M/s Danishta BIo-Tech Pvt Ltd., Hyderabad V. Asst. Commmissioner ofOfficer(OSD), Central Range-1, Hyderabad

ITA 484/HYD/2014

• Counselvise Citation: 48422514 RSA 2014
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO. A.Y. APPELLANT RESPONDENT 482/HYD/2014 2002-03 M/S. SATABISHA AGRO P. LTD., HYDERABAD PAN AAHCS1693K INCOME TAX OFFICER, (OSD)-3, CENTRAL RANGE- 1, HYDERABAD. 483/HYD/2014 M/S. SRSR ESTATES P. LTD., HYDERABAD PAN AAECS3693J 484/HYD/2014 M/S. DANISHTA BIO- TECH P. LTD., HYDERABAD PAN AABCD7534J ACIT (OSD), CENTRAL RANGE- 1, HYDERABAD. 489/HYD/2014 M/S. CHITTA FARMS P. LTD., HYDERABAD PAN AAECC1176E ACIT, CENTRAL CIRCLE-1, HYDERABAD. 492/HYD/2014 M/S. ANURADHA GREENLANDDS P. LTD., HYDERABAD PAN AAECA1845N INCOME TAX OFFICER (OSD)- 3, CENTRAL RANGE-1, HYDERABAD. 493/HYD/2014 M/S. ROHINI GREENLANDS P. LTD., HYDERABAD PAN AACCR4354B ACIT, CENTRAL CIRCLE-1, HYDERABAD. 495/HYD/2014 M/S. COAST LINE GREENLANDS P. LTD., HYDERABAD. PAN AABCC5529J ACIT (OSD), CENTRAL RANGE- 1, HYDERABAD. 496/HYD/2014 M/S. UTTARASHADA GREENLANDS P. LTD., HYDERABAD. PAN AAACU 6108L ITO (OSD)-3, CENTRAL RANGE- 1, HYDERABAD. 2 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 497/HYD/2014 2002-03 M/S. PARASNATH GREENLANDS P. LTD., HYDERABAD PAN AAACP1717E ITO (OSD)-3, CENTRAL RANGE- 1, HYDERABAD. ITA.NO. A.Y. APPELLANT RESPONDENT 519/HYD/2014 2002-03 DCIT, CENTRAL CIRCLE-9, HYDERABAD. M/S. PARASNATH GREENLANDS P. LTD., HYDERABAD. PAN AAACP1717E 520/HYD/2014 M/S. ANURADHA GREENLANDS P. LTD., HYDERABAD. PAN AAECA1845N 521/HYD/2014 M/S. UTTARASHADA GREENLANDS P. LTD., HYDERABAD. PAN AAACU6108L 522/HYD/2014 M/S. COASTLINE GREENLANDS P. LTD., HYDERABAD. PAN AABCC5529J 523/HYD/2014 M/S. DHANISHTA BIO- TECH P. LTD., HYDERABAD. PAN AABCD 7534J 524/HYD/2014 M/S. SATABISHA AGRO P. LTD., HYDERABAD. PAN AAHCS 1693K FOR ASSESSEE MR. K.C. DEVDAS FOR REVENUE MR. Y.V.S.T. SAI 3 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD DATE OF HEARING 25.09.2014 DATE OF PRONOUNCEMENT 10.10.2014 ORDER PER BENCH THESE CROSS-APPEALS PREFERRED BY ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE SEPERATE BUT IDENTICAL ORD ERS OF THE CIT(A)-VII, HYDERABAD DATED 30.12.2013 FOR THE ASSE SSMENT YEAR 2002-2003. REVENUE HAS NOT PREFERRED ITS APPEALS IN THE CASES OF M/S. SRSR ESTATES P. LTD., M/S. CHITTA FARMS P. LTD ., M/S. ROHINI GREENLANDS P. LTD., VIDE I.T.A. NO. 483, 489 AND 49 3/HYD/2014. SINCE, ISSUES RAISED IN THESE APPEALS ARE COMMON AN D PERTAIN TO THE GROUP OF CASES OF SATYAM COMPUTER SERVICES LIMI TED, THESE APPEALS ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. 2. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARN ED D.R. FOR THE SAKE OF REFERENCE, APPEAL IN THE CASE OF M/S. SATABISHA AGRO P. LTD., IN ITA.NO. 482/HYD/2014 IS DISCUSSED IN DETAIL. ITA.NO.482/HYD/2014 : 3. BRIEFLY STATED, ASSESSEE COMPANY IN THE BUSINES S OF AGRICULTURE AND ALLIED ACTIVITIES, FILED ITS RETURN OF INCOME FOR THE A.Y. 2002-03 ON 31.10.2002. AN INITIAL NOTICE U/S.1 43(2) WAS ISSUED TO ASSESSEE WHICH RESULTED IN FILING OF REVI SED RETURN OF INCOME ON 09.12.2003 INCREASING ITS INCOME TO RS.17 ,16,010. THE ASSESSMENT WAS COMPLETED BY THE A.O. U/S.143(3) BY ORDER DT.28.02.2005 ASSESSING THE INCOME AT RS.17,70,346 MAKING A DISALLOWANCE OF RS.54,336 TOWARDS THE CLAIM OF DEPR ECIATION ON THE TRACTOR. 