka High Court Draws a Clear Red Line

“Once the premises are searched and a panchanama is drawn, the assessee cannot be branded as a ‘non-searched person’”, High Court of Karnataka at Bengaluru, through Justice S.R. Krishna Kumar, delivered a powerful reaffirmation of search jurisprudence.

The Court struck down the notice dated 16.09.2020 issued under Section 153C of the Income-tax Act, 1961 for Assessment Year 2018-19, holding that when an assessee’s premises are searched and documents are seized, he is a “searched person” and not an “other person”. The judgment quashed not only the notice but also all consequential assessment orders, penalty proceedings and demand notices, terming the entire action “illegal, arbitrary and without jurisdiction”.

The ruling once again underscores that Section 153C is not a substitute or shortcut for Section 153A, and jurisdictional errors cannot be cured by departmental ingenuity.

“What the Revenue Cannot Do Directly Under Section 153A, It Cannot Do Indirectly Under Section 153C”

The dispute traces back to a search conducted on 25.04.2018 and 26.04.2018. A warrant under Section 132 was issued in relation to one J. Babuji, but the search was carried out at the residential premises of the petitioner, Sri Kumara Lingappa, at Mysuru. A panchanama was drawn, documents were seized, and the statement of the petitioner was recorded.

On the basis of the seized material, the Department prepared a satisfaction note and proceeded to issue a notice under Section 153C, directing the petitioner to file a return for AY 2018-19. The petitioner objected, asserting that Section 153C applies only to “other persons” and not to someone whose premises were searched. These objections were rejected by the Department, compelling the petitioner to invoke the writ jurisdiction of the High Court.

“Section 153C Presupposes Two Different Persons – Collapse of Jurisdiction When Both Are the Same”

The principal issue before the Court was whether Section 153C can be invoked against a person whose premises were searched and from whom documents were seized.

Justice S.R. Krishna Kumar noted that the issue was no longer res integra, being directly and squarely covered by a consistent line of decisions of the Karnataka High Court, particularly C.R. Ram Mohan Raju v. DCIT (27.10.2025), as well as earlier rulings in Sunil Kumar Sharma’s case, which stood affirmed by the Division Bench and ultimately by the Supreme Court, with even the review petition dismissed.

The Court observed that Section 153C operates only when material belonging to a third party is found during the search of a searched person. Where the search itself is conducted at the premises of the assessee, the statutory fiction of an “other person” simply cannot be created.

“The Panchanama Speaks Louder Than the Warrant”

Justice Krishna Kumar emphasised that jurisdiction under search provisions is determined by facts, not by drafting devices. The undisputed facts showed that the petitioner’s premises were searched, documents were seized from him, and a panchanama was drawn in his name. These facts conclusively established him as a searched person.

The Court categorically held that “the sole and unmistakable conclusion is that the petitioner was a searched person and not a non-searched person / such other person as contemplated under Section 153C of the I.T. Act.”

It further held that Section 153C would neither be applicable nor invocable against such a person, and any notice issued under that provision is void ab initio, being an assumption of jurisdiction that the statute does not permit.

“Jurisdiction Is Not a Technicality – It Is the Foundation”

Rejection of the Revenue’s Stand

The Revenue contended that since the warrant was issued in the name of another person, the petitioner could be treated as a non-searched person. The Court firmly rejected this argument, holding that the determinative factor is the search of the premises and seizure of material, not merely the name typed on the warrant.

The Court made it clear that once the assessee is searched, the only permissible route is Section 153A, subject to law, and Section 153C cannot be pressed into service to overcome jurisdictional hurdles.

Allowing the writ petition, the High Court quashed the impugned notice dated 16.09.2020 under Section 153C and all proceedings arising from it, including assessment, penalty and demand. The judgment powerfully reiterates that search provisions are extraordinary powers and must be strictly construed, and that jurisdictional discipline is non-negotiable.

The ruling stands as yet another reminder that “Section 153C is meant for ‘other persons’ – not for those who have already been searched.”

Date of Decision: 13 November 2025