My company is a member of an AOP and takes 35% of the AOP's gross sale proceeds under the AOP deed. We showed it as an exempt share of the AOP's profit. After a survey the AO reopened two years and now says it is revenue. Can he reopen, and is the money taxable in my hands?
No on the reopening challenge and no on the exemption. Where the assessment order shows the Assessing Officer never applied his mind to the character of the receipt at all, there is no opinion to change, and material coming out of a s.133A survey that reveals the true nature of the receipt is tangible material for s.147. On the merits the Court read Clause 7 of the AOP deed itself and held that a member's entitlement to 35% of gross sale proceeds, taken upfront and untouched by the AOP's expenses, is not a share of profit but a diversion of the AOP's receipts by overriding title, taxable in the member's hands as a business receipt. Two Revenue appeals were allowed and the assessee's appeal dismissed.
Decided by the Supreme Court (Supreme Court of India — J.B. Pardiwala J and K.V. Viswanathan J; the judgment is authored by Pardiwala J) on 2026-05-12, reported as 2026 INSC 472 — Civil Appeal No. 9107 of 2012 (out of SLP(C) No. 22613 of 2012), Civil Appeal No. 744 of 2013 (out of SLP(C) No. 17029 of 2012) and Civil Appeal No. 19487 of 2017; assessment years 2007-08, 2008-09 and 2009-10. It bears on section 147, section 148, section 133A, section 80-IB(10), section 86, section 67A, section 167B of the Income Tax Act 1961, in Reassessment & Reopening, Assessment & Scrutiny, How Tax Law Is Read and Deductions & Disallowances matters.
Two separate uses. On reassessment, this is the Supreme Court telling you that 'change of opinion' is not established by showing that the document was on the file and the figure was in the return - the assessee must show that the Assessing Officer actually formed an opinion on the point now reopened, and a passing reference in the assessment order to a similar arrangement under a different agreement is not that. The taxpayer-useful half of the same discussion is that the Court struck down the High Court's method: the validity of a reopening is tested only against the reasons recorded under s.148, and a document not mentioned in those reasons - here the AOP's own assessment orders - cannot be used to shore up the notice. On the merits, this is authority that the label the parties and the AOP put on a payment does not decide it: a clause that gives one member a fixed slice of gross receipts before any expenditure is diversion by overriding title, so the amount is the member's own business receipt and s.86 read with s.67A does not keep it out of his total income. Expect the department to run this against every revenue-sharing development AOP that has claimed s.80IB(10) or its successor on the full project profit.
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Sanand Properties P. Ltd. (SPPL), a private limited company, joined M/s Raviraj Kothari & Co. (RKC) in an agreement dated 29.04.2003 constituting an AOP named Fortaleza Developers to develop a parcel of land at Yerawada, Pune as a residential housing project. Clause 7 of that agreement provided that all sale agreements and all receipts from flat purchasers would be in the AOP's name, that SPPL was entitled 'as its share of revenue/income' to 35% of those gross receipts and could withdraw it from time to time, and that out of the balance 65% all expenditure for the business of the AOP would be met, the net balance being RKC's share. SPPL filed returns for AY 2007-08 and AY 2008-09, both scrutinised under s.143(3) with orders dated 21.12.2009 and 20.07.2010, in which it declared the receipt as its share of the AOP's profit and claimed that no tax was payable by it because tax on the AOP's income was payable by the AOP under s.167B(2); the AOP had itself claimed the whole project profit, including this 35%, as a deduction under s.80IB(10). A survey under s.133A at SPPL's premises on 23.12.2010 impounded the books and six documents, including the original AOP agreement and the AOP's audited accounts, and the statement of SPPL's director Shri Ashok V. Suratwala was recorded on oath under s.131, in which he said a formula had been devised entitling SPPL to 35% of gross receipts so as to keep its development rights out of the risks of the construction business. On 11.01.2011 the Assessing Officer issued s.148 notices for both years, the recorded reasons being that the receipt was not a share of profit but consideration for development rights sold or surrendered, so that Rs 3,49,18,587 for AY 2007-08 and Rs 14,18,52,156 for AY 2008-09 had escaped assessment within Explanation 2(c)(iv) to s.147. SPPL's objections were rejected by a speaking order dated 14.07.2011. The Bombay High Court quashed the AY 2007-08 notice on 23.09.2011 as a mere change of opinion, but on 19.12.2011 upheld the AY 2008-09 notice, distinguishing the years on the strength of the AOP's own assessment order for AY 2008-09 dated 29.12.2010. Meanwhile in the AOP's parallel proceedings the Tribunal and, on 09.04.2015 and 03.10.2016, the High Court held that Clause 7 was a profit-sharing clause and that SPPL received only a share of profit; the Tribunal applied that to SPPL's own reassessment for AY 2008-09 and assessment for AY 2009-10 on 21.03.2014, and the High Court dismissed the Revenue's appeals on 24.03.2017 as raising no substantial question of law. All three matters came to the Supreme Court: SPPL's appeal against the AY 2008-09 reopening, and the Revenue's appeals against the AY 2007-08 quashing and against the merits order.