4 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 3.1. ON 7.01.2009 SHRI B. RAMALINGA RAJU, THE THEN CHAIRMAN OF SATYAM COMPUTERS LTD. CONFESSED TO HAVI NG FUDGED THE ACCOUNTS OF THAT COMPANY OVER THE LAST SO MANY YEARS WITH AN INTENTION TO DEFRAUD THE PUBLIC AT LARGE. SHRI B. R AMALINGA RAJU AND HIS FAMILY MEMBERS HAVE FLOATED MORE THAN 350 C OMPANIES AND ASSESSEE-COMPANY IS ONE OF THEM. AS PER THE ANN UAL REPORT OF ASSESSEE-COMPANY FOR THE YEAR 2001-02, SMT. B. JHAN SI RANI AND SRI N. RAMA RAJU WERE ITS DIRECTORS. THE EFFECTIVE SHARE-HOLDERS AND THE CONTROLLING DIRECTORS IN ALL THE 350 PLUS C OMPANIES ARE THE FAMILY MEMBERS OF SRI B. RAMALINGA RAJU. WITH THIS SCENARIO IN BACK GROUND, THE CASES ALREADY CENTRALIZED WITH THE ITO (OSD), CENTRAL RANGE-1, HYDERABAD AND THE PRESENT CASE WAS RE-OPENED ON THE REASON THAT THE FUDGING OF ACCOUNTS BY SRI B . RAMALINGA RAJU WOULD HAVE A DIRECT IMPACT ON THE CASE AND REV ENUES RECORDED AND THE EXPENDITURE DEBITED IN THIS CASE A RE MANIPULATED TO EVADE INCOME TAX. ACCORDINGLY, NOTICE U/S. 148 O F THE I.T. ACT DATED 26.3.2009 WAS ISSUED WHICH WAS SERVED ON ASSE SSEE ON THE SAME DATE. IN RESPONSE TO THE NOTICE, ASSESSEE FILE D A RETURN ON 26.05.2009. THE TOTAL INCOME AS PER THE RETURN WAS RS. 17,16,010. 3.2. ASSESSEE OBJECTED TO ISSUE OF NOTICE UNDER SE CTION 148 STATING THAT THE ASSESSMENT CANNOT BE REOPENED AFTE R EXPIRY OF 4 YEARS UNLESS THERE IS OMISSION OR FAILURE ON THE PA RT OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NEC ESSARY FOR ASSESSMENT. IT WAS FURTHER SUBMITTED THAT THERE IS NO RECORD OR EVIDENCE THAT ANY INCOME OF ASSESSEE WAS SIPHONED O FF NOR THERE IS ANY EVIDENCE THAT ANY PARTICULAR INCOME HAS ESCAPED ASSESSMENT. THE ASSESSING OFFICER HOWEVER, REJECTED THE CONTENT ION AND EXAMINED THE ACCOUNTS WHICH WERE ALREADY ACCEPTED U NDER SECTION 143(3), THEREBY MAKING ADDITIONS OF INVESTMENTS MAD E IN THE LAND, 5 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD CREDITS IN THE BANK ACCOUNT, UNSECURED LOANS AND AD DITION TO FIXED ASSETS THEREBY BOTH THE CREDITS AND DEBITS HAVE BEE N BROUGHT TO TAX AS INCOME AS AGAINST THE INCOME RETURNED IN THE ORDER UNDER SECTION 143(3) AND THE TOTAL INCOME WAS DETERMINED AT RS.1,03,01,244. 4. ASSESSEE OBJECTED BEFORE THE CIT(A) TO THE REOP ENING OF THE ASSESSMENT ON THE GROUND THAT THE PROVISIONS OF SECTION 148 HAVE BEEN WRONGLY INVOKED AND ACCORDINGLY, REOPENIN G IS NOT VALID IN LAW. ASSESSEE ALSO CLAIMED BEFORE THE LD. CIT(A) WITH RESPECT TO THE OTHER ADDITIONS MADE BY A.O. SUCH AS DENIAL OF EXPENDITURE CLAIM OF AN AMOUNT OF RS.41,37,459, DIFFERENCE BETW EEN BANK STATEMENT AT RS.1,07,467, ADDITION ON ACCOUNT OF UN SECURED LOANS OF RS.42,85,972, DEPRECIATION ON TRACTOR OF RS.54,3 26 AND LEVY OF INTEREST UNDER SECTION 234A AND 234B OF AN AMOUNT O F RS.43,540 AND RS.12,84,434. 5. THE LD. CIT(A) HAVING CONSIDERED THE SUBMISSION S OF THE AUTHORIZED REPRESENTATIVE AND ALSO THE OBSERVAT ION OF THE ASSESSING OFFICER, OPINED THAT THE ASSESSING OFFICE R HAD A REASON TO BELIEVE THAT THERE IS AN ESCAPEMENT OF INCOME, A ND HENCE, THE REOPENING OF ASSESSMENT MADE BY A.O. IS IN ORDER. T HEREFORE, THE OBJECTION RAISED BY ASSESSEE IS REJECTED AND DISMIS SED THE GROUND OF ASSESSEE. HOWEVER, HE GAVE PARTIAL RELIEF ON THE ADDITIONS MADE. