Nagarjuna Constructions Co. Ltd., Hyderabad V. Dy.Commissioner of Income Tax, Circle-16(1), Hyderabad

ITA 689/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6257 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-08-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 15-04-2014
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment; Business income; Depreciation; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Revenue expenditure
• Section: 143(3); 147; 145; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 689/HYD/2014 ASSESSMENT YEAR: 2003-04 NAGARJUNA CONSTRUCTIONS CO. LTD., HYDERABAD [PAN: AAACN7335C] VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-16(1), HYDERABAD (APPELLANT) (RESPONDENT) C.O. NO. 12/HYD/2016 (IN ITA NO. 689/HYD/2014) ASSESSMENT YEAR: 2003-04 ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), HYDERABAD VS NAGARJUNA CONSTRUCTIONS CO. LTD., HYDERABAD [PAN: AAACN7335C] (CROSS-OBJECTOR) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI J. SIRI KUMAR, DR DATE OF HEARING : 24-08-2016 DATE OF PRONOUNCEMENT : 16-09-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-I, HYDERABAD D ATED I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 2 -: 25-02-2014 ON THE ISSUE OF REOPENING U/S. 147 OF TH E INCOME TAX ACT [ACT]. 2. IN THE COURSE OF APPEAL PROCEEDINGS, ASSESSEE FI LED AN ADDITIONAL GROUND THAT CIT(A) HAS NOT CONSIDERED APPEAL ON MERITS AND OBJECTED TO THE CONFIRMATION OF ADDITION MADE OF R S. 4,36,86,816/-. REVENUE IN ITS CROSS-OBJECTION IS MA INLY CONTESTING THAT THOUGH THE ITAT HAS SPECIFICALLY DIRECTED THE CIT(A ) TO DEAL WITH THE ISSUE ON MERITS OF ADDITION, LD.CIT(A) HAS NOT EXAMINED AND THEREFORE, THE ISSUE MAY BE REMITTED TO THE FILE OF CIT(A) FOR DECIDING THE MERITS OF SUBSTANTIVE ADDITION. 3. IN ORDER TO ADJUDICATE THE ABOVE CONTENTIONS, IT IS NECESSARY TO REFER TO THE PROCEEDINGS IN THE EARLIER R OUND OF APPEALS AS THESE ORDERS ARE CONSEQUENT TO THE ITAT DIRECTIONS GI VEN EARLIER. IN THIS CASE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 1 43(3) OF INCOME-TAX ACT [ACT] ON 27-03-2006 DETERMINING TAXABL E INCOME AT RS. 14,86,40,590/- AS AGAINST THE RETURNED INCOME OF RS. 8,87,25,877/-. SUBSEQUENTLY NOTICE U/S. 148 OF THE AC T WAS ISSUED ON 19-03-2010. THE REASON RECORDED FOR REOP ENING OF ASSESSMENT IS AS UNDER: THERE ARE VARIATIONS IN THE FIGURES SHOWN IN THE AN NUAL REPORT OF THE COMPANY AND THE COMPUTATION STATEMENT FILED ALO NG WITH RETURN OF INCOME AS UNDER: I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 3 -: SL. NO. DESCRIPTION AS PER COMPUTATION STATEMENT (RS.) AS PER ANNUAL REPORT (RS.) 1. PROFIT BEFORE TAX AS PER P&L A/C. 21,82,33,289 23,25,90,000 2. ADDITION: DEPRECIATION DEBITED TO P&L A/C. CONSIDERED SEPARATELY. 6,71,95,711 7,40,36,000 3. ADDITION: DEFERRED REVENUE EXPENDITURE WRITTEN OFF CONSIDERED SEPARATELY. 22,06,262 40,92,000 4. ADDITION: DONATIONS MADE DURING THE YEAR CONSIDERED SEPARATELY 14,77,474 15,30,000 TOTAL 28,91,12,736 31,22,48,000 THE VARIATIONS WERE DUE TO EXCLUSION OF CORRESPOND ING AMOUNTS RELATING TO JOINT VENTURE AND HENCE IT IS EVIDENT T HAT THE FIGURES ADOPTED IN THE COMPUTATION OF INCOME WERE NET OF TH OSE RELATING TO THE JOINT VENTURES. THE ASSESSEE FILED COMPUTATION OF INCOME IN WHICH THE STARTING POINT WAS ADOPTED FROM THE PROFI TS OF RS. 21,82,33,289/- WHICH IS THE PROFIT OF THE STAND-ALO NE OPERATIONS OF THE COMPANY. THE ASSESSEE HAS DEDUCTED A SUM OF RS. 4,36,86,816/- FROM THE ABOVE MENTIONED PROFITS TOW ARDS SHARE INCOMES RECEIVED FROM JV PARTNERSHIP FIRMS. IN VIE W OF THE ACCOUNTING POLICY THE VARIATIONS IN PROFITS BEFORE TAX WERE DUE TO EXCLUSION OF CORRESPONDING AMOUNTS RELATING TO JOIN T VENTURE AND THEREFORE, THE PROFITS ADOPTED IN COMPUTING THE INC OME RETURNED WERE NET OF THE PROFITS RELATABLE TO JOINT VENTURES. TH E CLAIM OF EXEMPTION OF INCOME OF RS. 4,36,86,816 TOWARDS SHARE INCOME F ROM JOINT VENTURES (FIRMS) RESULTED IN EXCESS ALLOWANCE OF DE DUCTION TO THAT EXTENT. THIS ESCAPEMENT OF INCOME HAS OCCURRED ON ACCOUNT OF I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 4 -: FAILURE AND OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPUTAT ION OF TAXABLE INCOME. HENCE, THERE IS REASON TO BELIEVE THAT INC OME HAS ESCAPED FROM ASSESSMENT FOR THE AY. 2003-04. 