On the first question the Court held that the reopening for both AY 2007-08 and AY 2008-09 was valid, because the Assessing Officer had formed no opinion in either original assessment on whether the receipt was profit or revenue, so there was no opinion to change, and the survey material gave him reason to believe income had escaped assessment. On the second question it held that on a plain reading of Clause 7 the 35% of gross sale proceeds was diverted to SPPL by overriding title before it could become the AOP's income, and so is SPPL's own business receipt and not a share of the AOP's profit. The operative order is appeal by appeal: Civil Appeal No. 744 of 2013 (Revenue) is allowed, the High Court's order of 23.09.2011 is set aside and the AY 2007-08 s.148 notice is held valid (para 114); Civil Appeal No. 9107 of 2012 (SPPL) is dismissed, the conclusion of the High Court's order of 19.12.2011 being upheld although its reasoning is held to be bad in law (paras 115-118); and Civil Appeal No. 19487 of 2017 (Revenue) is allowed, the orders of the High Court dated 24.03.2017 and of the Tribunal dated 21.03.2014 are set aside, and the 35% share for AY 2008-09 and AY 2009-10 is held taxable in SPPL's hands as a business receipt (paras 126-127). The Court expressly clarified at para 84 that upholding the reopening says nothing about the merits of the reassessment that will follow for AY 2007-08.
On reopening, the Court first rejected the Revenue's own framing that the merits appeal would decide the reopening appeals: validity is tested by limiting the enquiry to the reasons recorded under s.148, so reasons that justify a prima facie belief survive even if the belief later proves unfounded, and reasons never recorded cannot be supplied from the merits stage (para 63, with Rajesh Jhaveri Stock Brokers). It took from Kelvinator that post-1989 the power to reopen is wider but 'change of opinion' remains an in-built check and there must be tangible material with a live link (para 64). Because the notices were within four years of the end of the relevant years, the first proviso to s.147 was not attracted and the Revenue did not have to establish a failure to disclose; but Explanation 1 to s.147 still governed what counts as disclosure (para 72). On that footing the Court applied Calcutta Discount - producing books and documents does not discharge the duty unless the assessing authority's attention is drawn to the particular items - and Phool Chand - fresh, specific information exposing the untruth of what was stated is different from a fresh inference from the same material (paras 70-71). It then examined the two original assessment orders. For AY 2007-08 the receipt appears only in the single sentence at paragraph 4 of the order dated 21.12.2009; the 35:65 discussion in that order was about Clause 11 of a wholly different Joint Venture Agreement dated 26.08.2002 with RKA for commercial units in 'Victoria Complex', and the High Court had erroneously conflated it with Clause 7 of the AOP Agreement, so no opinion was ever formed on the AOP receipt (paras 78-80). For AY 2008-09 there was some discussion of the receipt, but only on whether it was to be excluded from net profit to arrive at book profit under s.115JB, the assessment proceeding on the assumption that it was profit without verifying it (para 81). A change of opinion presupposes a previously formed opinion; there being none, the survey material was tangible material and the reopening for both years was fresh information and not change of opinion (paras 80, 82-83). The Court nonetheless held that the High Court's route to upholding the AY 2008-09 notice was impermissible: it had travelled beyond the recorded reasons to rely on the AOP's assessment orders, which defeats the purpose of recording reasons and the assessee's right under GKN Driveshafts to a speaking order on objections; on the recorded reasons alone the notice was still valid (paras 85-87, 116-118). On the merits, the Court held that construction of a clause is a question of law, following Sir Chunilal V. Mehta and Sons, so the High Court's reliance on a Coordinate Bench's reading in the AOP's own proceedings as a finding of fact was an error and did not bind it (paras 93-94, 119). Reading Clause 7, SPPL could withdraw 35% of gross sale proceeds straightaway, before any expenditure, and the whole of the expenditure fell on the remaining 65% (paras 97, 121-122). Applying Sitaldas Tirathdas, the entitlement attaches to the gross receipts at the point of accrual and leaves the AOP no discretion, so the AOP merely holds and disburses that portion - the receipt is intercepted and diverted before it can assume the character of the AOP's income, and must therefore be taxed in SPPL's hands and not the AOP's (paras 98-99, 123-124). The director's s.131 statement, that the formula was devised to keep the development rights out of the risks of the business, pointed the same way (para 100). Since profit is what remains after expenses and SPPL's share was insulated from the AOP's expenses, the receipt lacks the essential characteristics of profit and is in pith and substance a business receipt arising from the surrender of development rights or a share of gross revenue; the clause itself says 'share of revenue/income', not share of profit (paras 102-103, 125).
