Short Overview: As assessee had not filed return for the year under consideration and no assessment was made under section 143(1)/143(3), therefore, bank account found during search in case of searched person, constituted seized material so as to invoke section 153C in assessee’s case.

The fact that assessee had made huge cash deposits in bank account, of which the source was not explained, come to notice of department during search and seizure operations conducted in case of one ‘D’. Accordingly, AO issued notice under section 153C to assessee and made addition. Assessee challenged this on the ground that assessment was made on the basis of deposits made in bank accounts without having the seized material. 

It is held that assessee had not filed regular return of income and no assessment was made under section 143(3)/143(1) for impugned assessment year. Thus, bank account found during search was not declared by the assessee and the same constituted seized material. Accordingly, action of AO for initiating proceedings under section 153C and legal validity of consequent additions made by AO was upheld.

Decision: Against the assessee.