M/s BRNR Holdings Pvt Ltd, Hyderabad V. Asst. Commmissioner of Officer(OSD), Central Range-1, Hyderabad

ITA 892/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82260 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Tangible material
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC : HYDERABAD BEFORE SHRI D. MANMOHAN VICE PRESIDENT ITA.NO.892/HYD/2014 ASSESSMENT YEAR 2002-03 M/S. BRNR HOLDING PVT. LTD. HYDERABAD. PAN NO.AABCB 5749B VS. ACIT (OSD), CENTRAL RANGE-1 HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.893/HYD/2014 ASSESSMENT YEAR 2002-03 M/S. SAMARAT MARINE PRODUCTS PVT. LTD HYDERABAD PAN NO.AAECS 1672D VS. ITO (OSD)-2, CENTRAL RANGE-1 HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.894/HYD/2014 ASSESSMENT YEAR 2002-03 M/S. GANGA GREENFIELDS PVT. LTD. HYDERABAD. PAN NO.AABCG 5926B VS. ITO (OSD)-3, CENTRAL RANGE-1 HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.897/HYD/2014 ASSESSMENT YEAR 2002-03 M/S. MALAYAGIRI GREENLANDS PVT. LTD. HYDERABAD. PAN NO.AACCM 4810B VS. ACIT , CENTRAL CIRCLE-1 HYDERABAD (APPELLANT) (RESPONDENT) FOR REVENUE MR. SOLGY JOSE T. KOTTARAM FOR ASSESSEE MR. K.C. DEVDAS DATE OF HEARING 11.08.2014 DATE OF PRONOUNCEMENT 11.08.2014 ORDER PER D. MANMOHAN, VICE PRESIDENT: THESE FOUR APPEALS, PERTAINING TO THE ASSESSMENT YEAR 2002-03, ARE DIRECTED AGAINST SEPARATE BUT IDE NTICAL ORDERS PASSED BY THE CIT(A)-VII, HYDERABAD. SINCE THE ISSUES 2 ITA NO.892, 893, 894 & 897/HYD/2014 M/S. BRNR HOLDINGS PVT. LTD. & OTHERS, HYDERABAD INVOLVED IN ALL THE APPEALS ARE MORE OR LESS IDENTI CAL, THEY ARE TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. 2. THE LD. COUNSEL MR. K.C. DEVDAS FILED BEFORE US A CHART TO HIGHLIGHT THAT MOST OF THE GROUNDS ARE IDENTICAL AND IN PARTICULAR, DISPOSAL OF THE GROUND NOS.1 & 2, CONCE RNING THE VALIDITY OF REOPENING OF ASSESSMENT, WOULD SERVE TH E PURPOSE SINCE, IN HIS OPINION, THE ASSESSMENTS WERE SOUGHT TO BE REOPENED WITHOUT RECORDING ANY REASONS TO BELIEVE T HAT THE INCOME OF THE ASSESSEES HEREIN ESCAPED ASSESSMENT. THE LD. COUNSEL HAS FILED BRIEF WRITTEN SUBMISSIONS TO HIGH LIGHT THAT THE NOTICES WERE ISSUED FOR THE ASSESSMENT YEAR UND ER CONSIDERATION BEYOND A PERIOD OF 4 YEARS FROM THE S PECIFIED PERIOD RELEVANT TO THE ASSESSMENT YEAR 2002-03. TH E ASSESSING OFFICER WAS REQUESTED TO FURNISH THE REAS ONS. IN RESPONSE THERETO, IT WAS STATED THAT SHRI B. RAM ALINGA RAJU EX-CHAIRMAN OF M/S. SATYAM COMPUTERS LTD. IN HIS LE TTER TO THE BOARD OF DIRECTORS, WITH A COPY MARKED TO SEBI, HAS STATED THAT BOOKS OF ACCOUNTS HAVE BEEN FUDGED FOR THE PAS T SEVERAL YEARS AND REVENUES AND PROFITS WERE MANIPULATED BY FALSIFICATION OF ACCOUNTS FOR THE LAST SEVERAL YEAR S. SWORN STATEMENT OF SHRI RAJU WAS RECORDED IN THE CENTRAL PRISON, CHANCHALGUDA, HYDERABAD, WHEREIN, HE CONFIRMED THE FACTS AND FIGURES THAT WAS STATED IN HIS LETTER DATED 7.1 .2009 ADDRESSED TO THE BOARD OF DIRECTORS. BASED ON SUCH STATEMENTS, THE ASSESSING OFFICER SOUGHT TO RE-OPEN THE ASSESSMENT IN THE CASE OF THE OTHER COMPANIES, WHIC H ARE THE APPELLANTS HEREIN. THE LD. COUNSEL PLACED BEFORE U S A COPY OF THE ORDER PASSED BY