Mr. Ramalingaraju. B, Hyderabad V. DCIT, Central Circle-8, Hyderabad

ITA 746/HYD/2012

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3046 (ITAT-HYDERABAD)
• Duration Of Justice: 7 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 16-12-2019
• Assessment Year: 2002-2003
• Appeal Filed On: 15-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Unexplained investment; Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER W TA NO. 01 / HYD/20 12 ASSESSMENT YEAR: 20 02 - 03 B. RAMALINGA RAJU, HYDERABAD. PAN: ACVPB 8311 J VS. DEPUTY COMMISSIONER OF WEALTH TAX, CENTRAL CIRCLE - 8, HYDERABAD. (APPELLANT) (RESPONDENT) I TA NO. 7 4 6 / HYD/20 12 ASSESSMENT YEAR: 20 02 - 03 B. RAMALINGA RAJU, HYDERABAD. PAN: ACVPB 8311 J VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 8, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.C. DEVDAS REVENUE BY: SRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 16/12/2019 DATE OF PRONOUNCEMENT: 09 /03/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. ITA NO.746/HYD/2012 IS FILED AGAINST THE ORDER OF THE LD. CIT (CENTRAL), HYDERABAD IN ORDER NO. CIT(C)/263/44/11 - 12, DATED 08/03/2012 PASSED U/S. 263 OF THE ACT FOR THE AY: 2002 - 03. WTA NO. 01/HYD/2012 2 IS FILED AGAINST THE ORDER OF THE LD. COMMISSIONER OF WEALTH TAX (CENTRAL), HYDERABAD IN ORDER NO. CIT (C) /25/52/11 - 12, DATED 26/03/2012 PASSED U/S. 25 WEALTH TAX ACT, 1957 FOR THE AY 2002 - 03 . SINCE BOTH THE SE APPEALS ARE FILED BY THE ASSESS EE FOR THE AY 2002 - 03 AND THEY BEING INTERCONNECTED THE APPEALS ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. ITA NO.746/HYD/2012 (AY 2002 - 03) 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED SEVERAL GROUNDS HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (CENTRAL), HYDERABAD HAS ERRED BY INVOKING HIS POWERS U/S. 263 OF THE ACT AND ERRED BY HOLDING THAT THE ORDER OF THE LD. AO (DCIT, CENTRAL CIRCLE, HYDERABAD) PASSED U/S. 143(3) R.W.S 147 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE AY 2002 - 03 ON 09/08/2002 DECLARING AN INCOME RS. 2,51,11,160/ - WHICH INCLUDES SALARY INC OME AND INCOME FROM OTHER SOURCES. INITIALLY, THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 04/03/3005 AND THEREAFTER THE CASE WAS REOPENED U/S. 147 AND THE ASSESSMENT ORDER U/S.143(3) R.W.S 147 WAS PASSED ON 21/07/2010 DETERMINING THE TAXABLE INC OME AT RS.55,55,19,540/ - . WHILE COMPUTING THE TOTAL TAXABLE INCOME THE LD. AO MADE THE FOLLOWING ADDITIONS: 3 1. ADDITIONS TOWARDS FIXED DEPOSITS MADE IN OTHER S NAME RS.4,80,04,380 2. AMOUNT CLAIMED TO BE IRRETRIEVABLE LOST DISALLOWED TREATING THE SAME AS UNEXPLAINED INVESTMENT RS.2,36,84,000 3. ADDITION TOWARDS UNEXPLAINED INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES RS.45,87,20,000 4. THEREAFTER, ON EXAMINING THE ASSESSMENT RECORD FOR THE AY 2002 - 03 WHICH WAS COMPLETED U/S. 143(3) R.W.S 147 OF THE ACT, THE COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD HAD OPINED THAT WHILE PASSING THE ASSESSMENT ORDER, THE LD. AO HAD HAD OMITTED TO CONSIDER AND EXAMINE CERTA IN VITAL ISSUES LIKE DIVERSION OF FUNDS AND THE NATURE OF THE OPENING BALANCE DISCLOSED UNDER THE HEAD