CHEVELLA REDDY JAYARAM CHEVELLA ,RANGA REDDY vs. INCOME TAX OFFICER, WARD-1, VIKARABAD

We come to the former legal issue of correctness of the impugned re-opening. There is hardly any dispute that the Assessing Officer herein issued his Section 148 notice dt.29-03-2016 after forming reasons to believe that the assessee’s taxable income; in the nature of capital gains arising from the transfer of capital asset in issue to the tune of Rs.209 crores, had escaped assessment. He thereafter framed the impugned re-assessment dt.29-12-2016 assessing 1/4th of the said capital gains of Rs.2.09 crores coming to Rs.52,42,750/- as taxable in this taxpayer’s hands as upheld in the CIT(A)’s order.

We have given our thoughtful consideration to rival pleadings against and in support of the correctness of the impugned Section 148/147 mechanism taken recourse to by the learned lower authorities. It emerges during the course of hearing that the learned lower authorities have themselves assessed assessee’s father viz. Shri Ch.Venkat Reddy on the same date. And also that the quantum of income in the assessee’s father’s hands as capital gains reads very figure of Rs.2,09,71,000/- out of which department has also assessed 1/4th share (supra) in this taxpayer’s case. All these facts and circumstances sufficiently indicate that no taxable income assessable in assessee’s hands had escaped assessment once the department had itself taxed the assessee’s father qua the entire sum of very sale consideration. We therefore quote case law DHFL Venture Capital Fund Vs. ITO 34 taxmann.com 300 (Bom) that recourse to Section 148 mechanism would not be formed only to ensure the Revenue’s interest rather than recording a finding of fact that a taxable income had in fact escaped assessment. We accordingly hold that the impugned re-opening in assessee’s case is not sustainable. The same stands quashed therefore. All other pleadings on merits are rendered academic.