Full and true disclosure sustains reopening, but a joint development agreement did not trigger deemed transfer for capital gains.

Reassessment beyond four years was upheld because the assessee had not disclosed the joint development transaction in the return or computation, so the statutory condition of failure to fully and truly disclose material facts was satisfied. However, the joint development agreement did not amount to a transfer in the relevant assessment year because the arrangement had not been acted upon, no consideration was received, no building plan was sanctioned, and there was no development activity or demonstrated readiness and willingness by the developer. On those facts, the deemed transfer provision could not apply, and the capital gains addition was deleted.

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Issues: (i) Whether the reassessment initiated beyond four years under the income-tax law was valid for want of full and true disclosure of material facts; (ii) Whether execution of the joint development agreement amounted to a transfer giving rise to capital gains in the relevant assessment year under the deemed transfer provision.

Issue (i): Whether the reassessment initiated beyond four years under the income-tax law was valid for want of full and true disclosure of material facts.

Analysis: The original assessment had been completed under section 143(3), and the later notice under section 148 was issued beyond four years. The record showed that the assessee had not disclosed the joint development transaction in the return or computation, and the material facts relating to the transaction were not brought to the assessing authority's notice. In those circumstances, the statutory condition for reopening based on failure to disclose fully and truly all material facts was satisfied.

Conclusion: The reassessment was valid and the reopening is upheld against the assessee.

Issue (ii): Whether execution of the joint development agreement amounted to a transfer giving rise to capital gains in the relevant assessment year under the deemed transfer provision.

Analysis: For section 2(47)(v) to operate, the transaction must answer the requirements of section 53A of the Transfer of Property Act, including a contract for consideration, possession in part performance, and the transferee's readiness and willingness to perform. The agreement had not been acted upon in the relevant year, no consideration had been received, no building plan had been sanctioned, and there was no development activity or demonstrated willingness to perform by the developer. In the absence of a contract enforceable in law for the purposes of section 53A, the deemed transfer provision could not be invoked for that year.

Conclusion: No transfer arose in the relevant assessment year under section 2(47)(v), and the capital gains addition is deleted in favour of the assessee.

Final Conclusion: The reopening is sustained, but the capital gains charge for the assessment year in question is not sustainable on the facts found, resulting in partial relief to the assessee.

Ratio Decidendi: A joint development agreement attracts deemed transfer under section 2(47)(v) only when the section 53A requirements are fulfilled, including a legally enforceable arrangement and the transferee's readiness and willingness to perform; absent those conditions, no capital gains transfer arises in that year.

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