The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed a regular income tax assessment completed after a search of the taxpayer’s premises. 

The bench of Satbeer Singh Godara (Judicial Member) and Sanjay Awasthi (Accountant Member) has observed that the Assessing Officer should have proceeded under Section 148 of the Income-tax Act, 1961, instead of completing the assessment under Section 143(3).

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The appellant/assessee filed its income tax return on October 24, 2023, declaring income of ₹6,78,68,000. The Income Tax Department subsequently conducted a search under Section 132 on January 4, 2024, in the Rollwrap Packagings Group, which included the taxpayer.

Despite the search, the Assessing Officer completed a regular assessment under Section 143(3) on March 26, 2025. The Commissioner of Income Tax (Appeals) upheld that assessment in an order dated December 31, 2025. The assessee then challenged its validity before the ITAT.

The taxpayer argued that, once the search had taken place, the Assessing Officer could not conclude the matter through a regular Section 143(3) assessment. According to the taxpayer, the appropriate course was to initiate proceedings under Section 148.

The Revenue disagreed. It contended that a search did not compel the Assessing Officer to move to proceedings under Sections 147 and 148, and that there was no bar on completing the regular assessment.

No one appeared for the taxpayer when the appeal was called twice for hearing. The Tribunal therefore proceeded in its absence and decided the legal challenge on the record.

The Bench accepted the taxpayer’s objection. It relied on the reasoning in Montage Enterprises (P) Ltd. v. DCIT, an earlier Tribunal decision concerning the validity of a regular assessment completed after a search.

Applying that reasoning to the present case, the ITAT held that the January 2024 search required the Assessing Officer to follow the Section 148 route. It found that the assessment completed under Section 143(3) on March 26, 2025, was not sustainable in law and quashed it.

Because that finding disposed of the assessment itself, the Tribunal said the remaining issues raised by the parties had become academic. It allowed the taxpayer’s appeal.

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