Section 153C satisfaction requirement bars assessment where no recorded satisfaction preceded transfer of seized material.

Proceedings under section 153C require recorded satisfaction by the Assessing Officer of the searched person that seized money, bullion, jewellery, books or documents belong to another person before material is forwarded for assessment. Mere forwarding of seized material is not enough, and satisfaction cannot be presumed. On the facts noted, no express satisfaction note was recorded, and the documents relied on were ordinary records already reflected in the assessee's books rather than incriminating material. The result was that the section 153C proceedings and the consequential assessment were held invalid and quashed in favour of the assessee.

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Issues: Whether the proceedings under section 153C of the Income-tax Act were valid in the absence of recorded satisfaction by the Assessing Officer of the searched person before forwarding seized material to the Assessing Officer of the other person.

Analysis: The jurisdiction under section 153C depends on the statutory satisfaction that seized money, bullion, jewellery, books of account, or documents belong to a person other than the searched person. The record showed no express satisfaction note by the Assessing Officer of the searched person, and the view that satisfaction could be presumed merely from forwarding the material was rejected. The Court also noted that the material referred to ordinary documents already reflected in the assessee's records and did not demonstrate any incriminating basis to sustain the initiation.

Conclusion: The proceedings under section 153C and the consequential assessment were held invalid and were quashed, in favour of the assessee.

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