Asst. Commissioner of Income Tax, Central Circle-3(1), Hyd, Hyderabad V. B. Rama Raju (Jr.), Hyderabad, Hyderabad

ITA 1552/Hyd/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6543 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 05-04-2021
• Assessment Year: 2003-2004
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR PANDEY
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 143(1); 147

Judgement Text

ITA NO 1552 OF 2017 B RAMA RAJU HYDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.1552/HYD/2017 ASSESSMENT YEAR: 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(1) HYDERABAD VS. SRI B. RAMA RAJU (JR) PLOT NO.1254A, ROAD NO.63, JUBILEE HILLS HYDERABAD PAN:AGNPB1463D (APPELLANT) (RESPONDENT) REVENUE BY: SRI SUNIL KUMAR PANDEY, DR ASSESSEE BY : SRI K.C. DEVDAS DATE OF HEARING: 05/04/2021 DATE OF PRONOUNCEMENT: 15/04/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2003-04 AGAIN ST THE ORDER OF THE CIT (A)-12, HYDERABAD, DATED 2.6.2 017 SETTING ASIDE THE ASSESSMENT ORDER BY HOLDING THAT THE REOP ENING OF THE ASSESSMENT U/S 147 OF THE I.T. ACT IS NOT SUSTAINAB LE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN DIVIDUAL FILED HIS RETURN OF INCOME FOR THE A.Y 2003-04 ON 3 0.09.2003 DECLARING AN INCOME OF RS.48,54,220/- FROM OTHER SO URCES. THE RETURN WAS PROCESSED U/S 143(1) ON 17.11.2003 AND T HE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLE TED U/S 143(3) ON 17.3.2006 ACCEPTING THE RETURN FILED BY T HE ASSESSEE. ITA NO 1552 OF 2017 B RAMA RAJU HYDERABAD PAGE 2 OF 4 3. THE ASSESSEE BEING ONE OF THE SONS OF SHRI B.RAMALINGA RAJU, EX-CHAIRMAN OF M/S SATYAM COMPUTE R SERVICES LTD, WAS ACTIVE IN THE BUSINESS ACTIVITIES OF THEIR FAMILY. SRI B.RAMALINGA RAO HAD SUO-MOTO MADE A CONFESSIONA L STATEMENT ON 7.1.2009 IN HIS LETTER SENT TO THE BOA RD OF DIRECTORS THAT THE BOOKS OF ACCOUNT OF THE SCSL HAVE BEEN FUD GED FOR THE LAST SEVERAL YEARS TO MANIPULATE THE BOOK RESULTS. IN VIEW OF THE SAID DECLARATION, THE ASSESSMENT OF THE ASSESSEE WA S ALSO REOPENED AND THE ASSESSMENT U/S 147 WAS COMPLETED B Y MAKING VARIOUS ADDITIONS TOTALING TO RS.1,68,94,408/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) CHALLENGING BOTH THE VALIDITY OF THE REOPENING OF THE ASSESSMENT AND ALSO THE MER ITS OF THE ADDITIONS MADE BY THE ASSESSING OFFICER. THE CIT (A ), BY FOLLOWING THE ITAT DECISION IN ITA NO.1233/HYD/2011 DATED 31. 12.2013 HAS HELD THE REOPENING U/S 147 TO BE INVALID. THE R ELEVANT PORTION OF THE ITAT ORDER WAS REPRODUCED AT PARA 5.2 OF THE CIT (A) ORDER AND ACCORDINGLY THE ASSESSMENT HAS BEEN QUASHED AND THE REVENUE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE ID CIT(A) IS CORRECT IN LAW IN HOLDING TH AT THE REOPENING OF ASSESSMENT IS BAD IN LAW WITHOUT APPRECIATING THAT AT THE STAGE OF INITIATION OF PRO CEEDING, ALL THAT REQUIRED IS THE REASON TO BELIEVE AND NOT AN ESTABLISHED FACT OF ESCAPEMENT OF INCOME?' 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE ID CIT(A) IS JUSTIFIED IN LAW IN NOT APPR ECIATING THE SPIRIT OF THE DECISION OF THE SUPREME COURT IN THE CASE OF ACIT VS RAJESH JHAVERI STOCK BROKERS PVT LTD (20 07) 291 ITR 500 WHEREIN IT WAS STATED THAT THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD ME AN CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME HAD ESCAPED ASSESSMENT AND THE EXPRESSION CANNOT MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FAC T, ITA NO 1552 OF 2017 B RAMA RAJU HYDERABAD PAGE 3 OF 4 LEGAL EVIDENCE OR CONCLUSION AND THE FINAL OUTCOME OF THE PROCEEDINGS IS NOT RELEVANT?' 