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ORDER Ms. Sonia Gokani, J. - Present petition is preferred challenging the notice under section 148 dated 13.2.2013 in the following factual background:- 1.1 Assessee is the Director of M/s. S. Vinodkumar Diamonds Pvt. Ltd., engaged in the business of diamond. Interest is earned by the assessee from the income under the head income from other sources and capital gain from sale of shares. For the Assessment Year 2006-07 the return of income declared by the assessee was at Rs.1.51 lakhs (rounded off). The Assessing Officer in scrutiny assessment issued notice under section 143(2) of the Income Tax Act, 1961("the Act" for short) calling for information. Specific query was raised with regard to treatment accorded to the activities of investment in shares as investment and not as business in the table shown below:- Name of Scrip/Units Quantity (Units) holding Purchase date & quantity Purchase amount Sale date and quantity Sale amount Dividend received if any Dividend date STCG/STCL 1 2 3 4 5 6 7 8 9 *** *** *** (d) Reasoning behind the treatment of activities as investment and not as business. 2. In reply to the said notice, the petitioner on 12.11.2008 specified that the share investment in the books of account has been treated as investment and not as stock-in-trade. In reply to the other queries, the assessee answered that the activity of purchase and sale is not a trading activity but investment activity, and therefore, the gain on sale of such shares is capital gain and not business profit. 3. In the assessment order passed on 28.11.2008 the nature of the business is shown as dealing in shares as the Director and the taxable income of the assessee for such year was computed after above discussion of the said income. It would be profitable to reproduce relevant portion of the said order :- 4. The assessee is a director M/s. S Vinodkumar Diamonds Pvt Ltd, engaged in the business of diamond. During the year, the assessee has shown interest income under income from other sources and exempted long-term capital gain from the sale of shares. Also short-term capital gain has been shown on account of sales of shares. 5. Perusing all the facts on record as well as…

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