we hold that the 35% share received by the SPPL from the AOP for Assessment Years 2008-09 and 2009-10 is taxable in the hands of the assessee as a business receipt.
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Handle my notice → Ask a CA on WhatsAppNo on the reopening challenge and no on the exemption. Where the assessment order shows the Assessing Officer never applied his mind to the character of the receipt at all, there is no opinion to change, and material coming out of a s.133A survey that reveals the true nature of the receipt is tangible material for s.147. On the merits the Court read Clause 7 of the AOP deed itself and held that a member's entitlement to 35% of gross sale proceeds, taken upfront and untouched by the AOP's expenses, is not a share of profit but a diversion of the AOP's receipts by overriding title, taxable in the member's hands as a business receipt. Two Revenue appeals were allowed and the assessee's appeal dismissed. This was decided by the Supreme Court (Supreme Court of India — J.B. Pardiwala J and K.V. Viswanathan J; the judgment is authored by Pardiwala J) and bears on section 147, section 148, section 133A, section 80-IB(10), section 86, section 67A, section 167B of the Income Tax Act 1961. It is reported as 2026 INSC 472 — Civil Appeal No. 9107 of 2012 (out of SLP(C) No. 22613 of 2012), Civil Appeal No. 744 of 2013 (out of SLP(C) No. 17029 of 2012) and Civil Appeal No. 19487 of 2017; assessment years 2007-08, 2008-09 and 2009-10. Two separate uses. On reassessment, this is the Supreme Court telling you that 'change of opinion' is not established by showing that the document was on the file and the figure was in the return - the assessee must show that the Assessing Officer actually formed an opinion on the point now reopened, and a passing reference in the assessment order to a similar arrangement under a different agreement is not that. The taxpayer-useful half of the same discussion is that the Court struck down the High Court's method: the validity of a reopening is tested only against the reasons recorded under s.148, and a document not mentioned in those reasons - here the AOP's own assessment orders - cannot be used to shore up the notice. On the merits, this is authority that the label the parties and the AOP put on a payment does not decide it: a clause that gives one member a fixed slice of gross receipts before any expenditure is diversion by overriding title, so the amount is the member's own business receipt and s.86 read with s.67A does not keep it out of his total income. Expect the department to run this against every revenue-sharing development AOP that has claimed s.80IB(10) or its successor on the full project profit. If it applies to you, the first step is this: When you resist a reopening on change of opinion, do not stop at showing the document was filed - point to the passage in the original assessment order where the Assessing Officer actually engaged with the very issue. On this judgment, a bare mention of the amount in the return or a stray line in the order is not the formation of an opinion.
