I. Santhi, Hyd, Hyderabad V. DCIT, Central Circle-9, Hyd, Hyderabad

ITA 372/HYD/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2943 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-01-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 07-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Keywords: Reopening of assessment; Salary income; Principle of natural justice; Source of fund; Tangible material; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER S.NO. ITA NO. AY ASSESSEE RESPONDENT 1. 370/H/15 2004-05 M. HARI PRASAD RAJU, HYDERABAD. PAN AGSPM 2101 J DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 9, HYDERABAD. 2. 371/H/15 2004-05 M. LAKSHMI, HYDERABAD PAN ACNPL 1466A -DO- 3. 372/H/15 2004-05 I. SHANTI, HYD. PAN ACPP 19876H -DO- 4 373/H/15 2004-05 N. LAKSHMI, HYD. PAN ABZPL 1263G -DO- 5 374/H/15 2004-05 M. SURYANARAYANA RAJU, HYD. PAN AJVPM 3856E -DO- 6 375/H/15 2004-05 I.V. KRISHNAM RAJU, HYD. PAN AAIPI7384R -DO- 7 376/H/15 2004-05 A.V. RAGHAVA RAJU, HYD. PAN ADZPA 5959L -DO- ASSESSEE BY: SRI K.C. DEVDAS RESPONDENT BY: SHRI B. KURMI NAIDU DATE OF HEARING: 21/01/2016 DATE OF PRONOUNCEMENT: 05 /02/2016 O R D E R PER BENCH: THIS BUNCH OF APPEALS PREFERRED BY DIFFERENT ASSES SEES ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-XII, HYDERABAD. I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 2 SINCE IDENTICAL ISSUES ARE INVOLVED IN THESE APPEAL S, THEY WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. TO DISPOSE OF THESE APPEALS, WE REFER TO THE FAC TS IN THE CASE OF MR. HARI PRASAD RAJU IN ITA NO. 370/HYD/201 5. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED HIS REGULAR RETURN OF INCOME FOR THE AY 2004-05 ON 15-10- 2004 DECLARING A TOTAL INCOME OF RS. 1,13,005/-. TH E CASE WAS REOPENED IN THE BACK DROP OF THE 'SATYAM EPISODE' A ND ASSESSEE'S ASSOCIATION WITH THE FAMILY OF SRHI B. RAMALINGA RAJU, THE ERSTWHILE CHAIRMAN OF SATYAM COMPUTERS. THE ASSESSEE IS ALSO DIRECTOR IN MANY OF THE SHELL COMP ANIES PROMOTED BY THE RAJU FAMILY TO MANAGE THEIR FINANCI AL AFFAIRS AND BANK ACCOUNTS IN THE NAME OF THE ASSESSEE IN TH E PAST WERE USED BY THE RAJU FAMILY TO ROUTE FUNDS IN A CO MPLEX AND CIRCUITOUS MANNER. IN VIEW OF THE ABOVE BACKGROUND, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 TO ASSESSEE ON 14/03/2011 WITH THE APPROVAL OF THE ADDL. CIT, CENT RAL RANGE 3, HYDERABAD. IN RESPONSE TO THE NOTICE, THE ASSE SSEE FURNISHED HIS RETURN ON 13-04-2011 DECLARING A TOTA L INCOME OF RS.1,13,005/- AS RETURNED EARLIER. AS REQUESTED BY THE ASSESSEE THE REASONS FOR RE-OPENING OF THE ASSESSME NT WAS COMMUNICATED TO THE ASSESSEE. 3.1 SUBSEQUENTLY NOTICES U/S 143(2) AND 142(1) WER E ISSUED TO THE ASSESSEE CALLING FOR INFORMATION RELEVANT FO R ASSESSMENT. IN RESPONSE TO THE ABOVE NOTICES, THE A SSESSEE FURNISHED HIS REPLIES IN TAPAL. 