Law:

Section:

Section 158BD of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income of any other person - Whether for initiating block assessment proceedings in respect of any other person, recording of satisfaction by Assessing Officer of searched person that any undisclosed income belonged to any person other than person searched is condition precedent - Held, yes - Whether such 'satisfaction', by its very nature, must precede before papers/documents are sent by Assessing Officer of person searched to Assessing Officer of third person - Held, yes - Whether mere use or mention of word 'satisfaction' in order/note will not meet requirement of concept of satisfaction as used in section 158BD; satisfaction has to be in writing and can be gathered from assessment order, if it is so mentioned/recorded, or from any other order, note or record maintained by Assessing Officer of person searched - Held, yes - Whether reliability, credibility or for that matter what weight has to be attached to material, depends upon subjective satisfaction of Assessing Officer, but, definitely, it is subject to scrutiny whether satisfaction has a rational nexus or a relevant bearing to formation of satisfaction and is not extraneous or irrelevant - Held, yes - Whether if there is no rational or intangible nexus between material and satisfaction that a third person has 'undisclosed income', conclusion would not deserve acceptance - Held, yes - In course of search carried out in premises of one 'M', several materials were seized on basis of which block assessment was completed in case of 'M' - Thereafter, Assessing Officer of 'M' sent a letter dated 15-7-2003 to Assessing Officer of assessee to effect that assessee had acted as a mediator for providing accommodation book entries by 'M' and that there was evidence that cash was received by 'M' from assessee - However, material and evidence on basis of which Assessing Officer of 'M' had reached such conclusion was not brought on record - Whether on facts, pre-requisite of 'satisfaction' as engrafted under section 158B for purpose of initiation of block assessment proceeding was non-existent or absent - Held, yes FACTS There…

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