Sanand Properties P. Ltd. (SPPL), a private limited company, joined M/s Raviraj Kothari & Co. (RKC) in an agreement dated 29.04.2003 constituting an AOP named Fortaleza Developers to develop a parcel of land at Yerawada, Pune as a residential housing project. Clause 7 of that agreement provided that all sale agreements and all receipts from flat purchasers would be in the AOP's name, that SPPL was entitled 'as its share of revenue/income' to 35% of those gross receipts and could withdraw it from time to time, and that out of the balance 65% all expenditure for the business of the AOP would be met, the net balance being RKC's share. SPPL filed returns for AY 2007-08 and AY 2008-09, both scrutinised under s.143(3) with orders dated 21.12.2009 and 20.07.2010, in which it declared the receipt as its share of the AOP's profit and claimed that no tax was payable by it because tax on the AOP's income was payable by the AOP under s.167B(2); the AOP had itself claimed the whole project profit, including this 35%, as a deduction under s.80IB(10). A survey under s.133A at SPPL's premises on 23.12.2010 impounded the books and six documents, including the original AOP agreement and the AOP's audited accounts, and the statement of SPPL's director Shri Ashok V. Suratwala was recorded on oath under s.131, in which he said a formula had been devised entitling SPPL to 35% of gross receipts so as to keep its development rights out of the risks of the construction business. On 11.01.2011 the Assessing Officer issued s.148 notices for both years, the recorded reasons being that the receipt was not a share of profit but consideration for development rights sold or surrendered, so that Rs 3,49,18,587 for AY 2007-08 and Rs 14,18,52,156 for AY 2008-09 had escaped assessment within Explanation 2(c)(iv) to s.147. SPPL's objections were rejected by a speaking order dated 14.07.2011. The Bombay High Court quashed the AY 2007-08 notice on 23.09.2011 as a mere change of opinion, but on 19.12.2011 upheld the AY 2008-09 notice, distinguishing the years on the strength of the AOP's own assessment order for AY 2008-09 dated 29.12.2010. Meanwhile in the AOP's parallel proceedings the Tribunal and, on 09.04.2015 and 03.10.2016, the High Court held that Clause 7 was a profit-sharing clause and that SPPL received only a share of profit; the Tribunal applied that to SPPL's own reassessment for AY 2008-09 and assessment for AY 2009-10 on 21.03.2014, and the High Court dismissed the Revenue's appeals on 24.03.2017 as raising no substantial question of law. All three matters came to the Supreme Court: SPPL's appeal against the AY 2008-09 reopening, and the Revenue's appeals against the AY 2007-08 quashing and against the merits order. The matter was decided on 2026-05-12 by the Supreme Court (Supreme Court of India — J.B. Pardiwala J and K.V. Viswanathan J; the judgment is authored by Pardiwala J). On those facts the Supreme Court held as follows. On the first question the Court held that the reopening for both AY 2007-08 and AY 2008-09 was valid, because the Assessing Officer had formed no opinion in either original assessment on whether the receipt was profit or revenue, so there was no opinion to change, and the survey material gave him reason to believe income had escaped assessment. On the second question it held that on a plain reading of Clause 7 the 35% of gross sale proceeds was diverted to SPPL by overriding title before it could become the AOP's income, and so is SPPL's own business receipt and not a share of the AOP's profit. The operative order is appeal by appeal: Civil Appeal No. 744 of 2013 (Revenue) is allowed, the High Court's order of 23.09.2011 is set aside and the AY 2007-08 s.148 notice is held valid (para 114); Civil Appeal No. 9107 of 2012 (SPPL) is dismissed, the conclusion of the High Court's order of 19.12.2011 being upheld although its reasoning is held to be bad in law (paras 115-118); and Civil Appeal No. 19487 of 2017 (Revenue) is allowed, the orders of the High Court dated 24.03.2017 and of the Tribunal dated 21.03.2014 are set aside, and the 35% share for AY 2008-09 and AY 2009-10 is held taxable in SPPL's hands as a business receipt (paras 126-127). The Court expressly clarified at para 84 that upholding the reopening says nothing about the merits of the reassessment that will follow for AY 2007-08.