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE IS IN APPEAL BEFORE US AND HAVE RAISED THE FOLLOWING COMM ON GROUNDS AMONG OTHER INDIVIDUAL GROUNDS : 6 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS)- VII, HYDERABAD IN SUSTAINING THE ASSESSMENT MADE UNDER SECTION 143 READ WITH 147 OF THE I.T. ACT, 19 61 IS UNSUSTAINABLE BOTH ON FACTS AND IN LAW. 2. (I) THE LEARNED CIT(A)-VII, HYDERABAD, FAILED TO N OTE THAT THE OPINION FORMED BY THE INCOME TAX OFFICER AND TH E RECORDING OF REASONS BEFORE THE ISSUE OF NOTICE U/S . 148 HAD ABSOLUTELY NO NEXUS WITH THE ISSUE OF THE REOPE NING 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, UNSUSTAINABLE AND NEEDS TO BE QUASHED . (II) THE LEARNED CIT(A)-VII, HYDERABAD, ERRED IN HO LDING THAT THE ASSESSING OFFICER HAD VALID REASONS TO REO PEN THE ASSESSMENT OF THE APPELLANT COMPANY TO EXAMINE THE VERACITIES AND FINANCIAL IMPLICATION BETWEEN TH E APPELLANT COMPANY AND M/S. SATYAM COMPUTERS SERVICES LTD. (III) THE LEARNED CIT(A)-VII, HYDERABAD FAILED TO N OTE THAT AN ASSESSMENT MADE U/S. 143(3) CANNOT BE REOPENED U/S. 148 BEYOND A PERIOD OF FOUR YEARS AS THERE IS NO FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FU LLY AND TRULY ALL THE MATERIAL FACTS RELEVANT FOR THE ASSES SMENT MADE ORIGINALLY AND THEREFORE OUGHT TO HAVE QUASHED THE REASSESSMENT PROCEEDINGS. (IV) THE LEARNED CIT(A)-VII, HYDERABAD FAILED TO NO TE THAT THE ASSESSING OFFICER HAD NO TANGIBLE MATERIAL TO C OME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCO ME FROM THE ORIGINAL ASSESSMENT AND THEREFORE THE ISSU E OF NOTICE U/S.148 AND THE ASSESSMENT MADE THEREON IS 7 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD INVALID, WITHOUT JURISDICTION AND THEREFORE MUST BE QUASHED. 3. THE LEARNED CIT(A)-VII, HYDERABAD FAILED TO NOTE THAT THERE WAS NO APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE REASONS RECORDED OUGHT TO HAVE NOTIC ED FROM THE RECORDS THAT THE ENTIRE REOPENING OF THE ASSESSMENT WAS UNDER THE DIRECTION OF SUPERIOR OFFI CERS AND THEREFORE THE ENTIRE ASSESSMENT SUFFERS FROM LE GAL INFIRMITY AND IS TOTALLY CONTRARY TO THE STATUTORY PROVISIONS AND HENCE MUST BE QUASHED. 4. THE LEARNED CIT(A)-VII, HYDERABAD, FAILED TO NOT E THAT THE ASSESSING OFFICER WAS FULLY AWARE OF THE EXISTE NCE OF THE COMPANIES WHICH WERE NOT FICTITIOUS COMPANIE S AND NEITHER THEIR EXISTENCE OR THEIR IDENTITY WAS U NDER DISPUTE AND THEREFORE ON THE MERE STATEMENT OF SRI B. RAMALINGA RAJU, EX.CHAIRMAN OF M/S. SCSL, CANNOT BE THE BASIS TO REOPEN WITHOUT THERE BEING ANY MATERIA L OR ANY INFORMATION HAVING A DIRECT LINK TO THE APPELLA NT COMPANY AND THEREFORE, THE ISSUE OF NOTICE U/S. 148 AND THE ASSESSMENT MADE THEREON IS INVALID, WITHOUT JURISDICTION AND THEREFORE MUST BE QUASHED. 