Satisfaction note requirement for search-related assessments is jurisdictional; limitation runs from handing over date, barring earlier years.

Challenge to assessments initiated under Section 153C turns on two legal points: jurisdiction and limitation. First, recording of a satisfaction note by the assessing officer of the searched person is treated as a jurisdictional prerequisite for transmitting seized material and initiating proceedings under Section 153C; absence of that satisfaction note renders the proceedings and assessment without jurisdiction and liable to be quashed. Second, the date of satisfaction/handing over of seized material is to be treated as the search date for computing limitation; where so computed earlier assessment years fall outside the permissible block and those assessments are time barred and quashed.

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Issues: (i) Whether proceedings and assessment under Section 153C of the Income-tax Act, 1961 were validly initiated against the assessee in absence of a satisfaction note recorded by the AO of the searched person; (ii) Whether assessment for AY 2010-11 under Section 153C is barred by limitation when computed from the date of satisfaction/handing over of seized material.

Issue (i): Jurisdiction to initiate proceedings under Section 153C in absence of satisfaction note by the AO of the searched person.

Analysis: The record shows no satisfaction note recorded by the AO of the searched person in the name of the assessee; precedents establish that recording of a satisfaction note by the AO of the searched person is a pre requisite before transmitting material and initiating proceedings under Section 153C. Relevant tribunal and higher court decisions construe the satisfaction note requirement as jurisdictional.

Conclusion: Proceedings and the assessment under Section 153C are without jurisdiction and liable to be quashed for lack of the required satisfaction note. This conclusion is in favour of the assessee.

Issue (ii): Computation of limitation for making assessment under Section 153C - whether AY 2010-11 is time barred when limitation is computed from the date of satisfaction/handing over of seized material.

Analysis: The satisfaction/handing over of seized material to the AO occurred on 24.6.2022 (deemed search year AY 2023 24); applying the established rule that the date of satisfaction/handing over is to be treated as the search date for reckoning assessment years, AY 2010 11 falls outside the permissible block of years. Recent authoritative decisions support computing limitation from the date of satisfaction/handing over.

Conclusion: The assessment for AY 2010 11 is barred by limitation and is quashed. This conclusion is in favour of the assessee.

Final Conclusion: Both jurisdictional defect (absence of satisfaction note by the AO of the searched person) and limitation computed from the date of handing over of seized material render the impugned assessment unsustainable in law; the appellate order deleting the additions is upheld and the revenue's appeal is dismissed.

Ratio Decidendi: Recording of a satisfaction note by the assessing officer of the searched person is a jurisdictional prerequisite for initiating proceedings under Section 153C of the Income-tax Act, 1961, and the date of satisfaction/handing over of seized material is to be used for computing the limitation period for assessments under Section 153C.

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