SUSPENSE ACCOUNT AND PASSED ORDER WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN CARRIED OUT . THEREFORE, THE LD. CIT TREATED THE ASSESSMENT ORDER PASSED BY THE LD. AO AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE . ACCORDINGLY, THE LD. CIT ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT MENTIONING HIS OBSERVATIONS RELATING TO AN AMOUNT OF RS. 1122 C R ORE S SHOWN AS OPENING BALANCE UNDER THE HEAD SUSPENSE ACCOUNT AND ISSUES RELATED TO DIVERSION O F ADS PROCEEDS . IN RESPONSE TO THE SHOW CAUSE NOTICE , THE ASSESSEE OBJECTED FOR INVOK ING OF THE PROVISIONS OF SECTION 263 ACT SINCE ON THE EARLIER OCCASION THE ASSESSMENT WAS 4 COMPLETED U/S. 143(3) R.W.S. 147 OF THE ACT WHEREIN ALL THESE ASPECTS WERE CONSIDERED BY THE LD.AO. 5. HOWEVER , O N PERUSING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE BEFORE THE LD. REVENUE AUTHORITIES, THE LD. CIT PASSED ORDER U/S. 263 OF THE ACT ON 08.03.2012 WHEREIN HE OBSERVED AS UNDER: (I) A S PER THE REPORTS SUBMITTED BY THE LD. REVENUE AUTHORITIES (LD. AO AND THE ADDL. CIT) AND ON VERIFICATION OF THE REPORT SUBMITTED BY THE SIFO, IT IS EVIDENT THAT THERE IS AN ALLEGED DIVERSION OF FUNDS TO THE TUNE OF RS. 397 CRS FROM ADS PROCEEDS OF M/S. SA TYAM COMPUTER SERVICES LTD. (II) THOUGH THE ADS PROCEEDS WERE STATED TO HAVE BEEN TRANSFERRED TO VARIOUS BANK ACCOUNTS OF M/S. SATYAM COMPUTERS MAINTAINED IN INDIA, ON VERIFICATION OF THE RELATED BANK ACCOUNTS IT IS REVEALED THAT THE AMOUNTS WERE NOT ACTUALLY C REDITED TO THE SAID ACCOUNTS. (III) THE CHAIRMAN OF THE COMPANY (M/S. SATYAM COMPUTERS) IN HIS CONFESSIONAL STATEMENT MADE IN JANUARY, 2009 ADMITTED TO HAVE FUDGED THE ACCOUNTS OF THE COMPANY. (IV) AS PER THE SFIO REPORT, THERE IS FALSIFICATION OF BOOKS OF ACCOUNT AN D THE BANK ACCOUNTS BY THE CONCERNED PERSONS. 5 (V) AS PER THE FORENSIC INVESTIGATION REPORT OF KPMG AN AMOUNT OF RS. 1122 CRORES WAS SHOWN AS OPENING BALANCE AS ON 01/04/2002 , WHICH WAS DISCLOSED AS SUSPENSE ACCOUNT IN THE RESTATED FINANCIAL STATEMENTS FOR THE YEAR 2008 - 09. HENCE THERE IS A POSSIBILITY OF DIVERSION OF CASH. 6. F ROM THE ABOVE OBSERVATIONS, THE LD. CIT OPINED THAT THE ASSESSING OFFICER HAS NOT THOROUGHLY EXAMINED OR ENQUIRED INTO THE A BOVE ISSUES. THEREFORE THE LD. CIT CAME TO THE CONCLUSION THAT THE ORDER PASSED BY THE LD. AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, THE LD. CIT SET - ASIDE THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S 147 OF THE ACT AND DIRECTED THE LD. AO TO THOROUGHLY EXAMINE THE ISSUE OF ADS PROCEEDS OF RS. 397 C R ORE S REFERRED TO IN THE SFIO AND ALSO THE OPENING BALANCE OF RS. 1122 CRORES AS ON 01/04/2009 REFERRED TO IN THE RESTATED FINANCIAL STATEMENTS AND THEREAFTER CO MPLETE THE ASSESSMENT. AGGRIEVED BY THE ORDER OF THE LD. CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. AR ARGUED BY STATING THAT THE LD. AO HAD EXAMINED ALL THE ISSUES RAISED BY THE LD. CIT IN HIS 263 ORDER AND THEREAFTER PASSED THE ASSESSMENT ORD ER U/S. 143(3) OF THE ACT DATED 21/07/2010 . HENCE, IT WAS PLEADED THAT THERE WAS NO MERIT IN THE ORDER OF THE LD. CIT AND THEREFORE, IT DESERVES TO BE QUASHED. THE LD. DR ON THE