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2014 (7) TMI 161 - AT - Income TaxBlock assessment u/s 158BD of the Act – Quantification of assessment – Held that:- The decision in Commissioner of Income Tax – III Versus M/s. Calcutta Knitwears, Ludhiana [2014 (4) TMI 33 - SUPREME COURT] followed - the requirement of satisfaction for initiation of proceedings u/s 158BD is essential, however there is no bar on the AO in respect of the stage of the proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person - the existence of cogent and demonstrative material is germane to the AOs satisfaction in concluding that the seized documents belong to a person other than the searched person is necessary for initiation of action u/s 158BD - the cardinal rule for initiation of proceedings u/s 158BD is the existence of cogent material which lead to detection of undisclosed income of the person other than the searched person. There is no mention of any particular document or material or any particular item of undisclosed income which was detected during the course of search in question or from the Books of Accounts or seized material – there is merit in the contention of the revenue that if the satisfaction is recorded or expressed by the AO in respect of the undisclosed income belonging to the person other than the searched person in the assessment order of the searched person passed u/s 158BC then the requirement of initiation of proceedings u/s 158BC will be regarded as satisfied - the AO has not made any addition of undisclosed income on account of such business conducting charge/rental income on the ground that the assessee has claimed expenses of only ₹ 15,000/- PM - when the AO has concluded in the assessment order that since the assessee has claimed only ₹ 15,000 PM on account of payment of rent and excess payment is not allowed - other than the rental charges neither the assessment order passed u/s 158BC nor the satisfaction recorded on 10.01.2003 disclosed any other undisclosed income detected by the AO from the Books of Accounts and other seized papers. At the time of recording satisfaction the AO should reach a clear conclusion that prima facie the material available establishes undisclosed income of third party - In the absence of existence of any cogent material which demonstrates the undisclosed income belonging to the person other than the searched person, the proceedings initiated u/s 158BD and consequent block assessment are invalid - it is clear that the AO has not brought out any record, Books of Accounts or seized material to demonstrate undisclosed income of the assessee - the initiation of the proceedings and consequential block assessment u/s 158BD are invalid and are quashed – Decided in favour of Assessee.
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