Reassessment based on mistaken transfer assumption fails where power of attorney did not satisfy part performance requirements.

A reassessment under section 147 was held unsustainable where the recorded reasons wrongly assumed that execution of a power of attorney on 15.12.2006 amounted to a completed sale. The assessee had not executed an agreement of sale, had not transferred possession, and the conditions for part performance under section 53A of the Transfer of Property Act were not met, so section 2(47)(v) could not be invoked to treat a transfer as having occurred in assessment year 2007-08. Because the reopening rested on an erroneous factual premise, jurisdiction failed and the reassessment notice and order were quashed.

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Issues: Whether the reassessment under section 147 of the Income-tax Act, 1961 for assessment year 2007-08 was valid where the recorded reason proceeded on an alleged sale on 15.12.2006, although only a power of attorney was executed on that date and no agreement in writing or possession transfer was shown.

Analysis: The assessee had executed only a registered power of attorney on 15.12.2006, without receiving or transferring possession and without executing any agreement of sale. On those facts, the conditions for part performance under section 53A of the Transfer of Property Act, 1882 were not satisfied, and therefore section 2(47)(v) of the Income-tax Act, 1961 could not be invoked to treat a transfer as having taken place in assessment year 2007-08. The subsequent sale deeds and delivery of possession occurred in later years. The recorded reasons for reopening incorrectly treated the power of attorney transaction itself as a completed sale for consideration, so the belief that income had escaped assessment was founded on an erroneous premise and could not sustain jurisdiction under section 147.

Conclusion: The reassessment notice and the reassessment for assessment year 2007-08 were held unsustainable in law and quashed.

Final Conclusion: The assessee succeeded on the jurisdictional challenge, and the reassessment framed for assessment year 2007-08 was set aside.

Ratio Decidendi: Reassessment cannot be sustained where the recorded reasons rest on a factually incorrect assumption that a transfer occurred, and the statutory conditions for invoking section 2(47)(v) read with section 53A are not met.

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