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TMI Blog2015 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee did not file any return of income for the AY under consideration. Subsequently, on the basis of the statement of Shri B. Ramalinga Raju, Ex-Chairman of Satyam Computers Services Ltd. (SCSL) making disclosure about fudging of accounts of the company and fraud committed, AO reopened assessment u/s 147 of the Act by issuing a notice dated 24/03/10 u/s 148 to assessee as he happens to be a family member and close relative of Shri B. Ramalinga Raju. In response to the notice issued u/s 148, assessee filed his return of income declaring "NIL" income. AO looking at the complexity of the accounts opined that assessee's case required audit u/s 142(2A) of the Act. Though assessee objected for such special audit but assessee's case was refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, rejecting the submissions of assessee set aside the assessment order passed by the AO with a direction to quantify the agricultural income earned by assessee and also bring to tax the pension earned by assessee. The findings of the learned CIT are extracted hereunder for convenience. "3. I have gone through the submission of the assessee. The AO while completing the assessment u/s 143(3) r.w.s. 147 had made additions of Rs. 19,94,589/- towards interest accrued on fixed deposits in various banks as against income returned NIL filed by assessee. For the computation of tax purpose the AO ought to have quantified the agricultural income from agricultural lands of 10 acres. Further the AO should have ascertained and brought to tax the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee in course of assessment proceeding, the assessment order passéd cannot be considered to be erroneous and prejudicial to the interests of revenue. It was further submitted that the impugned assessment order has been challenged by way of an appeal before the CIT(A) It was submitted, assessee has challenged the validity of the reopening of assessment in the appeal filed. In case, the CIT(A) declares initiation of proceeding u/s 147 to be invalid, the very basis on which the proceeding has been initiated u/s 263 will not survive. In this context, learned AR submitted that reopening of assessment made for the earlier years on similar grounds has already been quashed by the first appellate authority. It was submitted, in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. Brief note on the business activities. Your source of income Ans: I am a retired Scientist, Having pension from CSIR and 10 acres of agricultural lands. 4. Statement of affairs as on 31/03/2003 Ans: Having 10 acres of agricultural lands 5. Capital account for the financial year 2002-03 Ans: Having 10 acres of agricultural lands 6. Cash flow statement for the Financial Year 2002-03 Ans: Pension/Agricultural income 11. Have you derived any exempted income during the year such as agricultural income, dividend income etc., details with proof. Ans: Pension/Agricultural income 12. Personal drawings total family expenditure for the year in consideration. Ans: Personal expenditure meets out of pension/agricultural income." From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, failure on the part of AO to examine the issue relating to earning of agricultural income and pension income has rendered the assessment order erroneous and prejudicial to the interests of revenue. In these circumstances, CIT, in our view, was justified in setting aside the assessment order by exercising his revisional powers u/s 263 of the Act. Mere pending of appeal before the first appellate authority would not debar or restrict the CIT from exercising powers u/s 263 of the Act. In the aforesaid circumstances, we are of the view that the order passed by the CIT deserves to be upheld. However, we make it clear that AO while redoing the assessment shall examine the issue of agricultural income and pension independently and with an unbia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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