3.2. DURING THE COURSE OF REASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER NOTICED FROM THE INFORMATION OBTA INED FROM I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 3 BANKS VIZ., AXIS BANK LTD., GREENLAND BRANCH, BEGUM PET, HYDERABAD AND HDFC BAND LTD., LAKDIKAPUL, HYDERABAD THAT DURING THE YEAR 2003-04 (IN THE MONTH OF FEBRUARY 2 004), ASSESSEE HAD RECEIVED CERTAIN AMOUNTS BY WAY OF DEM AND DRAFTS PAYABLE AT CHENNAI AND BANGALORE FROM CERTAI N SHELL COMPANIES PROMOTED BY THE FAMILY MEMBERS OF SHRI B. RAMALINGA RAJU (THE DETAILS AS PER ANNEXURE-L & IL] . THE SAID DDS WERE ISSUED IN THE NAME OF ASSESSEE BY THE COMP ANIES PROMOTED BY RAJU FAMILY AND BOOKED AS ADVANCES FOR EXPENSES. AS THE ALLEGED AMOUNTS WERE ISSUED TO THE ASSESSEE BY WAY OF ACCOUNT PAYEE DEMAND DRAFTS, THE SAME WERE APPARENTLY EN-CASHED BY THE ASSESSEE IN HIS AC COUNTS OPERATED AT BANGALORE AND CHENNAI. 3.2 IN THE COURSE OF SCRUTINY, THE ASSESSEE WAS REQ UIRED TO FURNISH INTER-ALIA, THE DETAILS OF HIS BANK ACCOUNT S, BANK STATEMENTS AND STATEMENT OF AFFAIRS GIVING DETAILS OF HIS ASSETS AND LIABILITIES FOR THE YEAR UNDER ASSESSMENT. BUT IN REPLY, THE ASSESSEE STATED THAT THE INFORMATION CALLED WERE GE NERAL ONE AND NOT APPLICABLE TO HIS CASE AND GAVE EVASIVE REP LIES TO MOST OF THE ITEMS COVERED IN THE QUESTIONNAIRE. 3.3 THE ASSESSING OFFICER OBSERVED THAT ON THE ASSE SSEE'S FAILURE TO DECLARE HIS FINANCIAL AFFAIRS FOR THE PE RIOD UNDER ASSESSMENT AND FAILURE TO EXPLAIN THE NATURE OF REC EIPTS BY WAY OF DDS, WHICH WERE APPARENTLY EN-EASHED BY HIM, IT IS PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY ON TH IS MATTER AND AFTER TAKING INTO ACCOUNT THE INFORMATION AVAIL ABLE ON RECORD, THE ASSESSMENT WAS COMPLETED BY TREATING TH E RECEIPTS THROUGH DDS AMOUNTING TO RS, 74,40,000 AS INCOME OF THE ASSESSEE AND AS SUCH ADDED TO THE TOTAL INCOME OF T HE ASSESSEE. I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 4 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 5. IN COURSE OF THE APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE APPEARED AND MADE THE FOLLOWING POINTS: A) THE AO DID NOT GIVE ANY REASON AS TO WHY THE DEMAND DRAFTS SHOULD HAVE TO BE CONSTITUTED AS INC OME OF THE ASSESSEE B), IT IS NOT DISPUTED BY THE AO THAT THE DDS WERE DRAWN FROM THE BANK ACCOUNT OF DIFFERENT COMPANIES AND T HE BALANCE IN THEIR ACCOUNT WAS NOT DISPUTED. ALL THE SE COMPANIES WERE ALSO ASSESSED TO TAX. C) HOW A DEBIT IN THE BANK ACCOUNT BY WAY OF AN AC COUNT PAYEE DD IN THE NAME OF THE ASSESSEE, CONSTITUTES THE INCOME OF THE ASSESSEE WAS NOT CLARIFIED. D) THE AO STATED THAT THE DDS WERE APPARENTLY EN- CASHED BY THE ASSESSEE, BUT FAILED TO SHOW OR BRIN G ANY EVIDENCE. E) THE ASSESSEE WAS AN EMPLOYEE WITH M/S SRSR ADVISORY SERVICES PVT. LTD AND AS AN EMPLOYEE, ACC OUNT PAYEE DRAFTS WERE ISSUED IN HIS NAME AND THEY WERE CARRIED BY HIM AS A COURIER AND BY AN ENDORSEMENT THEY ULTIMATELY REACHED OTHER CORPORATE ENTITIES OF SAT YAM GROUP OF COMPANIES. THEREFORE, IT IS NOT CORRECT T O SUGGEST THAT THEY WERE EN-CASHED AND THEREFORE BECOMES ASSESSEES INCOME. I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 5 5.1 THE CIT(A) ISSUED A DETAILED QUESTIONNAIRE TO THE ASSESSEE SEEKING SPECIFIC DETAILS AND THE NATURE OF THE TRANSACTIONS, COPY OF WHICH WAS