Reassessment on change of opinion fails; capital gains under a development agreement arise when possession and development rights pass.

Reassessment under section 148 was invalid because the return had already been examined in scrutiny under section 143(3) and no fresh tangible material existed; reopening on the same material amounted to a mere change of opinion, so the reassessment was void. In the development-arrangement context, capital gains arose when possession and development rights were first handed over, as that event constituted a transfer under section 2(47) read with section 53A of the Transfer of Property Act, 1882. On the facts, that transfer occurred in an earlier year, not assessment year 2009-10, so the addition failed.

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Issues: (i) whether the reassessment initiated under section 148 was valid in the absence of fresh tangible material and in the face of an earlier scrutiny assessment under section 143(3); (ii) whether capital gains arising from the development arrangement were taxable in assessment year 2009-10 or in the year in which possession and development rights were first handed over.

Issue (i): whether the reassessment initiated under section 148 was valid in the absence of fresh tangible material and in the face of an earlier scrutiny assessment under section 143(3).

Analysis: The return had been examined in scrutiny proceedings and the capital gains issue was already within the material considered by the Assessing Officer. Reopening within four years still requires fresh material and cannot rest merely on a different view of the same facts. In these circumstances, the reopening amounted to a change of opinion.

Conclusion: The reassessment was invalid and void; this issue is decided in favour of the assessee.

Issue (ii): whether capital gains arising from the development arrangement were taxable in assessment year 2009-10 or in the year in which possession and development rights were first handed over.

Analysis: The first development agreement recorded handing over of possession and granted development rights. Applying the statutory concept of transfer under section 2(47), read with part performance principles under section 53A of the Transfer of Property Act, 1882, the transfer occurred when possession and development rights were first given. On the facts, that event took place in the earlier year, not in assessment year 2009-10.

Conclusion: The capital gains did not arise in assessment year 2009-10; this issue is decided in favour of the assessee.

Final Conclusion: The substantive addition failed and the reassessment could not be sustained, though the assessee's cross objection was not entertained on merits.

Ratio Decidendi: Reassessment cannot be sustained on a mere change of opinion where the original scrutiny assessment already considered the relevant material, and in a development-agreement case capital gains arise when possession and development rights are effectively transferred so as to constitute a transfer in law.

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