Mandatory recorded satisfaction under Section 158BD is essential; without it, block assessment lacks jurisdiction.

Recording of satisfaction that undisclosed income belongs to a person other than the searched person is a mandatory jurisdictional precondition for invoking Section 158BD. Here, the communication relied on merely noted seizure of books of account and proposed further proceedings, but it did not record the required satisfaction that undisclosed income belonged to the assessee. In the absence of that recorded satisfaction, initiation of proceedings under Section 158BD was invalid and the resulting block assessment could not be sustained. The Tribunal also found, as a factual matter, that no incriminating material had been found in the search, which supported the assessee's challenge.

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Issues: Whether the Assessing Officer had valid jurisdiction to initiate proceedings under Section 158BD of the Income-tax Act, 1961, and whether the assessment made pursuant thereto was sustainable.

Analysis: The requirement for invoking Section 158BD is that the Assessing Officer of the searched person must record satisfaction that undisclosed income belongs to a person other than the searched person, after which the seized books or documents are to be handed over and proceedings under Section 158BC may follow. The communication relied upon in the case merely stated that books of account relating to the assessee had been seized and proposed further proceedings; it did not record the mandatory satisfaction that any undisclosed income belonged to the assessee. In the absence of this jurisdictional precondition, the initiation of proceedings under Section 158BD was invalid. The assessment was also supported by the Tribunal's factual finding that no incriminating material had been found in the search.

Conclusion: The assumption of jurisdiction under Section 158BD was invalid and the assessment could not be sustained; the appeal by the Revenue failed.

Ratio Decidendi: Recording of satisfaction that undisclosed income belongs to a person other than the searched person is a mandatory condition precedent for invoking Section 158BD, and absence of such recorded satisfaction renders the resulting block assessment without jurisdiction.

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