REPRODUCED AT PAGES 9 TO 11 OF HIS ORDER. IN RESPONSE TO THE SAID QUESTIONNAIRE , THE ASSESSEE FILED A LETTER ON 30/01/2015, STATING THAT HE IS NOT IN A POSITION TO FILE THE DETAILS AS THE RECORDS ARE N OT AVAILABLE WITH HIM AND WERE IN THE CUSTODY OF THE CBI/SPL. CO URT. THE CIT(A) DISMISSED THE ASSESSEES APPEAL BY HOLDING A S UNDER: 5.5 FROM THE NARRATION OF THE ABOVE FACTS, IT IS EV IDENT THAT THOUGH THE TRANSACTION TOOK PLACE IN 2004 AND THOUGH NOTICE WAS ISSUED IN 2011 AND ASSESSMENT WA S COMPLETED IN 2011, TILL DATE, THE ASSESSEE HAS NO DETAILS TO JUSTIFY OR INDICATE THE NATURE OF THE TRANSACTI ON AND WHY IT IS NOT TAXABLE. EVEN TODAY, THE ASSESSEE IS STILL NOT IN A POSITION TO CLARIFY OR THROW ANY LIGHT ON THE ACTUAL NATURE OF THE TRANSACTIONS CARRIED OUT. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN DS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS)-12, HYDERABAD [CIT(A)] IN SUSTAINING THE ASSESSMENT MA DE U/S.143 R.W.147 OF THE I.T. ACT, 1961 IS UNSUSTAINABLE BOT H ON FACTS AND IN LAW. 2. (I) THE LEARNED CIT(A) FAILED TO NOTE THAT THE OPINION FORMED BY THE INCOME TAX OFFICER AND THE RECORDING OF REASON S BEFORE THE ISSUE OF NOTICE U/S.148 HAD ABSOLUTELY NO NEXUS WI TH THE ISSUE OF THE REOPENING OF THE ASSESSMENT AND FRAMING OF THE ASSESSMENT AND THEREFORE THE ISSUE OF NOTICE U/S.148 AND THE ASSESSMENT MADE THEREON IS INVALID, WITHOUT JURISDICTION, UNS USTAINABLE AND NEEDS TO BE QUASHED. (II) THE LEARNED CIT(A), ERRED IN HOLDING THAT THE ASSESSING OFFICER HAD VALID REASONS TO REOPEN THE ASSESSMENT OF THE ASSESSEE COMPANY TO EXAMINE THE VERACITIES AND FINANCIAL IM PLICATION BETWEEN THE ASSESSEE COMPANY AND MIS. SATYAM COMPU TERS SERVICES LTD. (III) THE LEARNED CIT(A), FAILED TO NOTE THAT AN A SSESSMENT MADE U/S.143(3) CANNOT BE REOPENED U/S.148 BEYOND A PER IOD OF FOUR YEARS AS THERE IS NO FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS RELEVANT FO R THE ASSESSMENT MADE ORIGINALLY AND THEREFORE OUGHT TO HAVE QUASHE D THE REASSESSMENT PROCEEDINGS. (IV) THE LEARNED CIT(A), FAILED TO NOTE THAT THE A SSESSING OFFICER HAD NO TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM THE ORIGINAL ASSESSMENT AND THEREFORE I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 6 THE ISSUE OF NOTICE U/S.148 AND THE ASSESSMENT MAD E THEREON IS INVALID, WITHOUT JURISDICTION AND THEREFORE MUST B E QUASHED. 3. THE LEARNED CIT(A), HAVING FAILED TO NOTE THAT THERE WAS NO APPLICATION OF MIND BY THE ASSESSING OFFICER TO TH E REASONS RECORDED, OUGHT TO HAVE NOTICED FROM THE RECORDS T HAT THE ENTIRE REOPENING OF THE ASSESSMENT WAS UNDER THE DIRECTIO N OF SUPERIOR OFFICERS AND THEREFORE THE ENTIRE ASSESSM ENT SUFFERS FROM LEGAL INFIRMITY AND IS TOTALLY CONTRARY TO THE STA TUTORY PROVISIONS AND HENCE MUST BE QUASHED. 