Change of opinion bars reopening beyond four years; development agreement without section 53A possession is not a deemed transfer.

Reopening beyond four years is impermissible where the issue was already raised and to in the original scrutiny assessment, because a later notice based on the same material amounts to a change of opinion unless there was failure to fully and truly disclose material facts. The article also notes that a development agreement does not amount to a deemed transfer for capital gains unless it confers possession in the manner required by section 53A of the Transfer of Property Act. On the stated facts, the reassessment notice was unsustainable and the development arrangement was not a transfer under section 2(47)(v).

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Issues: (i) Whether reassessment proceedings initiated after four years from the end of the relevant assessment year were valid in the absence of failure by the assessee to fully and truly disclose material facts. (ii) Whether the development agreement in question amounted to a transfer of land within the meaning of section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882.

Issue (i): Whether reassessment proceedings initiated after four years from the end of the relevant assessment year were valid in the absence of failure by the assessee to fully and truly disclose material facts.

Analysis: The reopening was founded on a matter that had already been raised during the original scrutiny assessment and answered by the assessee. Once a specific query is raised in assessment proceedings and replied to, the subject is treated as considered by the Assessing Officer, even if the assessment order does not expressly discuss it. On these facts, the proposed reopening rested on a mere change of opinion. As the notice under section 148 was issued beyond four years, the absence of any failure to fully and truly disclose material facts was fatal to the reopening.

Conclusion: The reopening was invalid and the notice under section 148 could not be sustained.

Issue (ii): Whether the development agreement in question amounted to a transfer of land within the meaning of section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882.

Analysis: The arrangement was treated as one where development rights were granted, but the essential ingredient for invoking section 2(47)(v) was not satisfied on the reasoning adopted in the connected matter relied upon by the Court. Grant of development permission or licence, without the kind of possession contemplated by section 53A of the Transfer of Property Act, 1882, does not amount to a transfer for the purpose of deemed capital gains. The earlier reasoning on the co-owner's case was applied to the same factual matrix.

Conclusion: The development agreement did not constitute a transfer attracting section 2(47)(v).

Final Conclusion: The reassessment notice and the order disposing the objections were quashed, and the petition was allowed.

Ratio Decidendi: Where a specific issue has been examined in the original scrutiny assessment after query and reply, a later reopening beyond four years based on the same material amounts to a change of opinion and is impermissible absent failure of full and true disclosure; a development agreement that does not confer possession in the manner required by section 53A does not amount to a deemed transfer under section 2(47)(v).

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