THE ITAT A BENCH, HYDERABAD I N THE CASE OF CERTAIN GROUP OF COMPANIES TO HIGHLIGHT THAT WHE N A NOTICE IS ISSUED BEYOND A PERIOD OF 4 YEARS, IT IS THE DUTY O N THE PART OF THE ASSESSING OFFICER TO RECORD PROPER REASONS IN T HOSE CASES. THE A.O. COULD NOT HIGHLIGHT FAILURE ON THE PART OF THE 3 ITA NO.892, 893, 894 & 897/HYD/2014 M/S. BRNR HOLDINGS PVT. LTD. & OTHERS, HYDERABAD ASSESSEES TO DISCLOSE FULLY AND TRULY ALL MATERIALS AND FACTS NECESSARY FOR ASSESSMENT IN WHICH EVENT MERELY BASE D ON A STATEMENT CONCERNING DIFFERENT ASSESSEES, IT CANNOT FORM THE BASIS FOR REOPENING THE ASSESSMENT (ITA NOS.1233/HY D/2011 AND BATCH DATED 31.12.2013). FOR THE SAKE OF IMMED IATE REFERENCE, THE OPERATIVE PORTION OF THE AFORESAID O RDER OF THE TRIBUNAL IN PARAS 18 TO 20 IS REPRODUCED HERE: 18. TO CONCLUDE, I. THE RECORDING OF REASONS BEFORE THE ISSUE OF NOTICE UNDER SECTION 148 HAS ABSOLUTELY NO NEXUS WITH THE ASSESSMENT MADE. II. THAT THE ASSESSMENT MADE UNDER SEC.143(3) CANNOT BE REOPENED UNDER SEC.148 BEYOND PERIOD OF 4 YEARS AS THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS IN THE ORIGINAL ASSESSMENT ITSELF. III. THE ASSESSING OFFICER HAD NO TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM THE ORIGINAL ASSESSMENT. IV. THE REOPENING WAS ON WRONG FOUNDATION OF REASONING OF THE FINANCIAL IMPLICATION BETWEEN THE ASSESSEE-COMPANY AND M/S. SATYAM COMPUTER SERVICES LIMITED, WHICH WAS NOT ESTABLISHED IN THE REASSESSMENT TO JUSTIFY THE REOPENING. V. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSMENT COMPLETED HAS NO RELATION AT ALL WITH THE 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 THE ASSESSING OFFICER HAS DONE IN THE ASSESSMENT IS DENIAL OF THE EXPLANATIONS GIVEN BY THE ASSESSEE WITH REFERENCE TO VARIOUS INVESTMENTS MADE THROUGH THE BOOKS OF ACCOUNTS, VARIOUS CREDITS AND LOANS OBTAINED AND ALSO ADDITION TO FIXED 4 ITA NO.892, 893, 894 & 897/HYD/2014 M/S. BRNR HOLDINGS PVT. LTD. & OTHERS, HYDERABAD ASSETS ON THE REASON THAT THE EVIDENCES HAVE NOT BEEN FILED. THUS AS CAN BE SEEN FROM THE ORDER, THERE IS NO NEXUS AT ALL WITH REFERENCE TO THE REASONS FOR REOPENING AND THE ASSESSMENT COMPLETED. 19. HENCE, THERE BEING NO NEXUS OR LIVE-LINK WITH T HE 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 THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERI AL FACTS IN THE ORIGINAL ASSESSMENT ITSELF, AND THERE BEING `NO TANGIBLE MATERIAL FOR THE REOPENING OF THE ASSESSM ENT, THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSI NG OFFICER. WE, THEREFORE, HOLD THAT THE REOPENING OF THE JURISDICTION UNDER SECTION 147 IS BAD IN LAW AND IS TO BE QUASHED. 20. FOLLOWING THE PRINCIPLES ON THE ABOVE ISSUE AS DISCUSSED AND THE FACTS AS CONCLUDED ABOVE IN PARAS NO.18 AND 19, WE ALLOW ASSESSEES GROUNDS ON THE IS SUE OF REOPENING RAISED BEFORE US FROM GROUNDS 1 TO 11. SINCE, WE HAVE ALLOWED THE ASSESSEES GROUNDS ON GROUNDS 1 TO 11, THE OTHER GROUNDS ON MERITS OF THE ADDITIONS DO ES NOT REQUIRE ANY CONSIDERATION AS THEY BECOME ACADEMIC I N NATURE. ACCORDINGLY, WE ALLOW THE APPEAL ITA NO.1233/HYD/2011 OF THE ASSESSEE. 