4. THE LEARNED CIT(A), FAILED TO NOTE THAT THE ASS ESSING OFFICER WAS FULLY AWARE OF THE EXISTENCE OF THE CO MPANIES WHICH WERE NOT FICTITIOUS AND NEITHER THEIR EXISTENCE NO R THEIR IDENTITY WAS UNDER DISPUTE AND THEREFORE ON THE MERE STATEM ENT OF SRI B.RAMALINGA RAJU, EX-CHAIRMAN OF M/S.SCSL, CANNOT BE THE BASIS TO REOPEN WITHOUT THERE BEING ANY MATERIAL OR ANY INFORMATION HAVING A DIRECT LINK TO THE ASSESSEE COMPANY AND T HEREFORE THE ISSUE OF NOTICE U/S.148 AND THE ASSESSMENT MADE TH EREON IS INVALID, WITHOUT JURISDICTION AND THEREFORE MUST B E QUASHED. 5. THE LEARNED CIT(A) FAILED TO NOTE THAT THERE WA S NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF AND THE INESCAPABLE CONCLUSION IS THAT THE ITO DID NOT HAV E REASON TO BELIEVE THAT ANY PART OF THE INCOME HAD ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF TH E OMISSION OR THE FAILURE ON THE PART OF THE ASSESSEE TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS AND THEREFORE THE NOTICE ISSUED U/S.148 TO REASSESS THE ASSESSEE IS TO BE STRUCK DOWN AS INV ALID AND MUCH SO THE REASSESSMENT. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDI TION OFRS.74,40,000 BEING DEMAND DRAFTS RECEIVED AND DR AWN ON AXIS BANK AT RS.58,20,000 AND HDFC BANK AT RS.16,15,000 . 7. BEFORE US, THE LD. AR SUBMITTED THAT THE ONLY INCOME OF THE ASSESSEE FOR THE PREVIOUS YEAR ENDING 31/03/200 4 RELEVANT TO THE ASSESSMENT YEAR 2004-2005 WAS SALARY INCOME FROM M/S. MAYTAS INFRA PVT. LTD. THE ASSESSEE'S SOURCES OF INCOME WERE INCOME FROM SALARY. THE RETURN OF INCOME WAS F ILED ON 15-10-2004 DECLARING AN INCOME OF RS. 1,13,005/- FR OM THE RESPECTIVE SOURCES OF INCOME. THE ASSESSMENT WAS CO MPLETED U/S.143 OF THE I.T. ACT. 1961 AFTER DUE VERIFICATIO N AND DULY ACCEPTING THE INCOME RETURNED. THE ASSESSEE THUS HA D RS.1.13,005/- AS TAXABLE INCOME FOR THE SAID ASSESS MENT YEAR. A NOTICE U/S.148 WAS SERVED BY THE ASSESSING OFFICE R DIRECTING THE ASSESSEE TO SUBMIT THE RETURN OF INCOME. THE PR EMISE FOR I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 7 REOPENING THE ASSESSMENT AS MENTIONED BY THE ASSESS ING OFFICER IN THE ASSESSMENT ORDER WAS AS UNDER: ' THE CASE WAS REOPENED IN THE BACK DROP OF THE 'SAT YAM EPISODE' AND ASSESSEE'S ASSOCIATION WITH THE F AMILY OF SHRI B. RAMALINGA RAJU, THE ERSTWHILE CHAIRMAN OF SATYAM COMPUTERS. THE ASSESSEE IS ALSO DIRECTOR IN MANY OF THE SHELL COMPANIES PROMOTED BY THE RAJU FAMILY TO MANAGE THEIR FINANCIAL AFFAIRS AND BANK ACCOUNTS IN THE NAME OF THE ASSESSEE IN THE PAST WERE USED BY THE RAJU FAMILY TO ROUTE FUNDS IN A COMPL EX AND CIRCUITOUS MANNER. IN VIEW OF THE ABOVE, NOTICE U /S.148 WAS ISSUED TO THE ASSESSEE ON 14/0312011 WITH THE APPROVAL OF THE ADDL., CIT, CENTRAL RANGE 3, HYDERABAD. 7.1 REFERRING THE ABOVE, THE LD. AR SUBMITTED THAT THE ASSESSEE IN OBEDIENCE TO THE NOTICE U/S.148 FILED T HE RETURN OF INCOME ADMITTING INCOME OF RS.1,13,005/-. THE ASSES SEE ALSO ASKED FOR THE REASONS RECORDED BY THE ASSESSING OFF ICER FOR THE ISSUANCE OF NOTICE U/.148. HE CONTENDED THAT THE AS SESSING OFFICER HAS NEVER PROVIDED THE REASONS AND NO SUCH REASONS AS RECORDED WERE SERVED ON THE ASSESSEE. THE ASSESS EE HAD THUS BEEN DEPRIVED TO PLACE HIS OBJECTIONS FOR THE REOPENING OF THE ASSESSMENT, A BLATANT VIOLATION OF THE PRINCIPL ES OF NATURAL JUSTICE. 