Jurisdictional defect and deemed transfer tests: assessment void, capital gains disallowed, and Rule 46A not breached.

Assessment issued by an officer lacking territorial or functional jurisdiction is void, and notices under section 142(1) and an assessment under section 144 cannot be sustained where the assessee had already filed a return with the regular Assessing Officer. A development agreement will not trigger deemed transfer or capital gains under section 2(47)(v) read with section 53A unless consideration is fixed and the statutory elements of possession and enforceable transfer are actually satisfied; on the stated facts, they were not. Reference to documents already on record before the Assessing Officer did not amount to fresh additional evidence, so Rule 46A was not attracted.

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Issues: (i) Whether the assessment framed by the Income-tax Officer (HQ)(CIB) without jurisdiction was valid; (ii) whether the development agreement amounted to a deemed transfer attracting capital gains under section 2(47)(v) read with section 53A; (iii) whether the Commissioner (Appeals) erred in entertaining additional evidence.

Issue (i): Whether the assessment framed by the Income-tax Officer (HQ)(CIB) without jurisdiction was valid.

Analysis: The jurisdiction order under section 120 showed that the DAO could issue notices under section 142(1) and complete assessment in cases of non-existing assessees who had never filed returns earlier, whereas in other cases AIR information was to be transferred to the jurisdictional Assessing Officer. The assessee had already filed a return with the regular jurisdictional officer, so the Income-tax Officer (HQ)(CIB) had no authority to issue notices or frame assessment under section 144.

Conclusion: The assessment was held to be null and void for want of jurisdiction, in favour of the assessee.

Issue (ii): Whether the development agreement amounted to a deemed transfer attracting capital gains under section 2(47)(v) read with section 53A.

Analysis: The agreement did not quantify or pay any sale consideration, possession was not handed over to the developer, no building plan had been approved, the land remained substantially under reservation or unauthorized occupation, and the developer had not progressed the project. On these facts, the ingredients of transfer under section 2(47)(v) and section 53A were not satisfied.

Conclusion: The addition towards long term capital gain was not sustainable, in favour of the assessee.

Issue (iii): Whether the Commissioner (Appeals) erred in entertaining additional evidence.

Analysis: The documents relied upon were already on record before the Assessing Officer having jurisdiction, and their reference before the Commissioner (Appeals) did not amount to fresh additional evidence. Rule 46A was therefore not attracted.

Conclusion: No procedural error was found in the appellate consideration, in favour of the assessee.

Final Conclusion: The Revenue's challenge failed on jurisdiction as well as on merits, and the appellate relief deleting the capital-gain addition was sustained.

Ratio Decidendi: An assessment or notice issued by an officer lacking territorial or functional jurisdiction is void, and a development agreement does not constitute a transfer for capital gains unless the statutory ingredients of section 2(47)(v) and section 53A are actually satisfied.

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