Reopening needs tangible fresh material, and a development agreement triggers deemed transfer only when section 53A conditions are met.

Reopening under section 147 cannot rest on material already on record alone; even where the return was processed under section 143(1), the recorded reasons must show a live link to escapement of income and be supported by tangible fresh material, so reassessment on mere reappraisal is invalid. A development agreement attracts deemed transfer under section 2(47)(v) only when the requirements of section 53A of the Transfer of Property Act are satisfied, including an enforceable contract, possession in part performance, and the transferee's readiness and willingness to perform; on these facts, the agreement did not trigger capital gains in assessment year 2006-07.

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Issues: (i) Whether reassessment initiated under section 147 on the basis of material already on record, where the original return had been processed under section 143(1), was valid in the absence of tangible fresh material. (ii) Whether the development agreement dated 28.02.2006 amounted to a transfer under section 2(47)(v) so as to attract capital gains in the assessment year 2006-07.

Issue (i): Whether reassessment initiated under section 147 on the basis of material already on record, where the original return had been processed under section 143(1), was valid in the absence of tangible fresh material.

Analysis: Reopening under section 147 requires reason to believe that income has escaped assessment. Even where the original return was only processed under section 143(1), the statutory conditions for reopening are not diluted. The reasons recorded must still have a live link with escapement of income and must be supported by tangible material; a mere reappraisal of material already available does not suffice.

Conclusion: The reassessment proceedings were invalid and were quashed.

Issue (ii): Whether the development agreement dated 28.02.2006 amounted to a transfer under section 2(47)(v) so as to attract capital gains in the assessment year 2006-07.

Analysis: A transaction falls within section 2(47)(v) only when the requirements of section 53A of the Transfer of Property Act, 1882 are satisfied, including an enforceable contract, possession in part performance, and the transferee's readiness and willingness to perform. On the facts, the arrangement was still at a preliminary stage, no effective transfer of possession in the sense required by section 53A was shown for the relevant previous year, and the project had not reached a stage where capital gains could be fastened on the agreement date.

Conclusion: The development agreement did not give rise to taxable capital gains in the assessment year 2006-07.

Final Conclusion: The assessee succeeded on both the reopening issue and the capital gains issue, and the Revenue's appeal failed.

Ratio Decidendi: Reassessment requires tangible material establishing a live nexus with escapement of income, and a development agreement attracts deemed transfer under section 2(47)(v) only when the conditions of section 53A of the Transfer of Property Act, 1882 are satisfied.

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