Recorded satisfaction under Section 158BD is mandatory; failure to record it vitiates the consequential assessment.

For invocation of Section 158BD in a search assessment, the transferring Assessing Officer must record prima facie satisfaction that the seized materials disclose undisclosed income of another person before forwarding the file to the jurisdictional Assessing Officer. The provision is an enabling mechanism in Chapter XIVB, but the transfer-stage satisfaction remains a mandatory statutory condition. The text distinguishes this requirement from provisions that expressly require recorded reasons, and states that binding Supreme Court precedent treats the absence of recorded satisfaction as fatal. On that basis, the consequential assessment under Section 158BC read with Section 158BD is invalid.

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Issues: Whether, for invoking Section 158BD of the Income-tax Act, 1961 and transferring materials to the Assessing Officer having jurisdiction over another person, the transferring Assessing Officer must record satisfaction in writing that undisclosed income belongs to such other person, and whether absence of such recorded satisfaction invalidates the assessment under Section 158BC read with Section 158BD.

Analysis: Section 158BD operates as an enabling provision in search cases under Chapter XIVB. The materials seized or requisitioned may be transferred to the Assessing Officer having jurisdiction over a person other than the searched person when the Assessing Officer is satisfied that the materials disclose undisclosed income of such other person. The judgment notes that the transfer-stage satisfaction is only prima facie satisfaction for handing over the file to the proper Assessing Officer. It distinguishes Section 158BD from provisions like Section 148(2) of the Income-tax Act, 1961, where the statute expressly requires recorded reasons. The judgment also refers to the binding Supreme Court view that, if such satisfaction is not recorded by the transferring Assessing Officer, the assessment under Section 158BC read with Section 158BD is invalid.

Conclusion: The absence of recorded satisfaction by the Assessing Officer transferring the file under Section 158BD invalidates the assessment, and the Revenue's challenge fails.

Final Conclusion: The appeal was dismissed, and the cancellation of the assessment was left undisturbed on the ground that the statutory condition for invoking Section 158BD had not been satisfied in the manner required by binding precedent.

Ratio Decidendi: For action under Section 158BD of the Income-tax Act, 1961, satisfaction regarding undisclosed income of another person must be recorded at the transfer stage, and failure to do so vitiates the consequential assessment.

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