5. THE LEARNED CIT(A)-VII, HYDERABAD, FAILED TO NOT E THAT THERE WAS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEE N THE REASONS AND THE BELIEF AND THE INESCAPABLE CONCLUSION IS THAT THE ITO DID NOT HAVE REASON TO B ELIEVE THAT ANY PART OF THE INCOME HAD ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF THE OMISSION O R THE FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS AND THEREFORE THE NOTICE I SSUED U/S. 148 TO REASSESS THE APPELLANTS IS TO BE STRUC K DOWN AS INVALID AND MUCH SO THE REASSESSMENT. 8 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 6. THE ORDER OF THE CIT(A) IN ASSESSING THE INTERES T INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES WHICH WA S ACCEPTED IN THE ORIGINAL ASSESSMENT AS ASSESSABLE UNDER THE HEAD BUSINESS IS UNSUSTAINABLE BOTH ON FACTS AND IN LAW. 7. THE LD. CIT(A) FAILED TO NOTE THAT THERE WAS DIR ECT AND SUBSTANTIAL NEXUS BETWEEN INTEREST RECEIPTS AND PAYMENTS AND THEREFORE ERRED IN HOLDING THAT THE GR OSS INTEREST WAS ASSESSABLE IGNORING THE INTEREST PAYME NT. 8. THE ORDER OF THE LD. CIT(A) IN NOT ALLOWING SERV ICE CHARGES CLAIMED AT RS.25,000 AS AN EXPENDITURE U/S.37(1) OF THE I.T. ACT OF 1961 IS UNSUSTAINABLE IN LAW. 9. THE LD. CIT(A) ERRED IN HOLDING THAT THE INTERES T EXPENDITURE OF RS.40,77,057 WOULD GO TOWARDS ADDITI ON OF COST OF THE ASSETS AND COULD NOT BE DEDUCTED AGA INST INTEREST INCOME. 10. THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE VEHICLE ROAD TAX EXPENSES AT RS.4,306 SHOULD BE ADDED TO TH E COST OF THE ASSET OF THE VEHICLE IS UNSUSTAINABLE I N LAW. 11. THE ORDER OF THE CIT(A) IN DISALLOWING THE TRAC TOR MAINTENANCE EXPENSE AT RS.8,656 AND DEPRECIATION OF TRACTOR AT RS.54,336 IS UNSUSTAINABLE IN LAW. 12. WITHOUT PREJUDICE TO ANY OF THE AFORESAID GROUN DS THE LD. CIT(A)-VII, HYDERABAD, HAVING FOUND THAT NO SPECIFIC ADDITIONS WERE MADE ON THE BASIS OF REASON S RECORDED OUGHT TO HAVE HELD THAT NONE OF THE ADDITI ONS MENTIONED IN THE PRECEDING GROUND COULD BE MADE AND THEREFORE OUGHT TO HAVE DELETED THE ENTIRE ADDITION S MENTIONED IN GROUND NOS. 6 AND 7. 9 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 13. THE APPELLANT DENIES ITS LIABILITY TO BE ASSESS ED TO THE LEVY OF INTEREST U/S.234A AND 234B. 14. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 7. THE LEARNED COUNSEL FOR ASSESSEE SHRI K.C. DEVI DAS REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). THE LD. COUNSEL FOR ASSESSEE RELIED ON THE DECISION OF THE COORDINATE BENCH OF THE HYDERABAD TRIBUNAL IN THE CASE OF M/S. ROHINI BIOTECH (P) LTD., HYDERABAD VS. ITO (OSD)-2 AND OTH ERS, CENTRAL RANGE-1, HYDERABAD IN ITA.NO.1233/HYD/2011 FOR THE A.Y. 2002- 03 DATED 31.12.2013. 8. THE LEARNED D.R. RELIED ON THE ORDER OF THE CIT (A) AND SUBMITTED THAT THE REPLY GIVEN BY THE ASSESSING OFF ICER FOR REOPENING UNDER SECTION 147 IS EXHAUSTIVE AND REITE RATED THE SAME. HE RELIED ON THE ORDERS OF AO AND CIT(A) ON THE ISSUE. 9. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT T HE ASSESSMENT HAS ALREADY BEEN COMPLETED UNDER SECTION 143(3) AFTER SCRUTINY WHICH HAS BECOME FINAL. THEREFORE REOPENIN G THE ASSESSMENT AFTER FOUR YEARS FROM THE END OF ASSESSM ENT YEAR CAN ONLY BE DONE ONLY WHEN THERE IS FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS OF ANY PARTICULARS OF INCOME. AO DID NOT ALLEGE ANYTHING OF THAT SORT. TH EREFORE DISALLOWING THE EXPENDITURE CLAIMS AND BRINGING TO TAX CREDITS WHICH WERE ACCEPTED IN THE ASSESSMENT EARLIER COMES