4. ASSESSEE REPLIED TO THE REOPENING OF ASSESSMENT A S FOLLOWS: AS IT WAS EXPLAINED DURING THE COURSE OF HEARING THAT THE REASONS FOR ISSUE OF THE NOTICE U/S 148 IS THE APPREHENDED DIFFERENCE IN THE PROFIT BEFORE TAX AS PER THE CONSOLIDATED PROFIT AND LOSS ACCOUNT PUBLISHED IN C OMPLIANCE WITH THE PROVISIONS OF THE COMPANIES ACT, 1956 PREP ARED APPLYING THE GENERALLY ACCEPTED ACCOUNTING PRACTICE S (GAAP) APPLICABLE IN INDIA WHICH TAKES INTO CONSIDERATION THE ACCOUNTING STANDARDS ISSUED AND NOTIFIED BY THE NA TIONAL ACCOUNTING STANDARDS BOARD CONSTITUTED UNDER SECTIO N 145 OF THE INCOME-TAX ACT, 1961 AND ACCOUNTING STANDARDS ( AS) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI) AND THE COMPUTATION OF INCOME OF THE NAGARJU NA CONSTRUCTION COMPANY LIMITED ON STANDALONE BASIS UN DER THE INCOME-TAX ACT, 1961 FOR THE PURPOSE OF RETURN OF INCOME AND ASSESSMENT. IN THE CONSOLIDATED PROFIT & LOSS A/C WHICH IS PREP ARED AS A GENERAL PURPOSE FINANCIAL STATEMENT OF THE COMPANY APPLYING THE PROVISIONS OF ACCOUNTING STANDARD (AS) 21 CON SOLIDATED FINANCIAL STATEMENT. THE SAID STANDARD REQUIRES TH E LINE BY LINE CONSOLIDATION OF EQUITY METHOD OF CONSOLIDATIO N IN THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS. U NDER THE LINE BY LINE, THE CONSOLIDATION IS DONE BY COMBININ G ITEM BY I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 5 -: ITEM SO THAT THE NET RESULTS APPEAR AS RESPECTIVE L INE ITEMS. WHEREAS, EQUITY IS THE RESIDUAL INTEREST IS ONLY AC COUNTED. THE REQUIREMENT OF THE APPLICATION OF THE METHOD DEPEND S UPON THE NATURE OF ECONOMIC INTEREST AND ITS ECONOMIC SUBSTA NCE. ACCORDINGLY, DURING THE PREVIOUS YEAR RELEVANT TO T HE ASSESSMENT YEAR 2003-04 THE CONSOLIDATED PROFIT & L OSS ACCOUNT IS PREPARED APPLYING THE ABOVE ACCOUNTING S TANDARD AND THE PROFIT BEFORE TAX AS PER THE SAID CONSOLIDA TED PROFIT & LOSS ACCOUNT IS RS. 2325.88 LAKHS, THE SAME IS EXPL AINED AND RECONCILED AS UNDER: (RS. IN LAKHS) AS THE ABOVE FIGURE INCLUDES STAND ALONE PROFIT BEF ORE TAX OF NCC AND PROFIT AFTER TAX OF JOINT VENTURES C ONSOLIDATED AND TAXED SEPARATELY, THE SAME NEED TO BE EXCLUDED AS THE PROFITS AND GAINS WERE ALREADY TAXED. THE ELIMINAT ION IS PROFIT AS PER CONSOLIDATED PROFIT & LOSS ACCOUNT (BEFORE TAX) 2325.88 LESS: AMOUNT OF TAX PROVIDED IN THE JVS CONSOLIDATED ON LINE TO LINE BASIS AS THE SAME IS A SEPARATE LIABILITY OF JVS. NCC-KNR (JV) RS. NIL NCC SMJ (JV) RS. 21.00 LGE & C-NCC (JV) RS. 102.80 NCC_MAYTAS (JV) RS. 14.97 TOTAL PROVISION FOR TAX 138.77 PROFIT BEFORE TAX STAND ALONE AND PROFIT AFTER TAX IN JVS CONSOLIDATED 2187.11 LESS: ADJUSTMENT FOR PRIOR PERIOD ITEMS (NEGATIVE) 4.79 PROFIT BEFORE TAX TAKEN AS BASE FOR COMPUTATION OF INCOME (STAND ALONE NCC) 2182.32 I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 6 -: DONE AS PER THE DETAILS IN THE ANNEXED STATEMENT AN D IS AS UNDER: (RS. IN LAKHS) PROFIT BEFORE TAX TAKEN AS BASE FOR COMPUTATION OF INCOME (STAND ALONE NCC) 2182.32 LESS: PROFIT AFTER TAX INCLUDED IN THE CONSOLIDATED P&L A/C. EXCLUDED U/S. 10(2) OF THE INCOME-TAX ACT, 1961 NCC-KNR (JV) RS. 50.38 NCC-SMJ (JV) RS. 61.42 LG E&C NCC (JV) RS. 176.36 UNIECH- NCC (JV) RS. 140.44 NCC-MAYTAX (JV) RS. 25.77 SOMDUTT- NCC (JV) (-) RS. 15.19 SDB-NCC-NEC (JV) RS. 34.30 NCC- MAYTAS (JV) (-) RS. 17.20 NCC-SMC (JV) RS. 19.42 TOTAL AMOUNT EXCLUDED AS INCOME NOT PART OF THE GROSS TOTAL INCOME TAX 436.86 PROFIT BEFORE TAX NCCL STAND ALONE 1745.46 5. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OFFER ED BY THE ASSESSEE. ACCORDING TO THE AO, ASSESSEE ALREAD Y EXCLUDED ALL INCOME AND ALL EXPENSES RELATING TO THE PROFIT AN D LOSS A/C. OF THE JV FIRMS IN ITS ACCOUNTS BEFORE ARRIVING AT THE PR OFIT OF THE STAND ALONE ASSESSEE'S COMPANY, THE CLAIM OF EXEMPTIO N OF RS. 4,36,86,816/- TOWARDS SHARE INCOME FROM JV FIRMS WAS NOT WARRANTED FROM THE PROFIT OF THE ASSESSEE. THE ASSESSE E WAS NOT ELIGIBLE FOR DEDUCTION OF RS. 4,36,86,816/- FROM THE PROFIT OF STAND- ALONE ASSESSEE'S COMPANY. ACCORDINGLY WHILE COMPLE TING THE RE- ASSESSMENT, HE ADDED RS. 4,36,86,816/-. 6. ON APPEAL, THE CIT(A) OBSERVED THAT ASSESSEE HAS TA KEN PROFIT BEFORE TAX AS PER PROFIT AND LOSS A/C. AT RS. 21 ,82,33,289/- I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 7 -: FROM WHICH ASSESSEE REDUCED SHARE INCOME OF THE FIRM S (JVS) U/S. 10(2A) AT RS. 4,36,86,816/- AND ARRIVED STAND ALONE P ROFIT BEFORE TAX OF THE COMPANY AT RS. 17,45,46,473/-. THEREAFTER THE VARIOUS EXPENSES WERE REDUCED LIKE ADJUSTMENT TOWARDS ADDITION OF DEPRECIATION DEBITED TO THE PROFIT AND LOSS A/C., DEFAUL T REVENUE EXPENDITURE, SHARE ISSUE EXPENSES, ASSETS DISCARDED, ETC., AND ARRIVED BUSINESS INCOME AT RS. 14,78,79,793/-. TO THI S, THE ASSESSEE ADDED CAPITAL GAIN OF RS. 7,60,797/- AND AR RIVED AT FINAL FIGURE OF GROSS TOTAL INCOME AT RS. 14,86,40,590/-. ACCORDING TO THE CIT(A) THE FIGURE TAKEN BY THE ASSESSEE IN ITS PROFI T AND LOSS A/C. AT RS. 21,82,33,289/- WAS ARRIVED AT AFTER REDU CING THE TAX PAID BY JVS AT RS. 138.77 LAKHS. IN OTHER WORDS, THE PROFIT SHOWN BY THE ASSESSEE'S PROFIT AND LOSS A/C. IS INCLUSIVE O F PROFIT AFTER TAX OF THE JVS. HE OBSERVED THAT THE DEDUCTION OF INCOME FR OM JVS WHILE CALCULATING THE STAND ALONE COMPANY'S PROFIT IS NOT WRONG. HOWEVER, HE OBSERVED THAT STATEMENT OF INCOME OF ASSESS EE- COMPANY AND JVS AS FILED BEFORE THE AO SHOWS THE PRO FIT BEFORE TAX AS PER THE COMPUTATION STATEMENT, IN FACT INCLUDES THE PRO FIT AFTER TAX OF THE JVS ALSO. TO THAT EXTENT HE WAS IN AGREEMENT WITH THE OBSERVATION OF THE AO THAT THE FIGURES ADOPTED IN THE C OMPUTATION OF INCOME DOES NOT INCLUDE SHARE INCOME OF THE JVS. FINALLY, HE CONSIDERED THE INCOME OF THE ASSESSEE AT STAND-ALONE BA SIS AS FOLLOWS: (RS. IN LAKHS) INCOME - 33,890.44 (LESS) EXPENDITURE - 32,098.92 PROFIT BEFORE TAX - 1,791.52 6.1. ACCORDINGLY, HE DIRECTED THE AO TO SUBSTITUTE RS. 1791.52 LAKHS IN PLACE OF RS. 1745.46 LAKHS AS PROF IT BEFORE TAX. I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 8 -: CONSEQUENT TO THE ABOVE, ASSESSEE AND REVENUE BOTH ARE IN APPEAL BEFORE THE ITAT IN ITA NOS. 1282 & 1364/HYD/2011. I T WAS THE CONTENTION OF ASSESSEE THAT PRELIMINARY ISSUE ON THE OBJ ECTIONS REGARDING REOPENING U/S 147 WERE NOT ADJUDICATED, WHE REAS REVENUE IS AGGRIEVED ON THE DELETION OF THE AMOUNT BY L D. CIT(A). CONSIDERING THE OBJECTIONS OF THE RIVAL PARTIES, THE ITA T HAS RESTORED THE MATTER TO THE FILE OF CIT(A) WITH THE FOLLO WING DIRECTIONS: 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MAT ERIAL ON RECORD. IN THIS CASE, ADMITTEDLY, THE ASSESSEE RAI SED THE GROUND AS GROUND NO. 1 BEFORE THE CIT(A) AS FOLLOWS: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED ASSESSING OFFICER ERRED IN LAW AND FACTS OF THE CASE IN PASSI NG THE IMPUGNED ORDER UNDER SECTION 143(3) READ WITH SECTION 147 AS SUCH THE ASSESSMENT WAS ORIGINALLY COMPLETED ON DUE VERIFICATION OF ALL THE MATERIAL FACTS IN SUPPORT OF THE CLAIMS IN THE RETURN OF INCOME AND THE PROCE EDINGS UNDER SECTION 147 ARE ON THE MERE CHANGE OF OPINION.' 