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID CIT(A) IS ERRED IN HOLDING THAT THE RE -OPENING OF ASSESSMENT IS BAD IN LAW WITHOUT APPRECIATING TH AT THE INFORMATION ABOUT THE REVELATIONS IN THE CONFES SIONAL STATEMENT OF SRI RAMALINGA RAJU AND THE FACTS OF FU DGING OF ACCOUNTS, VARIATIONS IN THE QUANTUM OF INCOME AN D ASSETS/LIABILITIES OF M/S SCSL AND THE FRONT COMPAN IES AS REVEALED IN THE CONFESSIONAL STATEMENT WHICH CAM E TO LIGHT IN THE INVESTIGATION CONDUCTED BY INVESTIGATI ON AGENCIES LIKE CBI,SFIO AND ENFORCEMENT DIRECTORATE WAS NOT AVAILABLE TO THE ASSESSING OFFICER WHILE COMPLE TING THE ORIGINAL ASSESSMENT AND THERE IS FAILURE ON THE PART OF THE ASSESSEE IN FULLY AND TRULY DISCLOSING THE MATE RIAL FACTS. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID CIT(A) IS ERRED IN HOLDING THAT THE ASSESSMENT WAS RE-OPENED ON MERE CHANGE OF OPINION WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OF FICER WAS IN POSSESSION OF THE INFORMATION THAT THE ASSES SEE HAD MADE INVESTMENT IN MANY SHELL COMPANIES PROMOTE D BY THE SHRI RAMALINGA RAJU TO MANAGE & ROUTE THEIR FINANCIAL AFFAIRS AND BANK ACCOUNTS IN A COMPLEX AN D CIRCUITOUS MANNER. 5. THE ID. CIT(A) ERRED IN HOLDING THAT THERE IS NO LIVE-LINK WITH THE REASONS RECORDED AND THE ADDITIONS MADE WITHOUT APPRECIATING THE FACT THAT AS PER THE SPECI AL AUDIT REPORT THERE WAS A MISMATCH BETWEEN THE CLOSI NG CAPITAL IN THE PRECEDING YEAR AND THE OPENING CAPIT AL IN THE CURRENT YEAR WHICH THE ASSESSEE FAILED TO RECON CILE RESULTING IN LIVE-LINK BETWEEN THE REASONS RECORDED AND THE OUTCOME OF THE RE-OPENED PROCEEDINGS. 6. THE ID CIT(A) FAILED TO APPRECIATE THAT COMING O F ALL THE RELATED COMPANIES AND INDIVIDUALS OF M/S SATYAM GRO UP UNDER THE CLOUD, IS A FACT THAT CANNOT BE BRUSHED U NDER THE CARPET AND THE LEGALITY OF REOPENING CANNOT BE EXAMINED IN ISOLATION OF THIS VITAL BACKGROUND. 7. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE ID CIT(A) IS CORRECT IN LAW IN QUASHING T HE REOPENING WHEN THE AO HAD VALIDLY REOPENED THE CASE FOR THE REASONS RECORDED BY HIM AND ALSO AS CAN BE SEEN FROM THE OUTCOME OF THE REOPENED PROCEEDINGS?' 8. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD ANY OTHER GROUNDS WHICH MAY BE NECESSARY. ITA NO 1552 OF 2017 B RAMA RAJU HYDERABAD PAGE 4 OF 4 5. THE LEARNED DR, RELIED UPON THE GROUNDS AND ALSO THE ORDER OF THE ASSESSING OFFICER, WHILE THE LEARNED C OUNSEL FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE CIT (A) AND AL SO SUBMITTED THAT IN THE CASES OF GROUP COMPANIES, THE TRIBUNAL HAS HELD THAT THE REOPENING ONLY ON THE BASIS OF THE STATEMENT OF THE M.D WITHOUT ANY MATERIAL IS NOT SUSTAINABLE. AS THE FAC TS AND CIRCUMSTANCES IN THIS CASE ARE EXACTLY THE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT ( A). 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OF APRIL, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH OF APRIL, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3 (1), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 50000 4 2 SRI B. RAMA RAJU (JR) PLOT NO.1254A, ROAD NO.63, JU BILEE HILLS HYDERABAD 3 CIT (A)-12, HYDERABAD 4 PR. CIT CENTRAL, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER