Unregistered joint development agreement cannot trigger capital gains transfer; reassessment beyond four years failed for want of jurisdiction.

Reassessment initiated beyond four years was invalid because the recorded reason for reopening depended on treating an unregistered joint development agreement as a transfer under section 2(47)(v) of the Income-tax Act, 1961. An unregistered agreement is not enforceable for section 53A of the Transfer of Property Act, 1882 and therefore cannot support a transfer for capital gains purposes. As the legal basis for forming the belief of escapement failed, the additional jurisdictional condition for reopening after four years was not met. The reassessment notice was therefore bad in law and the reopening was not permitted.

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Issues: Whether reassessment initiated beyond four years on the basis of an unregistered joint development agreement was valid in law.

Analysis: The reassessment was founded on the premise that execution of an unregistered joint development agreement amounted to a transfer of the capital asset in the relevant assessment year, attracting capital gains under section 2(47)(v) of the Income-tax Act, 1961. The notice under section 148 of the Income-tax Act, 1961 was issued after four years from the end of the assessment year, so the reopening had to satisfy the additional jurisdictional requirement that the assessee failed to disclose fully and truly all material facts necessary for assessment. The decisive foundation for reopening was the alleged transfer under the unregistered agreement. Since an unregistered agreement cannot be enforced for the purposes of section 53A of the Transfer of Property Act, 1882, it cannot support a transfer within section 2(47)(v) of the Income-tax Act, 1961. The legal basis for forming the belief of escapement therefore failed.

Conclusion: The reassessment notice was invalid and the reopening was bad in law, in favour of the assessee.

Final Conclusion: The assessment was not permitted to be reopened on the stated basis, and the appeal succeeded.

Ratio Decidendi: An unregistered agreement that is not enforceable under section 53A of the Transfer of Property Act, 1882 cannot constitute a transfer under section 2(47)(v) of the Income-tax Act, 1961, and where reassessment is initiated beyond four years, the jurisdictional conditions for reopening must be independently satisfied.

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