3. THE LD. COUNSEL ALSO PLACED BEFORE ME A COPY OF THE ORDER OF THE ITAT A BENCH, HYDERABAD IN THE FOLLO WING CASES: (WTA NO.2/HYDERABAD/2010 AND GROUP DATED 8.1.2014), WHEREIN I AM ALSO A PARTY, TO SUBMIT THA T BASED ON THE REASONING GIVEN IN THE EARLIER ORDER OF THE TRI BUNAL, THE BENCH CONCLUDED THAT IT IS THE DUTY OF THE ASSESSIN G OFFICER TO RECORD VALID REASONS FOR REOPENING OF THE ASSESSMEN TS AS OTHERWISE RE-OPENING BECOMES BAD IN LAW SINCE THERE IS NO LIVE LINK/NEXUS BETWEEN THE REASONS RECORDED AND THE FOR MATION OF A BELIEF IN ORDER TO INVOKE THE PROVISIONS CONCERNI NG ESCAPEMENT OF INCOME. LD. COUNSEL ALSO SUBMITTED T HAT THE FACTS AND CIRCUMSTANCES IN THE GROUP OF CASES POSTE D BEFORE ME TODAY ARE MUTATIS MUTANDIS IDENTICAL SINCE THE S TATEMENT OF SHRI RAJU DOES NOT INDICATE ANYTHING ABOUT THE P RESENT 5 ITA NO.892, 893, 894 & 897/HYD/2014 M/S. BRNR HOLDINGS PVT. LTD. & OTHERS, HYDERABAD COMPANIES AND NO FURTHER INVESTIGATION WAS MADE BY THE ASSESSING OFFICER BEFORE ISSUANCE OF NOTICE U/S 148 OF THE ACT AND THUS THE RE-OPENING OF ASSESSMENTS IS BAD IN LA W. 4. THE LD. D.R. FAIRLY ADMITTED THAT THE ISSUE RAIS ED IN GROUND NOS.1 & 2 IS COVERED BY THE AFORECITED DECIS IONS, THOUGH HE SUBMITTED THAT THE STATEMENT GIVEN BY SHR I RAJU PRESUPPOSES THAT IDENTICAL MODUS OPERANDI MUST HAVE BEEN FOLLOWED WITH REGARD TO THE OTHER COMPANIES ALSO; T HUS, THE A.O. WAS JUSTIFIED IN REOPENING THE ASSESSMENT. 5. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. IT IS ADMITTED THAT THE FACTS AND CIRCUMSTANCES IN THE AP PEALS FILED TODAY ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES OF THE CASES WHICH WERE DISPOSED OF BY THE ITAT A BENCH IN THE AFORESAID CASES, WHEREIN THE TRIBUNAL HAD ALREADY TAKEN A VIE W BY HOLDING THAT REOPENING OF ASSESSMENTS ARE BAD IN LA W. CONSISTENT WITH THE VIEW TAKEN THEREIN, I AM OF THE FIRM VIEW THAT THE REOPENING OF ASSESSMENTS IS BAD IN LAW AND THEREFORE I SET ASIDE THE ASSESSMENTS, THE ORDERS PASSED BY T HE CIT(A) AND ALLOW THE APPEALS FILED BY THE ASSESSEES. IN O THER WORDS, REOPENING OF ASSESSMENTS IN MY OPINION, IS BAD IN L AW. THE ISSUES CONCERNING THE MERITS ARE PURELY OF ACADEMIC NATURE AND THEREFORE IT IS NOT NECESSARY TO CONSIDER THE O THER ASPECTS. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.08 .2014 SD/- (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED 11 TH AUGUST, 2014 VG/SPS 6 ITA NO.892, 893, 894 & 897/HYD/2014 M/S. BRNR HOLDINGS PVT. LTD. & OTHERS, HYDERABAD COPY TO 1. M/S. BRNR HOLDINGS PVT. LTD., FLAT NO.201, KAMAL A ARCADE, SHYAMLAL BUILDINGS, BEGUMPET, HYDERABAD-500 038 2. M/S. SAMARAT MARINE PRODUCTS PVT. LTD., 392, HMT HILLS, OPP. JNTU COLEGE, KUMATPALLY, HYDERABAD 3. M/S. GANGA GREENFIELDS PVT. LTD., 2-13/31, S.S. NAGAR, OPP. HYDERNAGAR, HYDERABAD 4. M/S. MALAYAGIRI GREENLANDS PVT. LTD., 392, HMT H ILS, OPP. JNTU COLLEGE, KUMATPALLY, HYDERABAD 5. THE CIT(CENTRAL), HYDERABAD 6. ACIT (OSD), CENTRAL RANGE-1, HYDERABAD 7. ACIT CENTRAL RANGE-3, HYDERABAD 8. DCIT CENTRAL CIRCLE-9, HYDERABAD 9. ITO (OSD)-2, CENTRAL RANGE-1, HYDERABAD 10. ITO(OSD)-3, CENTRAL RANGE-1, HYDERABAD 11. ACIT CENTRAL CIRCLE-1, HYDERABAD 12. CIT(DR), SMC BENCH, HYDERABAD