On reopening, the Court first rejected the Revenue's own framing that the merits appeal would decide the reopening appeals: validity is tested by limiting the enquiry to the reasons recorded under s.148, so reasons that justify a prima facie belief survive even if the belief later proves unfounded, and reasons never recorded cannot be supplied from the merits stage (para 63, with Rajesh Jhaveri Stock Brokers). It took from Kelvinator that post-1989 the power to reopen is wider but 'change of opinion' remains an in-built check and there must be tangible material with a live link (para 64). Because the notices were within four years of the end of the relevant years, the first proviso to s.147 was not attracted and the Revenue did not have to establish a failure to disclose; but Explanation 1 to s.147 still governed what counts as disclosure (para 72). On that footing the Court applied Calcutta Discount - producing books and documents does not discharge the duty unless the assessing authority's attention is drawn to the particular items - and Phool Chand - fresh, specific information exposing the untruth of what was stated is different from a fresh inference from the same material (paras 70-71). It then examined the two original assessment orders. For AY 2007-08 the receipt appears only in the single sentence at paragraph 4 of the order dated 21.12.2009; the 35:65 discussion in that order was about Clause 11 of a wholly different Joint Venture Agreement dated 26.08.2002 with RKA for commercial units in 'Victoria Complex', and the High Court had erroneously conflated it with Clause 7 of the AOP Agreement, so no opinion was ever formed on the AOP receipt (paras 78-80). For AY 2008-09 there was some discussion of the receipt, but only on whether it was to be excluded from net profit to arrive at book profit under s.115JB, the assessment proceeding on the assumption that it was profit without verifying it (para 81). A change of opinion presupposes a previously formed opinion; there being none, the survey material was tangible material and the reopening for both years was fresh information and not change of opinion (paras 80, 82-83). The Court nonetheless held that the High Court's route to upholding the AY 2008-09 notice was impermissible: it had travelled beyond the recorded reasons to rely on the AOP's assessment orders, which defeats the purpose of recording reasons and the assessee's right under GKN Driveshafts to a speaking order on objections; on the recorded reasons alone the notice was still valid (paras 85-87, 116-118). On the merits, the Court held that construction of a clause is a question of law, following Sir Chunilal V. Mehta and Sons, so the High Court's reliance on a Coordinate Bench's reading in the AOP's own proceedings as a finding of fact was an error and did not bind it (paras 93-94, 119). Reading Clause 7, SPPL could withdraw 35% of gross sale proceeds straightaway, before any expenditure, and the whole of the expenditure fell on the remaining 65% (paras 97, 121-122). Applying Sitaldas Tirathdas, the entitlement attaches to the gross receipts at the point of accrual and leaves the AOP no discretion, so the AOP merely holds and disburses that portion - the receipt is intercepted and diverted before it can assume the character of the AOP's income, and must therefore be taxed in SPPL's hands and not the AOP's (paras 98-99, 123-124). The director's s.131 statement, that the formula was devised to keep the development rights out of the risks of the business, pointed the same way (para 100). Since profit is what remains after expenses and SPPL's share was insulated from the AOP's expenses, the receipt lacks the essential characteristics of profit and is in pith and substance a business receipt arising from the surrender of development rights or a share of gross revenue; the clause itself says 'share of revenue/income', not share of profit (paras 102-103, 125). In the words reproduced by the source cited on this page: "we hold that the 35% share received by the SPPL from the AOP for Assessment Years 2008-09 and 2009-10 is taxable in the hands of the assessee as a business receipt." The decision followed or applied Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd. [(2010) 320 ITR 561] - relied on for the change-of-opinion check and the tangible-material requirement (para 64); Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. [(2008) 14 SCC 208] - relied on for the meaning of 'reason to believe' (para 63); Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I Calcutta and Anr. [(1961) 41 ITR 191] - relied on for the duty to draw attention to the particular items (paras 70, 107); M/s Phool Chand Bajrang Lal and Another v. Income Tax Officer and Another [(1993) 4 SCC 77] - relied on for the distinction between fresh information and a fresh inference (paras 71, 111-112); GKN Driveshafts (India) Ltd. v. ITO [(2003) 1 SCC 72] - relied on for the reasons-and-objections procedure and the rule that reopening is tested on the recorded reasons (paras 86, 116); Sir Chunilal V. Mehta and Sons Ltd. v. Century Spinning & Manufacturing Co. Ltd. [AIR 1962 SC 1314] - relied on for construction of a document being a question of law (paras 93, 119); Commissioner of Income Tax, Bombay City II, Bombay v. Shri Sitaldas Tirathdas, Bombay [(1961) 41 ITR 367] - relied on for diversion by overriding title (paras 98-99, 123-124).