16. THE CIT(A) INADVERTENTLY NOT ADJUDICATED THIS G ROUND. WITHOUT ADJUDICATING THE ISSUE RELATING TO THE REOPENING OF ASSESSMENT, HE ADJUDICATED THE GROUND RELATING TO ADDITION OF RS. 4,36,86,816 ON MERIT WHICH IS INAPPROPRIATE. BEING SO, IN OUR OPINION, THE CIT(A) HAS TO FIRST DECIDE THE ISSUE RELATING TO VALIDITY OF REOPENING OF ASSESSMENT AND THEREAFTER HE HAS TO DECIDE THE ISSUE RELATING TO T HE ADDITION ON MERIT. THEREFORE, WE REMIT THE ISSUE RELATING TO REOPENING OF ASSESSMENT TO THE FILE OF THE CIT(A) TO DECIDE THE SAME AND TH EREUPON DEAL WITH THE ISSUE RELATING TO THE MERITS OF THE ADDITION OF RS. 4,36,86,816 . HOWEVER, IN THE EVENT THE ASSESSEE HAS NOT PRESSED THIS GROUND BEFORE HIM ON EARLIER OCCASION, HE HAS TO RECORD THE SAME. AT THIS STAGE WE REFRAIN OURSELVES FROM GOING INTO THE ISSUE RELATIN G TO THE MERIT OF THE ADDITION OF RS. 4,36,86,816 WHICH IS COMMON IN BOTH ASSESSEE AS WELL AS REVENUE APPEALS. ( EMPHASIS SUPPLIED) 7. ACCORDINGLY, LD. CIT(A) ADJUDICATED THE ISSUE O F REOPENING BY THE IMPUGNED ORDER IN WHICH THE GROUNDS RAISED BY ASSESSEE ARE DISMISSED. EVEN THOUGH, LD.CIT(A) DID A DJUDICATE THE ISSUE OF REOPENING U/S. 147, CIT(A) DID NOT ADJUDICA TE THE ISSUE ON I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 9 -: MERITS EVEN THOUGH SPECIFICALLY DIRECTED BY ITAT. AC CORDINGLY, REVENUE RAISED THE CROSS OBJECTION ON THE SAME POINT. 8. BEFORE COMING TO REVENUES CROSS-OBJECTION, IT IS NECESSARY TO EXAMINE ASSESSEES CONTENTIONS ON REOPENI NG OF ASSESSMENT. IN THE IMPUGNED ORDER, LD.CIT(A) EXAMINE D THE CONTENTIONS OF ASSESSEE AND HELD AS UNDER: 07.0 THE ASSESSMENT RECORDS AND THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. UNDER SECTION 147, AFTER ITS AMENDMENT W.E.F. 1-4-1989, WIDE POWER HAS BEEN GIVEN TO THE A SSESSING OFFICER EVEN TO COVER THE CASES WHERE THE ASSESSEE HAD FULLY DIS CLOSED THE MATERIAL FACTS. THE ONLY CONDITION FOR ACTION IS THAT THE A SSESSING OFFICER SHOULD HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE T O TAX HAD ESCAPED ASSESSMENT AND SUCH BELIEF CAN BE REACHED IN ANY MA NNER AND IS NOT QUALIFIED BY A PRE-CONDITION OF FULL AND TRUE DISCL OSURE OF MATERIAL FACTS BY THE ASSESSEE AS CONTEMPLATED IN THE PRE-AMENDED SEC TION 147(A) (JAWAND AND SONS VS CIT(A) 326 ITR 39 P & H). THE APPELLANT 'S CONTENTION IS THAT THE ASSESSING OFFICER ERRED IN RE-OPENING THE ASSES SMENT AFTER EXPIRY OF 4 YEARS. IN THIS CONNECTION, THE FINDING OF THE HON'B LE SUPREME COURT IN THE CASE OF KELVINATOR INDIA LIMITED NEEDS TO BE MENTIO NED WHERE IT HAS BEEN HELD THAT THE ASSESSMENT CAN BE REOPENED PROVIDED T HERE IS A TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS E SCAPEMENT OF INCOME FROM ASSESSMENT AND REASON MUST HAVE A LINK WITH TH E FORMATION OF THE BELIEF. RE-OPENING THE ASSESSMENT ON THE FACTUAL ER ROR NOTICED LATER AMOUNTS TO TANGIBLE MATERIAL WHICH CAN BE A VALID R EASON FOR RE-OPENING. WHERE ASSESSMENT WAS RE-OPENED U/S.147 AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE ASSESSING OFFICER MUST PROVE THAT ASSESSEE HAS NOT DISCLOSED FULL MATERIAL FACTS IN RELATION TO ESCAPED INCOME SO AS TO GIVE LEGALITY TO THE NOTICE ISSUED U/S.148 (FERNER INDIA LTD. VS. DCIT 241 ITR 0672) (MADRAS). 07.1 IN THE PRESENT CASE, THERE IS NO DISPUTE TO TH E FACT THAT THERE HAS BEEN A VARIATION IN THE PROFITS APPEARED IN THE COMPUTATION OF INCOME AND THE PROFITS REFLECTED IN THE ANNUAL REPORT WHIC H IS TABULATED AS UNDER: I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 10 -: S.NO. GIST OF OBJECTION AS PER COMPUTATION STATEMENT AS PER ANNUAL REPORT 1 PROFIT BEFORE TAX AS PER P&L ACCOUNT 218233289 232590000 2 ADDITION: DEPRECIATION DEBITED TO P&L ACCOUNT 67195711 74036000 3 ADDITION: DEFERRED REVENUE EXPENDITURE 2206262 4092000 4 ADDITION: DONATIONS MADE DURING THE YEAR 1477474 1530000 TOTAL 289112736 312248000 AS CAN BE SEEN ABOVE, THERE IS A VARIATION EVEN IN THE FIGURES OF DONATION, DEPRECIATION, DEFERRED