OTHER HAND ARGUED IN SUPPORT OF THE LD. CIT. 6 8. WE HAVE HEARD THE RIVAL SUBMISSION AND CAREFULLY PERUSED THE MATERIALS ON RECORD. ON PERUSING THE ORDER OF THE LD. AO WE DO NOT FIND ANY MENTION REGARDING THE ISSUES DISCUSSED BY THE LD. CIT IN HIS ORDER U/S. 263. FURTHER, SINCE THE ISSUES RAISED BY THE L D. CIT IS OF GRAVE CONSEQUENCE, IT IS NECESSARY TO EXAMINE THOSE ISSUES IN DETAIL. ACCORDINGLY, THE LD. CIT HAS ONLY DIRECTED THE LD. AO TO EXAMINE THOSE ISSUES IN DETAIL AND TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW AND MERIT WHICH IS APPROPRIATE . IN THIS SITUATION, WE DO NOT FIND MUCH STRENGTH IN THE ARGUMENTS ADVANCED BY THE LD. AR AND WE FURTHER FIND MERIT IN THE ORDER OF THE LD. CIT FOR INVOKING HIS POWERS U/S. 263 OF THE ACT AND DIRECTING THE LD. AO TO EXAMINE THE ISSUES POINTED OUT BY HIM I N DETAIL AND THEREAFTER TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW AND MERIT. FOR THE AFORE SAID REASONS, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD. CIT. HENCE, THE APPEAL OF THE ASSESSEE IS DEVOID OF MERITS. 9 . AS REGARDS , AS THE ORDER PASSED BY THE LD. CWT U/S. 25 OF THE WEALTH TAX ACT FOR SETTING ASIDE THE ORDER OF THE L D. WTO AND DIRECTING HIM TO FRAME FRESH ASSESSMENT ORDER AFTER VERIFYING THE ISSUES POINTED OUT IN THE ORDER PASSED U/S. 25 OF THE ACT, THE LD. AR SUBMIT TED THAT THE HYDERABAD BENCH OF THE TRIBUNAL HAD QUASHED THE REVISED WEALTH TAX ASSESSMENT ORDER PASSED U/S . 16(3)D R.W.S 17 OF THE ACT DATED 23/12/2019 AND THEREFORE, THE ORDER PASSED BY THE LD. CWT U/S. 25 DATED 26/03/2012 DOES NOT SURVIVE. IT WAS THERE FORE PLEADED THAT THE 7 ORDER OF THE LD. CWT U/S. 25 MAY BE QUASHED. THE LD. DR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LD. AR. 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS ON RECORD, AS POINTE D OUT BY THE LD.AR, WE FIND THAT THE OR DER OF THE LD. CWT PASSED U/S. 25 OF THE ACT DATED 26/3/2012 DOES NOT SURVIVE BECAUSE THE REVISED WEALTH TAX ASSESSMENT ORDER PASSED BY THE LD. WTO U/S. 16(3) R.W.S 17 OF THE ACT, DATED 23/12/2009 WAS QUASHED BY THE TRIBUNAL IN WTA NO. 02/H/2012 FOR THE AY 2002 - 03 IN THE ASSESSEES CASE VIDE ORDER DATED 08/1/2014. THEREFORE, WE HEREBY QUASH THE ORDER PASSED BY THE LD. CWT U/S. 25 OF THE ACT DATED 26/3/2012 FOR THE RELEVANT AY 2002 - 03. 11. IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO. 7 4 6/ HYD/20 12 IS DISMISSED AND THE APPEAL IN WTA NO. 01/ HYD/20 12 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 09 TH MARCH , 2020 . SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 09 TH MARCH , 2020 OKK COPY TO: - 1) B. RAMALINGA RAJU, PLOT NO.1242, ROAD NO.62, JUBILEE HILLS, HYDERABAD. 2) DCIT, CENTRAL CIRCLE - 8, VII FLOOR, AAYAKAR BHAVAN, HYDERABAD. (II) DY. COMMISSIONER OF WEALTH TAX, CENTRAL CIRCLE - 8, VII FLOOR, AAYAKAR BHAVAN, HYDERABAD. 8 3) THE CIT (CENTRAL), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. (II) COMMISSIONER OF WEALTH TAX (CENTRAL), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 4) THE ADDL. CIT, CENTRAL RANGE - 3, HYDERABAD. (II) ADDL. COMMISSIONER OF WEALTH TAX, CENTRAL RANGE - 3, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE