Bombay High Court: There is no basis for the AO to believe that income subject to tax evaded assessment.

According to the Bombay High Court, the development agreement only allowed for licensee construction on the land and had no bearing on the transfer of possession required by Section 53A of the Transfer of Property Act. Justice Kamal Khata and  Justice Dhiraj Singh Thakur observed that there is no basis for the Assessing Officer to believe that income subject to tax evaded assessment, in the case of Late Bharat Jayantilal Patel Versus Deputy Commissioner of Income Tax (Writ Petition No. 1612 Of 2022 )


The notice given pursuant to Section 148 of the Income Tax Act of 1961 has been contested by the petitioner. On the grounds that the AO had cause to think that income subject to tax had avoided assessment, it was requested that the assessment for the year 2013–14 be reconsidered. 

The petitioner claimed that the section 2(47)(v) that was used to reopen the case did not apply. According to Section 53A of the Transfer of Property Act, 1882, granting a licence to the developer who accessed the assessee’s land for development purposes did not constitute “letting the ownership of the land.” Thus, Section 2(47)(v) would not be applicable.

The petitioner argued that the arrangement between themselves and other property owners and developers constituted a development agreement, and that this agreement granted the developer merely licensee-like rights. Although a licensee could not be considered to be in “possession” as defined by Section 53A of the TPA, such “possession” was nevertheless necessary and an essential component for bringing a transaction within the scope of Section 2(47)(v).


There was neither any concrete evidence nor any justification for the assessing officer to think that “any income liable to tax had avoided assessment,” according to the division bench of Justice Dhiraj Singh Thakur and Justice Kamal Khata. Therefore, the evaluating officer’s conduct would lack jurisdiction.

The notice under Section 148 and the ruling were set aside by the court while still granting the petition.

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