WITHIN THE DOMAIN OF CHANGE OF OPINION. FOR THE CONCEPT OF C HANGE OF OPINION, THE SUPREME COURT HAS HELD IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 AS FOLL OWS : 10 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUBSTITUTION OF SECTION 147 O F THE INCOME TAX ACT, 1961, BY THE DIRECT TAX LAWS (AMENDMENT) A CTS, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSESSING O FFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAP ED ASSESSMENT, BUT THIS DOES NOT IMPLY THAT THE ASSESS ING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN- BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE, AFTE R APRIL 1, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS TANGIBLE MATERIAL T O COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMAT ION OF THE BELIEF. DECISIONS OF THE DELHI HIGH COURT IN CI T V. KELVINATOR OF INDIA LTD. (2002) 256 ITR 1 (FB) AND CIT V. EICHER LTD. (2007) 294 ITR 310 AFFIRMED. '147. INCOME ESCAPING ASSESSMENT.IF THE AO HAS REA SON TO BELIEVE THAT ANY INCOME ME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SS. 148 TO 153, ASSESS OR REASSESS SU CH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE AS SESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SS . 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR).' AFTER THE AMENDING ACT, 1989, S. 147 READS AS UNDER : 4. ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE TO S. 147 OF THE ACT, WE FIND THAT, PRIOR TO D IRECT TAX LAWS (AMENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER ABOVE TWO CONDITIONS AND FULFILLMENT OF THE SAID CO NDITIONS ALONE CONFERRED JURISDICTION ON THE AO TO MAKE A BA CK ASSESSMENT, BUT IN S. 147 OF THE ACT (W.E.F. 1ST AP RIL, 1989), THEY ARE GIVEN A GO BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE AO HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THEREFORE, POST 1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMAT IC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAI LING WHICH, WE ARE AFRAID, S. 147 WOULD GIVE ARBITRARY POWERS T O THE AO TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF 11 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE AO HAS NO POWER T O REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSM ENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTE NDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOP ENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE AO. HENCE, AFTER 1ST APRIL, 1 989, AO HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MA TERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO S. 147 OF THE ACT, AS QUOTED HEREIN ABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BE LIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN S. 147 OF THE A CT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AG AINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAME NT RE- INTRODUCED THE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRARY POWERS I N THE AO. WE QUOTE HEREINBELOW THE RELEVANT PORTION OF CIRCUL AR NO. 549, DT. 31ST OCT., 1989 [(1990) 82 CTR (ST) 1], WHICH R EADS AS FOLLOWS : '7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO R E- INTRODUCE THE EXPRESSION REASON TO BELIEVE IN S. 147. A NUMBER