7.2. THE LD. AR SUBMITTED THAT THE ASSESSEE HAVING NO ACCESS TO THE REASONS RECORDED SUBMITS THAT HE IS NOT AWAR E AS TO HOW FAR THEY ARE GERMANE TO THE ASSESSEE'S ASSESSME NT. THIS FACT WAS VERY MUCH REVEALING FROM THE BODY OF THE A SSESSMENT ORDER. THE ASSESSMENT WAS COMPLETED U/S.144 READ WI TH SECTION 147 OF THE I. T. ACT, 1961 ON AN INCOME OF RS.75,43,005/- IN OTHER WORDS, AN ADDITION OF RS.74 ,40,000/- WAS MADE TO THE INCOME RETURNED. THE ENTIRE ADDITIO N IS ILL CONCEIVED AND THE ASSESSMENT IS AGAINST THE PRINCIP LES OF NATURAL JUSTICE AS EXPLAINED IN DETAIL HEREUNDER: I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 8 A) IT WAS MENTIONED IN THE ASSESSMENT ORDER THAT T HE DEMAND DRAFTS RECEIVED THROUGH DEBITS IN THE BANK ACCOUNTS OF THE RESPECTIVE CORPORATE ENTITIES WITH (I)AXIS BANK LTD., GREENLANDS, BEGUMPET BRANCH; (II) HDFC BANK LTD., LAKDIKAPUL BRANCH WERE TREATED AS INCOM E OF THE ASSESSEE AND AS SUCH ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IT WAS NOT MENTIONED UNDER WHICH HEA D OF INCOME THEY ARE SUBJECTED TO TAX, THE MAIN CRITERI A AS PER THE PROVISIONS OF THE ACT. B) WITHOUT COMMUNICATING THE REASONS RECORDED, THE ASSESSMENT PROCEEDINGS WERE COMMENCED AND THEREFORE THE ASSESSMENT IS VITIATED IN LAW. C) THE ASSESSMENT WAS COMPLETED U/S.144 AS BEST JUDGMENT ASSESSMENT THE ASSESSING OFFICER FAILED T O GIVE ANY SHOW-CAUSE NOTICE AS TO HOW AND WHY SUCH DEMAND DRAFTS SHALL HAVE TO BE CONSTRUED AS THE IN COME OF THE ASSESSEE? D) THE UNDISPUTED FACT ON THE RECORDS OF THE ASSES SING OFFICER IS THAT THE DEMAND DRAFTS HAVE BEEN DRAWN FROM THE BANK ACCOUNTS OF THE RESPECTIVE CORPORATE ENTI TIES WHICH WERE ALSO ASSESSED TO TAX IN THE VERY SAME JURISDICTION OF THE ASSESSING OFFICER WHEREIN THE BALANCES IN THE SAID BANK ACCOUNTS HAVE NOT BEEN DISPUTED IN THEIR REOPENED COMPLETED ASSESSMENTS. IN SUCH A SITUATION. HOW IS IT CORRECT TO TREAT SUCH DEBITS IN THE BANK ACCOUNTS BY THE ACCOUNT PAYEE DEMAND DRAF TS IN THE NAME OF ASSESSEE SHALL CONSTITUTE THE INCOM E OF THE ASSESSEE? IF SO UNDER WHICH PROVISIONS OF THE I.T ACT, 1961? I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 9 E) THE FINDING OF THE ASSESSING OFFICER THAT THE ' ALLEGED AMOUNTS WERE ISSUED TO THE ASSESSEE BY WAY OF ACCO UNT PAYEE DEMAND DRAFTS, THE SAME WERE APPARENTLY EN- CASHED BY THE ASSESSEE IN HIS ACCOUNTS OPERATED AT BANGALORE AND CHENNAI' LACKS ITS CREDENCE SINCE IT IS THE PRESUMPTION OF THE ASSESSING OFFICER AND NOT B ASED ON ANY COGENT EVIDENCE. THIS IS BECAUSE, ASSESSING OFFICER HAD NOT BROUGHT ANY EVIDENCE, IF HE HAS IN HIS POSSESSION. F) THE INITIAL DEBIT WAS ARISING FROM THE BANK ACC OUNTS OF RESPECTIVE CORPORATE ENTITIES WHICH ENTITIES WERE ASSESSED TO TAX AND THE BALANCES IN THE SAID BANK ACCOUNTS WERE NEVER IN DISPUTE SINCE THE REOPENED ASSESSMENT OF ALL THOSE CORPORATE ENTITIES ONCE REOPENED WERE COMPLETED BY THE VERY SAME ASSESSING OFFICER. G) THE ASSESSEE WAS EMPLOYED WITH M/S.MAYTAS INFRA PVT. LTD. IS THE FACT ON RECORDS. AS AN EMPLOYEE O F GROUP COMPANY, MERELY IF ACCOUNT PAYEE DRAFTS WERE ISSUE D IN HIS NAME AND THEY WERE CARRIED BY