REVENUE EXPENDITURE APART FR OM PROFIT BEFORE TAX. THERE HAS BEEN NO MENTION OR C1ARIFLCATION/EXPLANAT ION REGARDING THE DIFFERENCE IN THE AMOUNTS MENTIONED ABOVE. IF IT HA S BEEN NET OF JV PROFITS AND EXPENSES, THE VARIATION WAS NOT EXPLAINED WITH ANY SUPPORTING DOCUMENTATION BY THE ASSESSEE IN THE RETURN OF INCO ME OR DURING THE ASSESSMENT PROCEEDINGS. AS CAN BE SEEN FROM THE ORD ER OF THE CIT(APPEALS) REFERRED ABOVE, EVEN HE HAD TO DEDUCE THE PROFIT BEFORE TAX AFTER GOING THROUGH THE SPREAD SHEET (FILED BY THE APPELLANT DURING APPEAL PROCEEDINGS) GIVING DETAILS OF INCOME AND EXPENDITU RE AND WORKING OF PROFIT BEFORE TAX AND PROFIT AFTER' TAX OF THE APPE LLANT COMPANY ON STANDALONE BASIS AND HELD 'IN MY VIEW, THE ASSESSIN G OFFICER SHOULD ADOPT THIS FIGURE (RS.1791.52 LAKHS) WHICH IS WORKE D OUT BY THE ASSESSEE ITSELF FOR THE PURPOSE OF COMPUTATION OF INCOME AND THIS SHOULD BE SUBSTITUTED FOR RS.1745.46 LAKHS AS SHOWN' IN THE C OMPUTATION OF TOTAL INCOME.' THIS SHOWS THAT THE APPELLANT FAILED TO DI SCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FULLY AND TRULY. A PURE FI NDING OF FACT HAS BEEN RECORDED BY THE ASSESSING OFFICER AS TO THE VARIATI ON IN THE PROFIT REFLECTED IN THE COMPUTATION OF INCOME AND THE ANNUAL REPORTS WHICH IS A PRE- CONDITION FOR RE-OPENING, THEREFORE, IT IS HELD THA T THE RE-ASSESSMENT PROCEEDINGS HAVE VALIDLY BEEN INITIATED AFTER FORMI NG THE OPINION THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. AC CORDINGLY, THE RE- OPENING OF THE ASSESSMENT U/S.147 OF I.T.ACT IS HEL D VALID. 9. REFERRING TO THE ABOVE ORDER OF LD.CIT(A), IT WAS THE CONTENTION THAT THERE IS NO FAILURE ON THE PART OF ASSES SEE IN MAKING FULL DISCLOSURE AT THE TIME OF ORIGINAL ASSESSM ENT. IT WAS SUBMITTED THAT ON THE BASIS OF ASSESSEES OWN STATEMENTS, IN SPITE OF VARIOUS RECONCILIATIONS FILED BEFORE THE AO, SUCCE SSOR AO AFTER END OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR HAS REOPENED I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 11 -: THE ASSESSMENT, ON THE SO CALLED MISTAKES. IT WAS SUBM ITTED THAT LD.CIT(A) HAS MORE OR LESS ACCEPTED THAT ASSESSEE HA S FURNISHED ALL THE RELEVANT INFORMATION AND ON THAT BASIS, HE HAS ADOPTE D THE FIGURE 1791.52 LAKHS AS AGAINST 1745.46 LAKHS SHOWN BY ASSESSEE. IT WAS SUBMITTED THAT THIS SMALL DISCREPANCY IS ALSO BEC AUSE THE LD.CIT(A) HAS NOT CONSIDERED THE DETAILED SUBMISSIONS MADE BEFORE HIM ON 1 ST MAY, 2011 (PLACED AT PG. 65 TO 69), WHEREIN THE INCOM E OF RS. 34.30 LAKHS WAS DIRECTLY INCLUDED IN THE PROFI T OF THE STAND ALONE COMPANY FROM SDB-NCC-NEC[JV] AND ADJUSTMENT FOR PRIOR PERIOD ITEMS (NEGATIVE). IF THESE TWO AMOUNTS WERE ALS O CONSIDERED BY THE LD.CIT(A), THE PROFIT BEFORE TAX OF ASSESSEE NC CL STAND ALONE PROFITS WOULD BE RS. 1745.46 LAKHS. THEREFORE, THERE IS NO NEED FOR REOPENING THE ASSESSMENT IN THE FIRST INSTANCE AND FURTH ER CONFIRMATION BY THE CIT(A) IN THE FIRST ROUND OF APPEA L. LD. COUNSEL RELIED ON THE FOLLOWING CASE LAW: I. FENNER (INDIA) LTD., VS. DCIT [241 ITR 672] (MADRAS) ; II. JAWAND SONS [326 ITR 39] (PUNJAB & HARYANA); III. CIT VS. KELVINATOR OF INDIA LTD., [320 ITR 561]; IV. RAJ RANI GULATI VS. UOI [329 ITR 370]; V. CIT VS. MULTIPLEX TRADING & INDUSTRIAL CO LTD., [63 TAXMANN.COM 170 (DELHI)]; VI. PR.CIT VS. SAMCOR GLASS LTD., AND SAMTEL COLOR LTD., HON'BLE HIGH COURT OF DELHI JUDGEMENT DT. 12-10-2015 IN ITA NO . 