Mandatory satisfaction for section 158BD jurisdiction makes delayed notice after block assessment invalid.

Jurisdiction under section 158BD depends on the Assessing Officer of the searched person recording a clear satisfaction, before completion of the block assessment under section 158BC, that undisclosed income belongs to another person. That satisfaction is a mandatory precondition for transferring the material to the other Assessing Officer and for issuing a valid notice under section 158BD. Where the notice is issued only after completion of the searched person's block assessment and after an inordinate delay, the jurisdictional requirement is not met. On the facts stated, the proceedings were held invalid and the block assessments were liable to be quashed.

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Issues: Whether proceedings under section 158BD of the Income-tax Act, 1961 were valid when the Assessing Officer of the searched person had not recorded the requisite satisfaction before completion of the block assessment under section 158BC and the notice under section 158BD was issued after a long delay.

Analysis: The statutory scheme of Chapter XIV-B requires the Assessing Officer of the searched person to record a clear satisfaction that undisclosed income belongs to a person other than the searched person, and such satisfaction is a mandatory condition for assuming jurisdiction under section 158BD. The relevant material must then be ed to the Assessing Officer having jurisdiction over the other person, who may thereafter proceed in accordance with law. Where the notice under section 158BD is issued only after completion of the block assessment in the case of the searched person and after an inordinate lapse of time, the jurisdictional requirements are not satisfied. On the facts, the notices were issued long after completion of the assessment of the searched person, and the proceedings were therefore not sustainable.

Conclusion: The proceedings under section 158BD were invalid and the block assessments were liable to be quashed in favour of the assessees.

Final Conclusion: The common legal challenge succeeded, with the assessees obtaining relief on the jurisdictional defect under section 158BD and the revenue appeals failing.

Ratio Decidendi: For valid assumption of jurisdiction under section 158BD, the Assessing Officer of the searched person must record satisfaction before completion of the block assessment under section 158BC, and a notice issued after that stage without compliance with this mandatory requirement is invalid.

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