OF REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS REASON TO BELIEVE FROM S. 147 AND TH EIR SUBSTITUTION BY THE OPINION OF THE AO. IT WAS POI NTED OUT THAT THE MEANING OF THE EXPRESSION, REASON TO BELIEVE HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM S. 147 WOULD GIV E ARBITRARY POWERS TO THE AO TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMENDED S. 147 TO REINTRODUCE THE EXPRESSION HAS REASON TO BELIEVE IN PLACE OF THE WORDS FOR REASO NS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION. OTH ER PROVISIONS OF THE NEW S. 147, HOWEVER, REMAIN THE SAME.' 5. FOR THE AFORE-STATED REASONS, WE SEE NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT, HENCE, DISMISSED WITH NO ORDER AS TO COSTS 12 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 10. WE ALSO FIND THAT CIT(A) ERRED IN HOLDING THAT THE ASSESSING OFFICER HAD VALID REASONS TO REOPEN THE A SSESSMENT OF ASSESSEE-COMPANY TO EXAMINE THE VERACITIES AND FINA NCIAL IMPLICATIONS BETWEEN ASSESSEE-COMPANY AND M/S. SATY AM COMPUTER SERVICES LIMITED. WE FIND THERE IS NO RATI ONALE NEXUS WITH SUCH STATEMENT BY SRI RAMALINGA RAJU AND REASS ESSMENT MADE. AS SEEN FROM THE ORDER OF AO EVEN THOUGH THE ASSESSMENT WAS REOPENED TO EXAMINE THE TRANSACTION BETWEEN M/S SATYAM COMPUTERS AND ASSESSEE, NO SUCH EXERCISE WAS UNDERTAKEN AND NO FINDINGS WERE GIVEN ON THAT ISSUE. THE ADDITIONS MADE ARE ROUTINE DISALLOW ANCES OUT OF ALREADY ALLOWED EXPENDITURE IN ORIGINAL ASSE SSMENT. THERE IS NO NEXUS BETWEEN THE REASONS RECORDED AND ADDITIONS MADE IN THE GUISE OF ESCAPEMENT OF INCOME . WE RELY UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GANGA SARAN & SONS P. LTD. VS. ITO AND OTHE RS 130 ITR 1 (SC) FOR THE PROPOSITION THAT IF THERE IS NO RATIONAL NEXUS BETWEEN THE REASONS AND THE BELIEF, SO THAT ON SUCH REASONS THE A.O. CANNOT HAVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, THE NOTICE ISSU ED BY THE A.O. IS TO BE STRUCK AS INVALID. AS THERE IS NO R ATIONAL NEXUS BETWEEN THE REASONS AND THE BELIEF, AND ON S UCH REASONS THE A.O. CANNOT HAVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF ASSESSEE HAS ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF OMISSION OR FAILURE ON THE PART OF ASSESS EE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, THE NOTICE ISSU ED BY THE A.O. IS TO BE STRUCK DOWN AS INVALID. THE ASSESSING OFFICER HA D NO TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT TH ERE WAS 13 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD ESCAPEMENT OF INCOME FROM THE ORIGINAL ASSESSMENT. THE ASSESSMENT MADE UNDER SEC. 143(3) HAS BEEN WRONGLY REOPENED UNDER SEC. 147 BEYOND PERIOD OF 4 YEARS, A S THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLO SE FULLY AND TRULY ALL THE MATERIAL FACTS IN THE ORIGINAL AS SESSMENT ITSELF. THE REOPENING WAS ON WRONG FOUNDATION OF RE ASONING OF THE FINANCIAL IMPLICATION BETWEEN THE ASSESSEE-C OMPANY AND M/S. SATYAM COMPUTER SERVICES LIMITED, WHICH WA S NOT ESTABLISHED IN THE REASSESSMENT TO JUSTIFY THE REOPENING. 