768 769/2015; 10. LD. DR, HOWEVER, SUPPORTED THE ORDER OF THE CIT(A ) AS FAR AS REOPENING IS CONCERNED AND REQUESTED FOR RES TORING THE ISSUE TO THE FILE OF CIT(A) FOR DECIDING THE ISSUE ON MERITS. I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 12 -: 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE ORDERS AND DOCUMENTS PLACED ON RECORD. THERE IS NO DOUBT THAT AO HAS COME TO THE CONCLUSION THAT INCOME HAS ESCAP ED ASSESSMENT ONLY ON THE BASIS OF THE STATEMENTS AND DOCUME NTS FURNISHED BEFORE HIM IN THE COURSE OF ASSESSMENT PROC EEDINGS. AS SEEN FROM THE DOCUMENTS ON RECORD, IT IS ALSO VERY CLE AR THAT ASSESSEE HAS RECONCILED VARIOUS RECEIPTS FROM THE JVS AND EXCLUDED THEM IN COMPUTATION OF INCOME FILED. THIS W AS ALSO ACCEPTED BY THE LD.CIT(A) IN HIS ORDER DT. 24-05-2010 , WHEREIN HE HAS HELD AS UNDER: 04.0 I HAVE GONE THROUGH THE FACT OF THE CASE AND THE SUBMISSION MADE BY THE APPELLANT. I HAVE ALSO GONE THROUGH TH E ASSESSMENT RECORD. I FIND FROM THE COMPUTATION OF TOTAL INCOME FILED BY THE APPELLANT THAT THE APPELLANT HAD TAKEN THE PROFIT BEFORE TAX AS PER P& L A/C AT RS.21,82,33,289/- FROM WHICH PROFIT EXEMPT U/S.10(2 A) BEING THE SHARE INCOME OF THE FIRMS (JVS) OF RS. 4,36,86,816/- HAS BEEN REDUCED TO ARRIVE AT THE STAND ALONE PROFIT BEFORE TAX OF THE COMPANY AT RS.17,45,46,473/-. TO THIS, ADJUSTMENTS BY WAY OF ADDITION OF DEPRECIA TION DEBITED TO P&L A/C, DEFERRED REVENUE EXPENDITURE, SHARE ISSUE EXPE NSES, ASSETS DISCARDED AND DISALLOWANCES U/S.44AB HAVE BEEN MADE . THEREAFTER DEPRECIATION AS ADMISSIBLE U/S.32 OF THE I.T. ACT, DEFERRED REVENUE EXPENDITURE ALLOWABLE, RIGHTS ISSUE EXPENDITURE U/S .35D, BONUS DISALLOWED IN EARLIER YEARS AND, PAID DURING THE YE AR, BAD DEBT AND IRRECOVERABLE ADVANCE WRITTEN OFF, PRIOR PERIOD ADJ USTMENTS, PROFIT ON SALE OF ASSETS AND PROFIT ON SALE OF INVESTMENTS HAVE BE EN REDUCED TO ARRIVE AT THE BUSINESS INCOME OF RS.14,78,79,793/-. TO THIS, THE INCOME UNDER THE HEAD CAPITAL GAINS OF RS.7,60,797/- HAS BEEN ADDED TO ARRIVE AT THE GROSS TOTAL INCOME OF RS.14,86,40,590/-. IN FACT, THIS IS THE INCOME WHICH WAS ADOPTED AS TOTAL INCOME IN THE ASSESSMENT ORDER U/S .143(3) DATED 27-3- 2006. WHILE CONSIDERING THE FIGURE OF RS.21,82,33,2 89/- IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME, THE APPELLANT HAS R EDUCED THE TAX PAID BY THE JVS OF RS.138. 77 LAKHS FROM THIS CONSOLIDATED PROFIT BEFORE TAX OF THE APPELLANT COMPANY AND NINE JOINT VENTURES TOTALLING TO RS.2325.90 LAKHS. THIS MEANS THAT THE PROFIT BEFORE TAX OF RS.21,82,3 3,289/- AS PER P&L A/C AS MENTIONED IN THE COMPUTATION OF INCOME IS INCLUS IVE OF THE PROFIT AFTER TAX OF THE JVS. THEREFORE, IN MY VIEW, REDUCTION OF THE SHARE INCOME FROM THE JVS WHILE CALCULATING THE STAND ALONE PROFIT OF THE COMPANY IS NOT WRONG IN PRINCIPLE. BY FOLLOWING THIS ROUND ABOUT A WAY, THE APPELLANT HAS ARRIVED AT THE STAND ALONE NET PROFIT BEFORE ADJUST MENTS AS DISCUSSED ABOVE, AT RS.17 ,45,46,473/-. THE AO WHILE REOPENIN G THE ASSESSMENT, I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 13 -: HAS COMPARED THE PROFIT BEFORE TAX IN P&L A/C AS PE R THE COMPUTATION STATEMENT (RS.21,82,33,289) AND AS PER THE ANNUAL R EPORT ( RS.23,25,90,000) OBSERVING THAT THE FIGURE ADOPTED IN THE COMPUTATION OF INCOME WAS NET OF THOSE RELATING TO THE JOINT VENTU RES. HOWEVER, THE STATEMENT OF INCOME OF THE APPELLANT COMPANY AND TH E JOINT VENTURES AS FILED BEFORE THE AD CLEARLY SHOWS THAT THE PROFIT B EFORE TAX AS PER THE COMPUTATION STATEMENT IN FACT INCLUDES THE PROFIT A FTER THE TAX OF THE JVS ALSO. TO THAT EXTENT, I AM NOT IN AGREEMENT WITH TH E OBSERVATION OF THE AO THAT THE FIGURE ADOPTED IN THE COMPUTATION OF INCOM E DOES NOT INCLUDE SHARE OF INCOME OF THE JV. 11.1. AS CAN BE SEEN FROM THE ABOVE ORDER OF THE LD. CIT(A), WHICH WAS SUBJECT MATTER OF EARLIER ROUND OF APPEAL, IT IS VERY CLEAR THAT THE ENTIRE PROCEEDINGS WERE INITIATED ONLY ON THE B ASIS OF ASSESSEES BOOKS OF ACCOUNT AND STATEMENTS FILED BEFO RE THE AO AND NO FRESH TANGIBLE MATERIAL HAS COME INTO CONSIDER ATION BEFORE THE AO FOR REOPENING THE ASSESSMENT U/S 147. THE PRO VISIONS OF SECTION 147 ARE AS UNDER: SEC.147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT 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 ALLOWANC E, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTIO N AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTIO N 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT Y EAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDIN G FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAP ED ASSESSMENT FOR ANY ASSESSMENT YEAR: I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 14 -: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE T HE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. ( EMPHASIS SUPPLIED) 11.2. IT IS VERY CLEAR FROM THE ABOVE PROVISION THAT A O CANNOT REOPEN THE ASSESSMENT IN A CASE WHERE SCRUTINY ASSESSM ENT U/S. 143(3) WAS COMPLETED AFTER THE END OF FOUR YEARS FRO M THE RELEVANT ASSESSMENT YEAR UNLESS THERE IS FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESS ARY FOR HIS ASSESSMENT. IN THIS CASE, THERE IS NO SUCH FAILURE O N THE PART OF ASSESSEE. IT IS ONLY APPRECIATION OF THE FACTS WRONGLY BY THE AO WHICH HAS LEAD TO HIS BELIEF THAT INCOME HAS ESCAPED A SSESSMENT. FOLLOWING THE PRINCIPLES LAID DOWN BY VARIOUS CASE L AW RELIED ON ABOVE, INCLUDING THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF KELVINATOR INDIA LTD., (SUPRA), WE AGREE WITH ASSESSEES CONTENTIONS THAT RE-OPENING OF ASSESSMENT IS BAD IN LAW ON THE FACTS OF THE CASE. 11.3. COMING TO THE SO CALLED DISCREPANCY CONFIRMED BY THE LD.CIT(A), THE DETAILS WERE SUBMITTED BEFORE THE LD. CIT(A), VIDE THE SUBMISSIONS MADE ON 1 ST MAY, 2011, WHEREIN IT WAS RECONCILED AS UNDER: IN THE CONSOLIDATED PROFIT AND LOSS ACCOUNT WHICH IS PREPARED AS A GENERAL PURPOSE FINANCIAL STATEMENTS OF THE COMPANY APPLYING THE PROVISIONS OF ACCOUNTING STANDARDS (AS) 21 CONSOL IDATED FINANCIAL STATEMENTS. THE SAID STANDARD REQUIRES THE LINE BY LIEN CONSOLIDATION OR EQUITY METHOD OF CONSOLIDATION IN THE PREPARATION O F CONSOLIDATED FINANCIAL STATEMENTS. UNDER THE LINE BY LINE THE C ONSOLIDATION IS DONE BY COMBINING ITEM BY ITEM SO THAT THE NET RESULTS APPE AR AS RESPECTIVE LINE ITEMS. WHEREAS, EQUITY IS THE RESIDUAL INTEREST IS ONLY ACCOUNTED. THE I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 15 -: REQUIREMENT OF THE APPLICATION OF THE METHOD DEPEND S UPON THE NATURE OF ECONOMIC INTEREST AND ITS ECONOMIC SUBSTANCE. ACCORDINGLY, DURING THE PREVIOUS YEAR RELEVANT TO T HE ASSESSMENT YEAR 2003-04 THE CONSOLIDATED PROFIT AND LOSS ACCOUNT IS PREPARED APPLYING THE ABOVE ACCOUNTING STANDARD AND THE PROFIT BEFORE TAX AS PER THE SAID CONSOLIDATED PROFIT AND LOSS ACCOUNT IS RS. 2325.88 LAKH THE SAME IS EXPLAINED AND RECONCILED AS UNDER: (AMOUNT IN RS, LAKHS) PROFIT AS PER CONSOLIDATED PROFIT AND LOSS ACCOUNT (BEFORE TAX): RS. 2325.88 LESS : AMOUNT OF TAX PROVIDED IN THE JVS CONSOLIDATED ON LINE TO LINE TO LINE BASIS AS THE SAME IS A SEPARATE LIABILITY OF JVS. NCC-KNR (JV) RS. NIL NCC-SMJ (JV) RS. 21.00 LGE&C-NCC (JV) RS. 102.80 NCC-MAYTAS (JV) RS. 14.97 138.77 PROFIT BEFORE TAX STAND ALONE AND PROFIT AFTER TAX IN JVS CONSOLIDATED: 2187. 11 LESS: ADJUSTMENT FOR PRIOR PERIOD ITEMS (NEGATIVE) 4.79 PROFIT BEFORE TAX TAKEN AS BASE FOR COMPUTATION OF INCOME (STAND ALONE NCC) 2182.32 AS THE ABOVE FIGURE INCLUDES STAND ALONE PROFIT BEF ORE TAX OF NCC AND PROFIT AFTER TAX OF JOINT VENTURES CONSOLIDATED AND TAXED SEPARATELY THE SAME NEED TO BE EXCLUDED AS THE PROFITS AND GAINS W ERE ALREADY TAXED. THE ELIMINATION IS DONE AS PER THE DETAILS IN THE A NNEXED STATEMENT AND IS AS UNDER: (RS. LAKHS) PROFIT BEFORE TAX TAKEN AS BASE FOR COMPUTATION OF INCOME (STAND ALONE NCC) 2182.32 LESS: PROFIT AFTER TAX INCLUDED IN THE CONSOLIDATED P&L A/C EXCLUDED UNDER SECTION 10(2) OF THE INCOME- TAX ACT, 1961 NCC-KNR (JV) RS. 50.381 NCC-SMJ (JV) RS. 61.42 LG E&C-NCC (JV) RS. 176.36 UNITECH-NCC (JV) RS. 140.44 NCC-MAYTAS (JV) RS. 25.77 I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 16 -: SOMDUTT-NCC(JV) (-) RS. 15.19 SDB-NCC-NEC (JV) RS. 34.302 NCC-MAYTAS (JV) (-) RS. 17.20 NCC-SMC (JV) (-) RS. 19.42 TOTAL AMOUTN EXCLUDED AS INCOME NOT PART OF THE GROSS TOTAL INCOME 436.86 PROFIT BEFORE TAX NCCL STANDALONE 1745 .46 FROM THIS THE COMPUTATION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION HAS BEEN COMPUTED ON STANDA LONE BASIS AS GIVEN IN THE STATEMENT OF COMPUTATION ENCLOSED TO THE RET URN OF INCOME FILED, PROCESSED AND ASSESSED UNDER SECTION 143(3) VIDE OR DER DATED 27-03- 2006. 