Reopening of Assessment u/s 147 can't be initiated when no Transfer took place on Account of JDA entered by "Group of Assessee": ITAT [Read Order]

The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that reopening of the assessment under Section 147 of the Income Tax Act, 1961 cannot be initiated when no transfer took place on account of the Joint Development Agreement (JDA) entered by a group of assessee.

The assessee being an NRI has filed the return of income declaring an income of Rs.18,26,340/- towards income from house property and income from short-term and long-term capital gains and the case was processed. The assessee along with 46 other persons had entered into a Joint Development Agreement cum General Power of attorney with M/s Trendset Jayabheri Projects LLP, Hyd for the construction of a residential and commercial project vide registered deed having a total value of Rs.177,50,70,000/- for an area of Ac.12.09 Gts.

The assessee transferred her share of land admeasuring 12.50 Gts valued at Rs.453,75,000/- for the said development and has not offered any capital gains on the said transaction. Accordingly, a notice under Section 148 of the Income Tax Act was issued to the assessee and was duly served on the assessee through the mail.

The assessee submitted that she along with other adjoining owners have entered into a joint development agreement with M/s Trendset Bharat Project Developers Pvt Ltd (Trendset) and gave possession of the land. However, due to severe financial difficulties, the developer could not carry out the development works as agreed and the project was stalled.

It was further submitted that the possession of the land was already given to the original developer i.e., Trendset vide development agreement and as could be seen from clause 1.1 of the tripartite agreement, possession of the land was given by the first developer i.e., Trendest to the second developer i.e., Trendset Jayabheri Projects LLP.

Thus, there was no change in the position of the landowners before and after the second JDA. Hence, the assessee submitted that the reasons recorded for the re-opening of the assessment are not justified and correct and requested to drop the proceedings initiated under Section 147 of the Income Tax Act.

The Two-member bench comprising of Rama Kanta Panda (Vice-President) and Laliet Kumar (Judicial member) held that the transfer within the meaning of Section 2(47) of the Income Tax Act has taken place pursuant to the 2nd JDA as the 1st JDA has not been acted upon and fell apart. The possession of the land has been transferred by the "Group of Assessee" to the TBPD and TBPD had also paid the security to the "Group of Assessee".

Therefore, the reopening of assessments had become academic and was dismissed. Thus, the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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