11. THUS, THERE BEING NO NEXUS OR LIVE-LINK WITH THE REASONS RECORDED AND THE FORMATION OF BELIEF TO C OME TO A CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME AND ALSO SINCE THE ASSESSMENT HAS BEEN REOPENED BEYOND THE P ERIOD OF 4 YEARS WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL F ACTS IN THE ORIGINAL ASSESSMENT ITSELF, AND THERE BEING NO TAN GIBLE MATERIAL FOR THE REOPENING OF THE ASSESSMENT, THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFI CER. WE, THEREFORE, HOLD THAT THE REOPENING OF THE ASSESSMEN T UNDER SECTION 147 IS BAD IN LAW AND IS TO BE QUASHED. 12. ON SIMILAR FACTS IN THE GROUP CASES OF M/S. R OHINI BIOTECH (P) LTD., HYDERABAD VS. ITO (OSD)-2, CENTRA L RANGE-1, HYDERABAD IN ITA.NO.1233/HYD/2011 FOR THE A.Y. 2002 -03 DATED 31.12.2013, COORDINATE BENCH HAS ANALYSED THE LEGAL PROPOSITIONS AND FACTS AND CAME TO FOLLOWING CONCLUSIONS VIDE PA RAS 18 AND 19 AS UNDER. 14 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 18. TO CONCLUDE, (I) THE RECORDING OF REASONS BEFORE THE ISSUE OF NO TICE UNDER SECTION 148 HAS ABSOLUTELY NO NEXUS WITH THE ASSESS MENT MADE. (II) THAT THE ASSESSMENT MADE UNDER SEC.143(3) CANN OT BE REOPENED UNDER SEC. 148 BEYOND PERIOD OF 4 YEARS AS THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISC LOSE FULLY AND TRULY ALL THE MATERIAL FACTS IN THE ORIGINAL AS SESSMENT ITSELF. (III) THE ASSESSING OFFICER HAD NO TANGIBLE MATERIA L TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM THE ORIGINAL ASSESSMENT. (IV) THE REOPENING WAS ON WRONG FOUNDATION OF REASO NING OF THE FINANCIAL IMPLICATION BETWEEN ASSESSEE-COMPANY AND M/S. SATYAM COMPUTER SERVICES LIMITED, WHICH WAS NO T ESTABLISHED IN THE REASSESSMENT TO JUSTIFY THE REOP ENING. (V) AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSMENT COMPLETED HAS NO RELATION AT ALL WITH TH E REASONS FOR REOPENING. EVEN THOUGH ASSESSEE BELONGS TO SATYAM GROUP OF COMPANIES, THERE IS NO EVIDENCE OF SIPHONING OF FUNDS OR ESCAPEMENT OF INCOME. WHAT TH E ASSESSING OFFICER HAS DONE IN THE ASSESSMENT IS DEN IAL OF THE EXPLANATIONS GIVEN BY ASSESSEE WITH REFERENCE T O VARIOUS INVESTMENTS MADE THROUGH THE BOOKS OF ACCOU NTS, VARIOUS CREDITS AND LOANS OBTAINED AND ALSO ADDITIO N TO FIXED ASSETS ON THE REASON THAT THE EVIDENCES HAVE NOT BEEN FILED. THUS AS CAN BE SEEN FROM THE ORDER, THE RE IS NO 15 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD NEXUS AT ALL WITH REFERENCE TO THE REASONS FOR REOP ENING AND THE ASSESSMENT COMPLETED. 19. HENCE, THERE BEING NO NEXUS OR LIVE-LIN K WITH THE REASONS RECORDED AND THE FORMATION OF BELIEF TO C OME TO A CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME AND ALSO SINCE THE ASSESSMENT HAS BEEN REOPENED BEYOND THE PERIOD OF 4 YEARS WHEN THERE IS NO FAILURE ON THE P ART OF ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL F ACTS IN THE ORIGINAL ASSESSMENT ITSELF, AND THERE BEING NO TANGIBLE MATERIAL FOR THE REOPENING OF THE ASSESSMENT, THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFI CER. WE, THEREFORE, HOLD THAT THE REOPENING OF THE JURISDICT ION UNDER SECTION 147 IS BAD IN LAW AND IS TO BE QUASHED. 