Retrospective effect of registered sale deeds barred reassessment for a later year after the transfer was already completed and disclosed earlier.

Reassessment under the Income-tax Act could not be initiated for Assessment Year 2006-07 where the property transaction had already been completed, disclosed, and reflected in Assessment Year 2005-06. The agreement was executed, consideration received, and possession handed over in the earlier year, and Section 47 of the Registration Act gave the registered sale deed retrospective effect from the date of execution. As a result, the later registration did not shift the transfer to 2006-07, and there was no taxable sale in that year to support reopening for capital gains. The reassessment notice and objection order were therefore quashed.

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Issues: Whether reassessment proceedings under Section 147 read with Section 148 of the Income-tax Act, 1961 could be initiated for Assessment Year 2006-07 when the sale transaction had been completed and disclosed in Assessment Year 2005-06, and the registered sale deed related back to the date of execution under Section 47 of the Registration Act, 1908.

Analysis: The transaction was complete in Assessment Year 2005-06 on execution of the agreement, receipt of consideration, and handing over of possession, and it had already been reflected in the return for that year. Section 47 of the Registration Act, 1908 makes a registered document operate from the time it would have commenced to operate if registration had not been required, so the later registration of the sale deed did not shift the transfer to Assessment Year 2006-07. On that basis, there was no transaction of sale or registration in Assessment Year 2006-07 that could justify reopening for capital gains in that year.

Conclusion: Reassessment for Assessment Year 2006-07 was not permissible and the notice and objection order were liable to be quashed.

Final Conclusion: The writ petition succeeded because the reassessment notice was issued for the wrong assessment year after the transaction had already been completed and disclosed in the earlier year.

Ratio Decidendi: A reassessment notice cannot be sustained for an assessment year in which no taxable transfer occurred, where the property transaction had already been completed and disclosed in an earlier year and the registered instrument operates retrospectively from the date of execution.

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