HIM AS A COURIER , SINCE HE WAS AN EMPLOYEE OF GROUP COMPANY AND BY A N ENDORSEMENT WHICH ULTIMATELY REACHED OTHER CORPORA TE ENTITIES OF RAJU GROUP OF COMPANIES, HOW IS CORREC T TO SUGGEST THAT THEY WERE ENCASHED BY THE ASSESSEE AN D THEREFORE THEY CONSTITUTE THE INCOME OF THE ASSESS EE? H) CAN THERE BE AN ASSESSMENT ON PRESUMPTION OVER PRESUMPTION AS NOTICEABLE FROM THE RESPECTIVE PRESUMPTIONS NOTICEABLE FROM THE ASSESSMENT ORDER? FURTHER THERE WAS NOT EVEN A WHISPER BY THE ASSESS ING I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 10 OFFICER AS TO HOW HE ESTABLISHED THE ALLEGATION TH AT THE ASSESSEE EN-CASHED THE DRAFTS AND THAT TOO WITHOUT ANY COGENT EVIDENCE IN HIS POSSESSION. HOW CAN THERE B E SUCH AN ASSESSMENT AS BALD AS THE WISHFUL THINKING OF THE ASSESSING OFFICER? I) IT IS THE SETTLED PRINCIPLE THAT THE ASSESSMENT SHOULD BE ON FACTS. IN NO EVENT IT COULD BE WITH IMAGINAT ION FOLLOWED BY THE IMAGINARY STATEMENTS AS DEPICTED B Y THE ASSESSING OFFICER ONE AFTER THE OTHER IN THE ASSES SMENT ORDER. SUCH IMAGINARY VERSION OF THE ASSESSING OFF ICER WHEN CLOTHED AS FINDINGS IN THE ASSESSMENT ORDER T O TREAT SUCH AMOUNTS AS THE INCOME OF THE ASSESSEE S HALL BE THE ABSURD PROPOSITIONS AND THUS FAILS TO ALL T HE TESTS OF LAW. J) THE ASSESSING OFFICER MENTIONED THAT THE ASSESS EE WAS GIVEN SUFFICIENT OPPORTUNITY AND A FINAL OPPOR TUNITY WAS GIVEN ON 23/12/2011. THE ASSESSEE AS A STATEME NT OF FACT SUBMITS THAT NO SUCH OPPORTUNITY WAS GIVEN AND MUCH LESS NO SUCH LETTER WAS ALSO SERVED UPON THE ASSESSEE. 7.3 THE LD. AR SUBMITTED THAT IN THE APPEALS FILE D BY DIFFERENT ASSESSEES, ONLY MR. HARI PRASAD RAJU AND MR. A.V. RAGHAVA RAJU, HAD FILED RETURN OF INCOMES AND OTHERS HAD N OT FILED RETURN OF INCOMES. 7.4 THE LD. AR SUBMITTED THAT THE CIT(A) WAS WRONG IN SUSTAINING THE ASSESSMENT MADE U/S 143(3) R.W.S. 14 7 OF THE ACT AS IT IS UNSUSTAINABLE BOTH ON FACTS AND IN LAW . I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 11 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, BESIDES STRONGLY RELYING ON THE ORDERS OF REV ENUE AUTHORITIES SUBMITTED THAT THE REASONS RECORDED BY THE ASSESSING OFFICER WERE ALREADY COMMUNICATED TO ASSE SSEE. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDE RS OF REVENUE AUTHORITIES. THE AO MADE AN ADDITION OF RS. 74,40,000/- ON ACCOUNT OF AMOUNTS RECEIVED BY THE A SSESSEE BY WAY OF DEMAND DRAFTS DEPOSITED BY MR. HARI PRASA D RAJU, THE ASSESSEE IN M/S HDFC BANK AND AXIS BANK IN THE MONTH OF FEBRUARY 2004 FROM THE COMPANIES OF 'SATYAM GROU P' , THE MANAGEMENT OF WHICH VESTED WITH FAMILY MEMBERS OF SHRI B. RAMALINGA RAJU, CHAIRMAN OF THE SATYAM COMPUTERS SE RVICES LTD. THE AO ALSO OBSERVED THAT THESE 'SHELL' COMPAN IES HAD CLAIMED THESE AMOUNTS AS THEIR EXPENDITURE. AS THE AMOUNTS RECEIVED WAS SUBSTANTIAL AND NO RETURN WAS FILED, N OTICE U/S 148 WAS ISSUED AND THE ASSESSEE WAS ASKED TO FURNIS H THE DETAILS OF HIS BANK ACCOUNT, STATEMENT OF AFFAIRS G IVING DETAILS OF HIS ASSETS AND LIABILITIES AND ALSO TO EXPLAIN T HE NATURE OF THE PAYMENT RECEIVED BY HIM. HOWEVER, NO DETAILS WE RE FURNISHED AND THE AO COMPLETED THE ASSESSMENT U/S 1 44 TO THE BEST OF HIS JUDGMENT BY MAKING ADDITION OF THE AMOUNTS RECEIVED BY WAY OF DDS FROM THE SHELL COMPANIES OF SATYAM GROUP. THE CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER OBSERVING THAT THE ASSESSEE HAS NO DETAILS TO JUSTIFY OR INDICATE THE NATURE OF THE TRANSACTION AND WHY IT I S NOT TAXABLE. 