It was decided by the Supreme Court on 2026-05-12 and is reported as 2026 INSC 472 — Civil Appeal No. 9107 of 2012 (out of SLP(C) No. 22613 of 2012), Civil Appeal No. 744 of 2013 (out of SLP(C) No. 17029 of 2012) and Civil Appeal No. 19487 of 2017; assessment years 2007-08, 2008-09 and 2009-10. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 147, section 148, section 133A, section 80-IB(10), section 86, section 67A, section 167B, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. On the first question the Court held that the reopening for both AY 2007-08 and AY 2008-09 was valid, because the Assessing Officer had formed no opinion in either original assessment on whether the receipt was profit or revenue, so there was no opinion to change, and the survey material gave him reason to believe income had escaped assessment. On the second question it held that on a plain reading of Clause 7 the 35% of gross sale proceeds was diverted to SPPL by overriding title before it could become the AOP's income, and so is SPPL's own business receipt and not a share of the AOP's profit. The operative order is appeal by appeal: Civil Appeal No. 744 of 2013 (Revenue) is allowed, the High Court's order of 23.09.2011 is set aside and the AY 2007-08 s.148 notice is held valid (para 114); Civil Appeal No. 9107 of 2012 (SPPL) is dismissed, the conclusion of the High Court's order of 19.12.2011 being upheld although its reasoning is held to be bad in law (paras 115-118); and Civil Appeal No. 19487 of 2017 (Revenue) is allowed, the orders of the High Court dated 24.03.2017 and of the Tribunal dated 21.03.2014 are set aside, and the 35% share for AY 2008-09 and AY 2009-10 is held taxable in SPPL's hands as a business receipt (paras 126-127). The Court expressly clarified at para 84 that upholding the reopening says nothing about the merits of the reassessment that will follow for AY 2007-08. It arises in Reassessment & Reopening, Assessment & Scrutiny, How Tax Law Is Read and Deductions & Disallowances matters, on section 147, section 148, section 133A, section 80-IB(10), section 86, section 67A, section 167B of the Income Tax Act 1961, and was decided by Supreme Court of India — J.B. Pardiwala J and K.V. Viswanathan J; the judgment is authored by Pardiwala J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Read the reasons recorded and hold the department to them. This judgment says in terms that a document not referred to in the s.148 reasons cannot be used to justify the notice, and it faulted the Bombay High Court for going outside them; take the objection at the objections stage under GKN Driveshafts so it is on record. Pull out the profit-sharing clause of any AOP, joint venture or development agreement and test it against Clause 7 here. If one member draws a percentage of gross receipts before expenses and the other bears the whole cost, expect the receipt to be characterised as that member's own revenue, whatever the appropriation account calls it. If the AOP has claimed a deduction on profits that include a co-member's gross-receipt share, work out the exposure on both sides now - this judgment taxes the share in the member's hands without deciding what happens to the AOP's deduction or to the AOP's completed assessment. Cite the case for the two propositions it actually decides. It is not authority on whether the same receipt can then be relieved in the AOP's hands, and it does not decide the merits of the AY 2007-08 reassessment, which the Court expressly left open.
