Section 263 revision and capital gains transfer depend on real inquiry and possession in part performance under the contract.

Revisional jurisdiction under section 263 is not sustainable merely because the Commissioner further inquiry was desirable where the Assessing Officer had sought an explanation, received a detailed reply, and completed the assessment after considering the material. The distinction between lack of inquiry and inadequate inquiry remains material. An agreement for sale does not trigger transfer under section 2(47)(v) unless possession is delivered in part performance within section 53A of the Transfer of Property Act, 1882; permissive entry or deferred possession under the written terms is insufficient. On these principles, the revisionary orders were quashed and capital gains could not be brought to tax in the relevant year.

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Issues: (i) Whether revision under section 263 was valid on the ground that the Assessing Officer had not applied his mind while completing the assessments. (ii) Whether the agreement for sale dated 11.11.2000 resulted in a transfer of the capital asset so as to attract capital gains in the relevant assessment year.

Issue (i): Whether revision under section 263 was valid on the ground that the Assessing Officer had not applied his mind while completing the assessments.

Analysis: The record showed that the Assessing Officer had called for a specific explanation on taxability of capital gains, received a detailed reply from the assessees, and completed the assessments after considering the material. An assessment order need not contain elaborate reasons for every issue. The distinction between lack of inquiry and inadequate inquiry was material, and revisional jurisdiction could not be exercised merely because the Commissioner considered that further inquiry ought to have been made.

Conclusion: The invocation of section 263 on this ground was not sustainable and was against the assessee.

Issue (ii): Whether the agreement for sale dated 11.11.2000 resulted in a transfer of the capital asset so as to attract capital gains in the relevant assessment year.

Analysis: The agreements specifically provided that possession would be delivered only on execution of the sale deed, and there was no delivery of possession in part performance within the meaning of section 53A of the Transfer of Property Act, 1882. The developer's entry was only permissive and did not amount to legal possession. The ingredients of section 2(47)(v) were therefore not satisfied, and the Commissioner could not disregard the written terms of the agreements by invoking a supposed substance over form approach.

Conclusion: There was no transfer within the meaning of section 2(47)(v), and the capital gains could not be brought to tax in the relevant assessment year.

Final Conclusion: The revisionary orders were quashed, and the assessees succeeded on both grounds.

Ratio Decidendi: Revision under section 263 cannot rest on mere absence of detailed discussion where inquiry was made, and transfer under section 2(47)(v) arises only when possession is taken or retained in part performance of a contract satisfying section 53A of the Transfer of Property Act, 1882.

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