9.1 THE GRIEVANCE OF THE LD. AR OF THE ASSESSEE IS THAT THERE BEING NO REASONS FOR THE INITIATION OF PROCEEDINGS U/S 148 OF THE IT ACT, 1961 AND INITIATED ONLY ON BACKDROP OF SATYAM EPISODE, ALSO NO REASONS WERE COMMUNICATED TO THE A SSESSEE AND AS SUCH THE PROCEEDINGS WHEN CEASED TO SURVIVE, THE I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 12 ASSESSING OFFICER HAD NO JURISDICTION TO MAKE ADDIT ION ON ANY ISSUES MUCH LESS OTHER THAN THE ISSUES IN RESPECT O F WHICH PROCEEDINGS WERE INITIATED AND THERE BEING NO SUCH ISSUES, THE ASSESSMENT BASED ON SUCH NOTICE OF REOPENING IS NOT VALID IN LAW. 9.2 THE CASE OF THE ASSESSEE WAS REOPENED IN THE BA CKDROP OF SATYAM EPISODE. SINCE THE ASSESSEE FAILED TO D ECLARE HIS FINANCIAL AFFAIRS AND FAILED TO EXPLAIN THE NATURE OF RECEIPTS BY WAY OF DDS THE ASSESSING OFFICER PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY ON THIS MATTER AND AFTE R TAKING INTO ACCOUNT THE INFORMATION AVAILABLE ON RECORD, C OMPLETED THE ASSESSMENT U/S 144 OF THE ACT, BY TREATING THE DDS AS INCOME OF ASSESSEE. BEFORE THE CIT(A), WHEN THE CIT (A) ISSUED A QUESTIONNAIRE, THE ASSESSEE STATED THAT HE IS NOT IN A POSITION TO FILE THE DETAILS AS THE RECORDS WERE NO T AVAILABLE WITH HIM AND WERE IN THE CUSTODY OF THE CBI/SPL. CO URT. 9.3 THE GENERAL PRINCIPLE IS THAT ONCE AN ASSESSME NT IS COMPLETED IT BECOMES FINAL. SECTION 147 EMPOWERS TH E ASSESSING OFFICER TO REOPEN AN ASSESSMENT IF THE CO NDITIONS PRESCRIBED THEREIN ARE SATISFIED. THE CONDITIONS AR E: I) THE ASSESSING OFFICER HAS TO RECORD THE REASON F OR TAKING ACTION UNDER SECTION 147. IT IS ON THE BASIS OF SUC H REASONS RECORDED IN THE FILE THAT THE VALIDITY OF THE ORDER REOPENING ASSESSMENT HAS TO BE DECIDED. RECORDED REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. II) THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. III) THE JURISDICTIONAL CONDITION UNDER SECTION 147 IS THE FORMATION OF BELIEF BY THE ASSESSING OFFICER TH AT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 13 IV) NO ACTION CAN BE INITIATED UNDER SECTION 147 AF TER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT BY REASON FOR THE FAILURE ON THE PART OF THE TAXPAY ER TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT. 9.4 THE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. V/S D.C.I.T. (2003) 259 ITR 19 (SC) HAS LAID D OWN THE PROCEDURE TO CHALLENGE THE REASSESSMENT PROCEEDINGS AS BELOW: WHEN A NOTICE UNDER SECTION 148 OF THE INCOME-TAX A CT, 1961, IS ISSUED, THE PROPER COURSE OF ACTION IS TO FILE THE RETURN AND, IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING THE NOTICES. THE ASSESSING OFFICER IS BOUND TO FUR NISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF RE ASONS, THE ASSESSEE IS ENTITLED TO FILE OBJECTIONS TO ISS UANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPO SE OF THE SAME BY PASSING A SPEAKING ORDER. 