13. FOLLOWING THE PRINCIPLES ON THE ABOVE ISSUE, A S DISCUSSED AND THE FACTS AS CONCLUDED ABOVE IN PARAS NO.18 AND 19 IN THE ABOVE CASE, WE ALLOW ASSESSEES GROUNDS ON T HE ISSUE OF REOPENING RAISED BEFORE US FROM GROUNDS 1 TO 5. SIN CE, WE HAVE ALLOWED ASSESSEES GROUNDS ON GROUNDS 1 TO 5, THE O THER GROUNDS ON MERITS OF THE ADDITIONS DOES NOT REQUIRE ANY CON SIDERATION AS THEY BECOME ACADEMIC IN NATURE. ACCORDINGLY, WE ALL OW THE APPEAL ITA.NO.482/HYD/2014 OF ASSESSEE. ITA.NO. 483/HYD/2014 ITA.NO.484/HYD/2014 ITA.NO.489/HYD/2014 ITA.NO.492/HYD/2014 ITA.NO.493/HYD/2014 ITA.NO.495/HYD/2014 ITA.NO.496/HYD/2014 ITA.NO.497/HYD/2014 16 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 14. IN THESE APPEALS THE FACTS ARE SIMILAR AND THE ASSESSMENT COMPLETED BY THE ASSESSING OFFICER IS S IMILAR AND THE CONTENTIONS OF THE PARTIES ARE ALSO SIMILAR. FOR TH E DETAILED DISCUSSION MADE IN THE ABOVE APPEAL ITA.482/HYD/201 4, WE ALLOW THE APPEALS OF ASSESSEE FROM GROUNDS 1 TO 5 AND TRE AT THE OTHER GROUNDS ON VARIOUS ADDITIONS AS ACADEMIC IN NATURE. THE APPEALS ARE ALLOWED. REVENUE APPEALS : ITA.NO.519/HYD/2014 ITA.NO.520/HYD/2014 ITA.NO.521/HYD/2014 ITA.NO.522/HYD/2014 ITA.NO.523/HYD/2014 ITA.NO.524/HYD/2014 15. THE ONLY ISSUE RAISED IN ALL THE ABOVE REVENUE APPEALS IS THAT THE LD. CIT(A) HAS NOT GIVEN ANY OPPORTUNIT Y TO A.O. FOR VERIFICATION OF THE FRESH EVIDENCE PRODUCED BEFORE HIM DURING THE APPELLATE PROCEEDINGS. FIRST OF ALL, THERE IS NO ME RIT IN REVENUE CONTENTION AS THE LD. CIT(A) HAS ACCEPTED MOSTLY I. T. RETURNS AND ENCLOSURES/ STATEMENTS WHICH CANNOT BE CONSIDERED A S FRESH EVIDENCE AS THEY ARE ALREADY AVAILABLE WITH THE A.O . MOREOVER, SINCE THE REOPENING ITSELF IS CONSIDERED AS BAD IN LAW IN ASSESSEES APPEALS, THERE IS NO NEED TO CONSIDER/ADJUDICATE RE VENUE CONTENTIONS. ACCORDINGLY, WE FIND NO MERIT IN REVEN UE GROUNDS AND THEY ARE DISMISSED. 16. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSE D. 17 ITA.NO. 482 TO 484/H/2014, 489/H/2014, 492 & 493/H/2014, 495 TO 497/H/2014, 519 TO 524/HYD/2014 M/S. SATABISHA AGRO PRIVATE LTD., ETC., HYDERABAD 17. TO SUM-UP, ITA.NO.482, 483, 484, 489, 492, 493 , 495, 496 AND 497/HYD/2014 OF ASSESSEE ARE ALLOWED AND IT A.NO. 519, 520, 521, 522, 523 AND 524/HYD/2014 OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.10.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH OCTOBER, 2014 VBP/- COPY TO 1. M/S. SATABISHA AGRO P. LTD., PLOT NO.80, ROAD NO .9, JUBILEE HILLS, HYDERABAD 500 033. 2. M/S. SRSR ESTATES P. LTD., PLOT NO.80, ROAD NO.9 , JUBILEE HILLS, HYDERABAD 500 033. 3. M/S. DANISHTA BIO-TECH P. LTD., PLOT NO.80, ROAD NO.9, JUBILEE HILLS, HYDERABAD 500 033. 4. M/S. CHITTA FARMS P. LTD., PLOT NO.80, ROAD NO.9 , JUBILEE HILLS, HYDERABAD 500 033. 5. M/S. ANURADHA GREENLANDS P. LTD., PLOT NO.80, RO AD NO.9, JUBILEE HILLS, HYDERABAD 500 033. 6. M/S. ROHINI GREENLANDS P. LTD., PLOT NO.80, ROAD NO.9, JUBILEE HILLS, HYDERABAD 500 033. 7. M/S. COAST LINE GREENLANDS P. LTD., PLOT NO.80, ROAD NO.9, JUBILEE HILLS, HYDERABAD 500 033. 8. M/S. UTTARASHADA GREENLANDS P. LTD., PLOT NO.80, ROAD NO.9, JUBILEE HILLS, HYDERABAD 500 033. 9. M/S. PARASNATH GREENLANDS P. LTD., PLOT NO.80, R OAD NO.9, JUBILEE HILLS, HYDERABAD 500 033. 10. THE INCOME TAX OFFICER (OSD)-3, CENTRAL RANGE-1 , 7 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD. 11. COMMISSIONER OF INCOME TAX(APPEALS)-VII, HYDERA BAD. + 8 COPIES 12. CIT (CENTRAL), HYDERABAD 13. D.R. B BENCH, ITAT, HYDERABAD.