AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 88
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....d after the case was taken for scrutiny, an order under section 143(1) came to be passed on 30.11.2007. Later on, a notice has been issued under section 148 of the Act on 29.3.2011 and the order came to be passed under section 143(3) read with section 147 of the Act on 25.11.2011. It appears that in the case of one M/s Devrekha Engineers Private Limited, assessment for AY 2005-06 was sought to be reopened beyond the period of four years and the question arose whether the amount of Rs. 1,46,00,000/- alleged to have been received by the said assessee as long term capital gain was to be added to the income of the said assessee firm or not? The Assessing Officer passed an order against the assessee and in favour of the revenue. However, on an appeal before the learned CIT (Appeals), the learned CIT (Appeals) was of the opinion that notice under section 148 for AY 2005-06 was required to be issued in the case of the present assessee - Devendra S. Naik. 5. Learned CIT (Appeals) also confirmed the disallowance made by the Assessing Officer by not granting the deduction under section 154 EC against the amount of Rs. 87 lac with respect to sale consideration of Rs. 1,46,00,000/-. It appe....
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..... Soparkar, learned advocate appearing on behalf of the petitioner has vehemently submitted that in the present case, admittedly, the assessment for AY 2005-06 has been reopened after a period of six years. It is submitted that the reopening proceedings have been initiated for AY 2005-06 solely on the direction issued by the learned CIT (Appeals) issued in the order dated 25.6.2013 in the case of one another assessee M/s Devrekha Engineers, by which the learned CIT (Appeals) directed to issue notice upon the present assessee under section 148 of the Act invoking the extended period of limitation as prescribed under section 150 of the Act. It is submitted that when the direction issued by the learned CIT (Appeals) to reopen the assessment for AY 2005-06 in the case of the present assessee itself has been set aside by the learned Tribunal and the same has been confirmed by the Division Bench of this Court, there was no question of invoking section 150 of the Act. It is submitted that section 150 of the Act can be invoked to give effect to the order passed by the appellate authority and/or any other authority and on the eventuality, as mentioned in section 150 of the Act. It is submit....
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....ed the assessment of the present assessee as per the observations of the learned CIT (Appeals) in the case of M/s Devrekha Engineers, the income of Rs. 1,46,00,000/- is to be taxed in the ends of the present assessee in the nature of long term capital gain and therefore, for the reasons recorded, the Assessing Officer is justified in issuing the impugned notice under section 148 of the Act and is justified in reopening the assessment for AY 2005-06. 10. It is submitted that in the present case, section 150 of the Act has rightly been invoked and that too in view of the observations and directions issued by the learned CIT (Appeals) in the order dated 25.6.2013, it is requested to dismiss the present petition. 11. Heard learned advocates appearing on behalf of the respective parties at length. 12. It is required to be noted that what is challenged in the present petition is the impugned notice at Annexure A issued under section 148 of the Act, by which the assessment for AY 2005-06 has been sought to be reopened beyond the period of six years. The reasons recorded for reopening of the assessment for AY 2005-06 has been communicated to the petitioner - assessee vide communic....
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....ayments have been made by M/s. Devrekha Engineers Pvt. Ltd., to Shri Devendra S. Naik in A.Y.2005-06. vi. As per Ld.CIT(A)'s decision, the sum of Rs. 1,46,00,000/- is taxed in the hands of M/s. Devrekha Engineers Pvt. ltd as income under the head 'Other Sources' and assessment is enhanced. In view of the above, the income in the hands of Shri. Devendra S. Naik is to be taxed in the nature of Long Term Capital Gain. I have therefore reason to believe that the income to the tune of Rs. 1,46,00,000/- has this is a fit case for issue of notice u/s. 148 of the LT. Act." 13. Thus, from the reasons recorded, it appears that reopening of the assessment for AY 2005-06 seems to be on the basis of the directions issued by the learned CIT (Appeals) in the order dated 25.6.2013 in the case of one M/s Devrekha Engineers. It is to be noted that while considering the appeal in the case of one M/s Devrekha Engineers, the learned CIT (Appeals) observed and directed as under: "As discussed in this order, the property rights in question were vested in the sister concern and therefore, LTCG / STCG is to be taxable only in the hands of sister concern. Therefore directions u/s 150....
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.... hands of the assessee but to be assessed in the hands of M/s D.S. Synthetics. It appears that the learned CIT(A) wanted to step into shoes of AO while recording reasons for issuance of notice u/s.l48 of IT Act. The same is not permissible in the eyes of law. The reasons recorded for issuance of notice u/s.148 was not that the Long Term Capital Gain did not arise to the assessee, but to Ms. D.S. Synthetics. The reasons for reopening assigned were that the wrong computation of Long Term Capital Gain, especially, the indexed cost of acquisition, was shown by the assessee. We therefore hold that in a situation when the assessee has owned up the Long Term Capital Gain in its hands and made an investment in REC bonds which was duly examined at the time of original assessment while framing the assessment u/s, 143(3) of IT Act and a disclosure was made on the material facts then there was no occasion on the part of the learned CIT(A) to twist the reasons of reopening and thereupon upheld the action u/s. 148 of- IT Act. We are of conscientious view that learned CIT (A) went wrong in upholding the action of the AO; hence, his findings is hereby reversed." 15. The aforesaid decision of th....