1. RS. 6.93 GROUPED IN OTHER INCOME IN THE CONSOLI DATION 2. DIRECTLY INCLUDED IN PROFIT. 11.4. AS CAN BE SEEN FROM THE ABOVE RECONCILIATION F URNISHED, LD.CIT(A) IN HIS ORDER HAS MISSED TWO ITEMS; (I) IN COME FROM A JV DIRECTLY TAKEN UNDER P&L A/C AND (II) PRIOR PERIOD AD JUSTMENTS WHICH HAS LEAD TO HIS CONFIRMATION OF PART AMOUNT TO THA T EXTENT IN THE FIRST ROUND OF APPEAL. ON EXAMINATION OF THIS RECO NCILIATION AND THE DOCUMENTS ON RECORD, WE ARE OF THE OPINION THAT ASSESSEE HAS CORRECTLY TAKEN THE INCOME, WHICH WERE EXAMINED IN DETAIL BY THE AO. IT IS TO BE NOTED THAT ON THE ORDER U/S. 143(3), THE MATTERS HAVE REACHED TO ITAT ALSO, MAINLY ON THE ISSUE OF DED UCTION U/S. 80-IA. ON THE QUANTUM OF INCOME, THERE ARE ORDERS OF CIT(A) AND ITAT AND THE ORDER OF AO U/S. 143(3). ON PERUSING T HOSE ORDERS ALSO, IT CANNOT BE STATED THAT THERE IS FAILURE ON THE PART OF ASSESSEE IN DISCLOSING THE INCOMES OR MATERIAL FACTS, AS THE CL AIM U/S. 80-IA WHICH WAS DISALLOWED BY AO PERTAIN TO VARIOUS INCOMES EARNED BY ASSESSEE ON DIFFERENT PROJECTS. IN VIEW OF THAT, IT CAN NOT BE STATED THAT ASSESSEE HAS NOT FURNISHED NECESSARY DETAILS IN TH E COURSE OF ASSESSMENT. THEREFORE, AS THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 17 -: FOR ASSESSMENT, THE ACTION OF AO IN REOPENING THE ASSE SSMENT BASED ON THE VERY SAME DOCUMENTS PLACED ON RECORD IS NOT ACCORDING TO LAW. MOREOVER, THE SAME CANNOT BE CONSID ERED AS TANGIBLE MATERIAL SO AS TO REOPEN, AS CONSIDERED BY THE LD.CIT(A) IN HER ORDER. IN VIEW OF THIS, WE ARE OF THE FIRM OP INION THAT THE ORDER OF CIT(A) AND THE ORDER OF AO ARE TO BE SET ASID E, AS THE VERY BASIS OF INITIATION OF PROCEEDINGS ARE BAD IN LAW. ACCORDINGLY, ASSESSEES GROUNDS ARE ALLOWED AND APPEAL IS ALLOWE D. THE ORDER OF AO AND LD. CIT(A) ON THESE PROCEEDINGS ARE HEREBY S ET ASIDE. 11.5. CONSEQUENT TO HOLDING THAT PROCEEDINGS U/S. 147 ARE BAD IN LAW, THERE IS NO NECESSITY TO ADJUDICATE THE C ROSS-OBJECTION RAISED BY THE REVENUE- THAT CIT(A) HAS NOT ADJUDICATED TH E ISSUE ON MERITS. IT IS TRUE THAT CIT(A) HAS NOT ADJUDICATED THE ISSUE ON MERITS EVEN THOUGH DIRECTED BY THE ITAT BUT AFTER PERUSI NG THE ORDER WHICH WAS SUBJECT MATTER OF APPEAL IN EARLIER R OUND, WE ARE OF THE OPINION THAT THERE IS NO NECESSITY TO EXAMINE T HE ISSUE ON MERITS, AS ASSESSEE HAS CORRECTLY DISCLOSED THE INCOME S AND RECONCILED THEM PROPERLY. IN VIEW OF THAT, CROSS-OBJ ECTION IS CONSIDERED AS ACADEMIC IN NATURE AND ACCORDINGLY DI SMISSED. 12. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED AND CROSS- OBJECTION OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2016 SD/- SD/- (P. MADHAVI DEVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMB ER HYDERABAD, DATED 16 TH SEPTEMBER, 2016 TNMM I.T.A. NO. 689/HYD/2014 C.O. NO. 12/HYD/2016 NAGARJUNA CONSTRUCTIONS CO. LTD., :- 18 -: COPY TO : 1. NAGARJUNA CONSTRUCTIONS CO. LTD., HYDERABAD. C/O . SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, ROAD NO. 9, HIMAYATNAGAR, HYDERABAD. 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(1), HYDERABAD. 3. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1(1), HYDERABAD. 4. CIT(APPEALS)-I, HYDERABAD. 5. CIT (CENTRAL), HYDERABAD. 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.