TaxTMI 
TaxTMI 
2016 (7) TMI 310
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.... on the reason of examining the transactions which are supposed to be fraudulent. AO recorded reasons, made additions which are confirmed by the Ld. CIT(A). The facts in this group of assessees are more or less same, except the quantum of addition made. Assessees have raised common grounds challenging the jurisdiction u/s. 147 for reopening the assessments u/s. 143(3) and additions made as unexplained. For the sake of clarity, the facts in the case of Smt. B. Radha in ITA No. 767/Hyd/2015 is discussed in detail. ITA No. 767/Hyd/2015: 3. Briefly stated, assessee is sister-in-law of Shri B. Ramalinga Raju, Chairman of Satyam Computer Services Ltd. In light of the confessional statement dt. 07-01-2009 made by Shri Ramalinga Raju about fudging of accounts and manipulation of book results for the past so many years of that company, the associates of Satyam group comprising of various companies and family members came under a cloud. The AO had discussed these issues in para 2, 3 & 4 on pages 1 to 5 of the assessment order and issued notice u/s. 148 of the Act after rejecting the objections of assessee. The issuance of notice is challenged by assessee. 3.1. The addition made was ....
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....ed as under: a) The appellant drew attention of the AO to the seizure of records by investigating agencies and hence its inability to produce "records". It was also stated that with the availability of whatever was available, the appellant tried to reconstruct the accounts and filed the balance sheet and because of the incompleteness of the records, there was variation from what was filed originally and what was now submitted in response to the notice issued under section 147. b) In the original assessment order done u/s 143(3), all the issues were examined but original assessment records were conveniently ignored even though it was brought to the attention of the AO. c) The explanation of the appellant extracted from asst. Order at para 10 was self explanatory. In absence of books which were under seizure and a fact which was known to the AO the allegation that the appellant failed to reconcile the difference stands to no reason. The AO could have obtained the complete seized record and examine the issue. The appellant thus submitted that not only the assessment was bad in law, but also the additions made were unjustified". 5. Ld. CIT(A) howe....
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....nd the legality of reopening cannot be examined in isolation of this vital background. 5.3 It is also seen that at the stage of issuing of notice u/s 147, as per law, all that was required was a bonafide belief or a reason to believe about escapement of income. This belief and its bonafide were certainly there in the background. Thus, the issue of notice is therefore upheld. The justification of the additions made is altogether a different issue and the additions made are now examined". On merits, Ld. CIT(A) confirmed the addition as assessee failed to reconcile the differences in balances disclosed in different returns. 6. At the outset, Ld. Counsel submitted that the issue of reopening of assessments concluded under 143(3) in the group was exclusively discussed in various Co-ordinate Bench decisions and relied on these orders: 1. M/s Danishta Farms Pvt. Ltd., Vs. ACIT and others , ITA No. 535/Hyd/14 and others dated 12/12/2014. 2. M/s Rohini Biotech (P) Ltd. Vs. ITO and others in ITA Nos. 1233/Hyd/2011 and others, dated 31/12/2013. 3. M/s SRSR Advisory Services Pvt. Ltd. Vs. ACIT, in ITA No. 1227/Hyd/2014, 09/10/2015. 7. Ld. DR fairly ....
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....ning of the financial implication between the assessee-company and Mis. 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 reopeninq. 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 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 the reasons recorded and the 'formation of belief' to come 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 part of the assessee to fully and t....
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....s an inbuilt test to check the abuse of power. Hence, after April 1, 1989, the Assessing Officer has power to reopen an assessment, provided there is "tangible material" to come to the conclusion that there was escapement of income from assessment. Reason must have a link with the formation of the belief Decisions of the Delhi High Court in Cit v. Kelvinator of India Ltd. (2002) 256ITR 1 (FE) and CIT v. Eicher Ltd. (2007) 294 ITR 310 affirmed." "147. Income escaping assessment.-If the AO has reason to believe that any income me chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of ss. 148 to 153, assess or reassess such income and also any other income chargeable to tax which has 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 assessment 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 mads as under: 4. On going through the changes, quoted ab....
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....son to believe' from s. 147 and their substitution by the 'opinion' of the AD. It was pointed out that the meaning of the expression, 'reason to believe' had been explained in a number of Court rulings in the post and was well settled and its omission from s. 147 would give arbitrary powers to the AO to reopen post assessments on mere change of opinion. To alloy 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 reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new s. 147, however, remain the some." 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 . 10. We also find that CIT(A) erred in holding that the Assessing Officer had valid reasons to reopen the assessment of Assessee-company to examine the veracities and financial implications between Assessee company and M/s. Sat yam Computer Services Limited. We find there is no rationale nexus with such statement by Sri Ramalinga Raju and reassessment made. As seen from ....