Capital gains tax follows the year of transfer under section 2(47); later-year reassessment and section 50C addition failed.

Capital gains are taxable in the year in which transfer occurs within section 2(47) of the Income-tax Act, not merely when the conveyance deed is registered. Because the agreement to sell, receipt of consideration, and delivery of possession had already occurred in the earlier year, the later-year reassessment lacked any failure to disclose material facts and was invalid. Section 50C could also not be applied in the reassessment year, as no fresh transfer took place in that year; the stamp duty valuation mechanism cannot shift taxability to a year in which the transfer was already completed and assessed. The reassessment and the corresponding addition were deleted.

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Issues: (i) Whether the reopening of assessment for the relevant assessment year was valid when the capital asset had already been transferred and capital gains had been offered in an earlier year. (ii) Whether the addition made by substituting stamp duty valuation under section 50C was sustainable in the reassessment year when no transfer took place in that year.

Issue (i): Whether the reopening of assessment for the relevant assessment year was valid when the capital asset had already been transferred and capital gains had been offered in an earlier year.

Analysis: The reassessment was founded only on the fact that the registered sale deed was executed in the later year. The agreement to sell, receipt of consideration, delivery of possession, and the assessee's earlier offer of capital gains had already occurred in the preceding year. For income-tax purposes, transfer is determined by section 2(47) of the Income-tax Act, 1961, and not merely by registration of the conveyance deed under property law. Since the transfer had already been completed in the earlier assessment year and had been assessed there, there was no failure to disclose material facts for the later year.

Conclusion: The reopening was invalid and could not be sustained against the assessee.

Issue (ii): Whether the addition made by substituting stamp duty valuation under section 50C was sustainable in the reassessment year when no transfer took place in that year.

Analysis: Section 50C of the Income-tax Act, 1961 applies only in the year in which transfer giving rise to capital gains is chargeable under sections 45 and 48 read with section 2(47). Here, the transfer had already taken place in the earlier year when possession was given and consideration was received. In the reassessment year there was no fresh transfer, so section 50C could not be invoked to tax only the difference between sale consideration and stamp duty value in that year. The reliance on the absence of a registered conveyance in the earlier year did not alter the tax position under the Income-tax Act.

Conclusion: The addition under section 50C for the reassessment year was unsustainable and was deleted.

Final Conclusion: The assessee succeeded on both the jurisdictional challenge and the merits, and the reassessment and resultant addition were set aside.

Ratio Decidendi: For capital gains purposes, the year of taxability is the year in which transfer occurs within the meaning of section 2(47) of the Income-tax Act, 1961; section 50C cannot be invoked in a later year where no transfer took place in that year, and reassessment on that basis is invalid.

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