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TMI Blog2019 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... f account of the assessee and other documents, came to a prima facie conclusion that the assessee has not disclosed the true facts and all other materials to complete the assessment. AO has rightly reopened the assessment and accordingly we uphold the order of CIT(A) in confirming the reopening of assessment made by the AO u/s 147 Disallowance u/s 14A - HELD THAT:- No infirmity in the decision of the CIT(A) in restricting the disallowance to ₹ 50,000/- and accordingly, we uphold the order of CIT(A) on this issue and dismiss the ground raised by the assessee. Similar ground u/s 14A was raised by the assessee. CIT(A) has restricted the disallowance to ₹ 50,000/- as against the disallowance made by the AO. Accordingly, we find no reason to interfere with the decision and hence, uphold the order of CIT(A) on this issue and dismiss the ground raised by the assessee. Computation of income and segregation of loss from speculation business - HELD THAT:- As perused the material on record as well as gone through the orders of revenue authorities. We are of the view that the CIT(A) has rightly directed the AO to verify the true nature of the transactions and decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of accounts for the last several years, the AO reopened the assessment of the assessee by issuing notice u/s 148, as the assessee company was incorporated by the family members of the promoters of Satyam Computers Services Ltd. The reasons for reopening the assessment given by the AO vide issuance of notice u/s 148, are as under: Elem Investments Pvt Ltd PAN - AAACE4370L has filed its return of Income for 1 the assessment year 2003-04 on 28-1'1-2003 declaring income of ₹ 17,00,030/-. The assessment under section 143(3) was completed on 0603-2006 and income was assessed at ₹ 32,00,030/- On 7th January, 2009, Sri. B. Ramalinga Raju, Ex-Chairman of M/s. Satyam Computer Services Ltd. (SCSL for short) in his letter sent to the Board of Directors with a copy marked to SEBI has stated that Books of accounts have been fudged for the last several years. He further stated that the revenues and profits were manipulated by falsification of accounts for the last several years. Subsequently, investigating agencies like the CBI, SFIO and the Enforcement Directorate have conducted investigations and it came to light t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced to M/s SCSL have not been recorded in the books of SCSL at the behest of Sri B Ramalinga Raju and that certain transactions entered in the books of SCSL are not recorded in the accounts of the group companies. The books of such investment companies and their financial statements do not reflect the true and fair statement of affairs of these companies. Thus it is apparent that some of the transactions are also not recorded in the books of these companies like that of the assessee-company. The entire setoff un recorded transactions by SCSL and group of companies and individuals were thus planned and executed by one master mind viz. B Ramalinga Raju. The assessments in these cases were completed under section 143(3) of the I. T. act and a) The revelations in the confessional statement of Sri B Ramalinga Raju, the facts of fudging of accounts. b) The real and effective control over the front companies of Sri B Ramalinga Raju and his family members: c) That there were variations in the quantum of income and assets/liabilities of SCSL and the front companies was revealed in the confessional statement etc. wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of ₹ 22, 72,574/-. I have, thus, reason to believe that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for A. Y. 2003-04 and also that it resulted in escapement of income chargeable to tax to the tune of atleast ₹ 5,16,828/-, given the volume of the transactions as stated above, within the meaning of sec. 147 read with sec. 149 of the I.T. Act. 4.2 The assessee objected the reopening of assessment, however, the AO completed the assessment u/s 143(3) read with section 147 of the Act, dated 05/08/2011 by assessing the total income of the assessee at ₹ 35,08,092/-. 5. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) challenging the reopening of assessment made by the AO. 6. The ld. CIT(A) after considering the arguments of the assessee, upheld the reopening of assessment by observing as under: 5.1 The statement dated 07/01/2009 of the Chairman/promoter of the iconic Company of Andhra Pradesh, M/s Sat yam Computers had created turmoil in all circles and opened a Pandora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T, [2014] 44 Taxmann.com 386 (Mum.) 4. DCIT Vs. Tivoli Investment and Trading Co. (P) Ltd., [2014] 49 Taxmann.com 479 (Mum.) 9. We considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. Also gone through the case law relied upon by both the counsels. The issue for our consideration before us is whether reopening of assessment made by the AO is in accordance with law or not. On perusal of the reasons recorded by the AO for reopening of assessment (cited supra), it is a fact that notice u/s 148 was issued by the AO after four years, the fact of which was not objected by the department. No doubt that in the reopening of assessment notice issued beyond four years, the AO has established the fact that the assessee has not disclosed all the facts fully and truly to complete the assessment. From the reading of the above reasons recorded by the AO, we find that the AO after examining the entire file of the assessee came to the conclusion that the assessee has not disclosed true facts before him to complete the assessment. AO also clearly mentioned that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/-, by giving a relief to the assessee of ₹ 2,58,059/-. 10.3 After considering the rival submissions and material on record, we find no infirmity in the decision of the CIT(A) in restricting the disallowance to ₹ 50,000/- and accordingly, we uphold the order of CIT(A) on this issue and dismiss the ground raised by the assessee. 11. Similar ground u/s 14A was raised by the assessee in ITA No. 626/Hyd/2015. The CIT(A) has restricted the disallowance to ₹ 50,000/- as against the disallowance of ₹ 2,78,582/- made by the AO. Accordingly, we find no reason to interfere with the decision and hence, uphold the order of CIT(A) on this issue and dismiss the ground raised by the assessee. 12. As regards the issue regarding computation of income and segregation of loss from speculation business , the AO observed that in the course of assessment proceedings, when the assessee was asked to show cause as to why the income from other sources should not be computed separately, the Assessee has not provided any specific answer and has stated that the interest income is part of business income. 12.1 The AO o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is to be stated that the AD by invoking provision of speculative transaction in the current asst. year can utmost see that any loss on account of such transaction arising during the year is not set off against the other income of the assessee for the year. This year there was no business loss nor was there any claim of set off of brought forward losses. The exercise done by the AO in reclassifying the income is unnecessary even otherwise. If the AO wanted to be technically correct, then he would have done the exercise of finding out whether the transactions were speculative transactions at all. He did not do this exercise also before invoking the provisions erroneously. 7.2 In view of the above findings, the AD is directed to recompute the income of the appellant while giving effect to this appellate order. 13. We have heard both the parties and perused the material on record as well as gone through the orders of revenue authorities. We are of the view that the CIT(A) has rightly directed the AO to verify the true nature of the transactions and decide the issue in accordance with law and recompute the income of the assessee accordingly. We do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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