9.5 WE ARE OF THE VIEW THAT THE ASSESSING OFFICER H AS NO TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT TH ERE WAS ESCAPEMENT OF INCOME FROM THE ORIGINAL ASSESSMENT W HICH IS APPARENT ON RECORD AND FAILED TO FURNISH THE REASON S FOR REOPENING THE ASSESSMENT TO THE ASSESSEE. AS PER ASSESSMENT ORDER, IT IS CLEAR THAT THE REOPENING WA S DONE ONLY BASED ON SATYAM EPISODE. ASSESSING OFFICER HAS EXTR ACTED ONLY THE DEPOSITS IN THE BANK ACCOUNT AND NOT DISCL OSED OR BROUGHT ON RECORD THE WITHDRAWALS OF SUCH DEPOSITS AND ITS UTILISATION BY THE ASSESSEE. IT IS CLEAR THAT THE A SSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE WHOLE ISSUE AND IT GIVES THE IMPRESSION AND URGENCY IN REOPENING THE ASSESSMENTS ONLY BASED ON THE SATYAM EPISODE AND HE HAS NO COGENT MATERIAL FOR SUCH REOPENING. ALSO, THE AD DITIONS WERE MADE ON THE FINDINGS WHICH WERE MADE SUBSEQUEN T TO THE INITIATION OF THE REOPENING OF THE ASSESSMENT. IT IS CLEAR FROM THE RECORD THAT THE ASSESSMENT PROCEEDINGS U/S 147 WAS I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 14 INITIATED AND SUBSEQUENTLY THE PROCEEDINGS WERE COM PLETED WITHOUT ANY DIRECTION AS THE PROCEEDINGS WERE INITI ATED ONLY BASED ON SATYAM EPISODE. ASSESSING OFFICER HAS NO T DEMONSTRATED ANYWHERE IN THE WHOLE PROCEEDINGS U/S 147 THAT THE PROPER REASONS OR COGENT MATERIAL ON WHICH THE PROCEEDINGS WERE INITIATED AND CONDUCTED, WHICH HAS CONNECTION WITH ORIGINAL ASSESSMENT U/S 143(1) AND THEREFORE THE ISSUE OF NOTICE U/S 148 AND THE ASSESSMENT MADE THERE ON IS INVALID AND WITHOUT JURISDICTION AS THE ASSESSIN G OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH NEX US BETWEEN THE DDS AND ENCASHING THE SAME. MOREOVER, THE ASSES SING OFFICER HAS NOT SATISFIED THE CONDITIONS TO REOPEN THE ASSESSMENT AS MENTIONED ABOVE. THEREFORE, WE QUASH THE REOPENING OF ASSESSMENT MADE BY THE ASSESSING OFFIC ER AND THE ADDITION MADE THEREON. 10. SINCE THE FACTS AND GROUNDS OF APPEAL IN OTHER ASSESSEES CASES IN ITA NOS. 371 TO 376/HYD/2015 AR E MATERIALLY IDENTICAL TO THAT OF M. HARI PRASAD RAJU BEING ITA NO. 370/HYD/15 (SUPRA) WE QUASH THE REOPENING OF ASSESSMENT MADE U/S 148 IN THESE CASES ALSO. 11. IN THE RESULT, ALL THE APPEALS UNDER CONSIDERAT ION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2016 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 5 TH FEBRUARY , 2016 KV I.T.A. NO. 370 TO 376/HYD/2015 MR. HARI PRASAD RAJU AND OTHERS 15 COPY FORWARDED TO: 1. M. HARI PRASAD RAJU, 2. M. LAKSHMI, 3) I SANTHI, 4) N. LAKSHMI, 5) M. SURYANARAYANA RAJU, 6) I.V. KRISHNAM RAJU, AND 7) A.V. RAGHAVA RAJU, C/OFORTUNE MONARCH MALL, 3 RD FLOOR, NO. 306, PLOT NO. 707-709, JUBILEE HILLS, ROAD NO. 36, HYD. 500 033 8 DCIT, CENTRAL CIRCLE 9, POSNET BHAVAN, CHURCH BUILDING, TILAK ROAD, HYDERABAD 500 001 9 CIT(A), 12, HYDERABAD 10 CIT (CENTRAL), HYDERABAD 11 THE DR, ITAT, HYDERABAD