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TMI Blog2016 (7) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... erabad dated 31-03-2015. As issues are common, these appeals are heard together and decided by this common order. 2. The assessees in this group are connected to Sri Ramalinga Raju, Ex.MD/Chairman of Satyam Technologies Ltd. On the basis of confessional statement given by Shri Raju, assessments in this group are reopened u/s. 147 after four years from the end of relevant assessment year 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were examined with evidences and which is available in the asst. record. The appellant cited the following case laws in support of the contention that the reopening was bad in law : (i) Ranbaxy Laboratories Ltd Vs CIT (Delhi) 336 ITR 136). (ii) CIT Vs Jet Airways (I) Ltd (331 ITR 236) (Bombay High Court). 4.3 As regards the addition made, the appellant submitted 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad a Question mark over their transactions and the individuals and family members too had a Question mark over their investments. Whether the AO had explicitly mentioned this aspect or not, this coming of all the related companies and individuals of M/s Satyam group under the cloud, is a fact that cannot be brushed under the carpet and 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 Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After the amendment, the Assessing Officer has to have reason to believe that income has escaped assessment, but this does not imply that the Assessing Officer can reopen an assessment on mere change of opinion. The concept of change of opinion must be treated as 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90) 82 CTR (St) 1}, which reads as follows: 7.2 Amendment mode by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in s. 147. A number of representations were received against the omission of the words 'reason 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-com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment has been reopened beyond the period of 4 years when there is no failure on the part of the assessee to fully and truly disclose all material facts in the original assessment Itself and there being 'no tangible material' for the reopening of the assessment the CIT(A) erred in confirming the order of the Assessing Officer. We, therefore, hold that the reopening of the assessment under section 147 is bad in law and is to be quashed . Since the facts being similar, we hold that reopening of assessment in the impugned AY is bad in law. The issues considering the merits are purely academic in nature and therefore it is not necessary to consider the disallowance/ addition made by the AO in the assessment. Considering the above facts and the law on the issue, the orders of AO and CIT(A) are set aside. Assessee s grounds on reopening is accepted and appeal is accordingly allowed. 9. Facts in the other cases are similar. Therefore, considering the findings in ITA No. 767/Hyd/2015, other appeals of assessees are allowed. 10. In the result, all the appeals of the assessees are allowed. Order pronounced in the open Court on 13th May, 2016. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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