Mandatory satisfaction before invoking cross-person block assessment renders jurisdiction invalid when not recorded

Section 158BD can be invoked only after the Assessing Officer of the searched person records satisfaction that seized material shows undisclosed income belonging to another person and then transmits that material to the other Assessing Officer. That recorded satisfaction is a mandatory jurisdictional precondition, and it must exist before proceedings under section 158BD commence. On the stated facts, no such satisfaction by the Assessing Officer of the searched person was produced, and the material was forwarded only after appellate proceedings in the searched person's case. The assumption of jurisdiction was therefore invalid and the block assessment was liable to be quashed.

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Issues: Whether the block assessment made under section 143(3) read with section 158BD of the Income-tax Act was valid in the absence of satisfaction recorded by the Assessing Officer of the searched person before transmitting the seized material to the Assessing Officer having jurisdiction over the assessee.

Analysis: Section 158BD can be invoked only when the Assessing Officer of the searched person is satisfied that undisclosed income belongs to a person other than the searched person and, on that basis, hands over the seized books, documents, or assets to the Assessing Officer of such other person. That satisfaction is a jurisdictional requirement and must exist before the other Assessing Officer can proceed under section 158BD. On the facts, no satisfaction recorded by the Assessing Officer of the searched person was produced. The material was forwarded only after the appellate order in the searched person's case, and the observations relied upon were those of the appellate authority, not the Assessing Officer.

Conclusion: The precondition for invoking section 158BD was not satisfied, the assumption of jurisdiction was invalid, and the assessment was liable to be quashed.

Ratio Decidendi: Recording of satisfaction by the Assessing Officer of the searched person that seized material belongs to another person is a mandatory jurisdictional condition precedent for invoking section 158BD.

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