Still good law. This is a Supreme Court judgment of 12 May 2026 and it is the latest word in this litigation, allowing both Revenue appeals and dismissing the assessee's. No search for later treatment was carried out in this pass - the entry was written from the judgment text alone, and no digest, reporter or citator was consulted. What would displace it is a larger Bench of the Supreme Court, a review or curative petition in these very appeals, or a statutory change; the reassessment holding is on s.147 and s.148 as they stood before the Finance Act 2021 recast, so it does not by itself carry over to the s.148A regime, and the merits holding turns on the wording of one contractual clause rather than on a statutory test. That finding was checked against a published source, which is linked on this page, on 2026-09-05. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Written from the full text of the judgment only. Nothing here comes from a digest or a reporter. No reporter citation is given because the file carries only the neutral citation 2026 INSC 472 and the appeal numbers. Three things in the record deserve a reader's caution, all visible on the face of the judgment. First, the reasons recorded reproduced at para 65 describe the impounded document as the 'Original copy of the AOP agreement dated 28.04.2003', whereas the judgment throughout refers to the AOP Agreement dated 29.04.2003; the file does not resolve the discrepancy. Second, at para 10 the s.148 notices are said to have been issued on 11.01.2011, while the Revenue's submission at para 53 describes a common notice dated 07.02.2011; the Court does not reconcile the two dates. Third, para 79 sets out the same two sentences about the JV Agreement and the AOP Agreement twice over, which appears to be a repetition in the text rather than a distinct finding. The judgment does not state the amount in issue for AY 2009-10 - the figures stated are Rs 3,49,18,587 for AY 2007-08 and Rs 14,18,52,156 for AY 2008-09. It also does not state whether any appeal was carried against the High Court's order dated 03.10.2016 in the AOP's own case; that was the assessee's assertion recorded at para 40 and the Court does not deal with it. Nothing is said about the Income-tax Act 2025, so no successor section is stated here. The held and reasoning above do separate the outcome appeal by appeal - Civil Appeal No. 744 of 2013 (Revenue, AY 2007-08 reopening) allowed, Civil Appeal No. 9107 of 2012 (SPPL, AY 2008-09 reopening) dismissed, Civil Appeal No. 19487 of 2017 (Revenue, merits for AY 2008-09 and AY 2009-10) allowed - and note that the assessee lost every one of them. What the judgment does not decide is a longer list. It does not decide the merits of the AY 2007-08 reassessment at all; para 84 expressly says upholding the notice has no bearing on the order that will emerge. It does not decide what happens to the AOP's own completed assessments, or to the s.80IB(10) deduction the AOP claimed on a project profit that included this 35% - the Revenue's case at para 48 was that the amount ought to have been an expense in the AOP's hands, but the Court neither accepts nor rejects that, and it does not say whether the AOP is now entitled to relief or how the same sum is to be kept from being taxed twice. It does not address the assessee's point at para 40 that the High Court's order dated 03.10.2016 in the AOP's own case had become final for want of an appeal. It does not decide the ASG's alternative argument on the second proviso to clause (b) of s.86 - the merits are decided on diversion by overriding title under Sitaldas Tirathdas, and s.86, s.67A and s.167B are not construed. It does not say whether the receipt is business income from the surrender of development rights or a share of gross revenue - para 103 and para 125 leave that in the alternative - so the head of income, the year of accrual, and any question of cost of the development rights are all untouched. It says nothing about the s.115JB book-profit treatment of the receipt, which was the one thing the AY 2008-09 original assessment did discuss, and nothing about the s.271(1)(c) penalty proceedings initiated by the reassessment order dated 30.12.2011. On reassessment law, it is decided under s.147 and s.148 as they stood before the Finance Act 2021, so it does not tell you how the 'information' standard in the present s.148A works, and it does not address sanction, limitation, or the four-year proviso, which it holds inapplicable because the notices were within four years. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
On the first question the Court held that the reopening for both AY 2007-08 and AY 2008-09 was valid, because the Assessing Officer had formed no opinion in either original assessment on whether the receipt was profit or revenue, so there was no opinion to change, and the survey material gave him reason to believe income had escaped assessment. On the second question it held that on a plain reading of Clause 7 the 35% of gross sale proceeds was diverted to SPPL by overriding title before it could become the AOP's income, and so is SPPL's own business receipt and not a share of the AOP's profit. The operative order is appeal by appeal: Civil Appeal No. 744 of 2013 (Revenue) is allowed, the High Court's order of 23.09.2011 is set aside and the AY 2007-08 s.148 notice is held valid (para 114); Civil Appeal No. 9107 of 2012 (SPPL) is dismissed, the conclusion of the High Court's order of 19.12.2011 being upheld although its reasoning is held to be bad in law (paras 115-118); and Civil Appeal No. 19487 of 2017 (Revenue) is allowed, the orders of the High Court dated 24.03.2017 and of the Tribunal dated 21.03.2014 are set aside, and the 35% share for AY 2008-09 and AY 2009-10 is held taxable in SPPL's hands as a business receipt (paras 126-127). The Court expressly clarified at para 84 that upholding the reopening says nothing about the merits of the reassessment that will follow for AY 2007-08.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My return was only processed under 143(1). Does that stop the department reopening it later?
How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
A reassessment was done in between. Does the two-year clock for s.263 restart from it?