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TMI Blog2014 (10) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the learned D.R. For the sake of reference, appeal in the case of M/s. Satabisha Agro P. Ltd., in ITA.No. 482/Hyd/2014 is discussed in detail. ITA.No.482/Hyd/2014 : 3. Briefly stated, assessee company in the business of agriculture and allied activities, filed its return of income for the A.Y. 2002-03 on 31.10.2002. An initial notice u/s.143(2) was issued to assessee which resulted in filing of revised return of income on 09.12.2003 increasing its income to Rs. 17,16,010. The assessment was completed by the A.O. u/s.143(3) by order dt.28.02.2005 assessing the income at Rs. 17,70,346 making a disallowance of Rs. 54,336 towards the claim of depreciation on the tractor. 3.1. On 7.01.2009 Shri B. Ramalinga Raju, the then Chairman of Satyam Computers Ltd. confessed to having fudged the accounts of that Company over the last so many years with an intention to defraud the public at large. Shri B. Ramalinga Raju and his family members have floated more than 350 companies and Assessee-company is one of them. As per the annual report of Assessee-company for the year 2001-02, Smt. B. Jhansi Rani and Sri N. Rama Raju were its Directors. The effective share-holders and the controlling Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apement of income, and hence, the reopening of assessment made by A.O. is in order. Therefore, the objection raised by Assessee is rejected and dismissed the ground of Assessee. However, he gave partial relief on the additions made. 6. Aggrieved by the Order of the CIT(A), Assessee is in appeal before us and have raised the following common grounds among other individual grounds : "1. The Order of the Commissioner of Income Tax (Appeals)- VII, Hyderabad in sustaining the assessment made under section 143 read with 147 of the I.T. Act, 1961 is unsustainable both on facts and in law. 2. (i) The learned CIT(A)-VII, Hyderabad, failed to note that the opinion formed by the Income Tax Officer and the recording of reasons before the issue of Notice u/s. 148 had absolutely no nexus with the issue of the reopening of the assessment and framing of the assessment and therefore, the issue of Notice u/s. 148 and the assessment made thereon is invalid, without jurisdiction, unsustainable and needs to be quashed. (ii) The learned CIT(A)-VII, Hyderabad, erred in holding that the Assessing Officer had valid reasons to reopen the assessment of the appellant company to examine the veraciti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e head "Income from other sources" which was accepted in the original assessment as assessable under the head "Business" is unsustainable both on facts and in law. 7. The Ld. CIT(A) failed to note that there was direct and substantial nexus between interest receipts and payments and therefore erred in holding that the gross interest was assessable ignoring the interest payment. 8. The order of the Ld. CIT(A) in not allowing service charges claimed at Rs. 25,000 as an expenditure u/s.37(1) of the I.T. Act of 1961 is unsustainable in law. 9. The Ld. CIT(A) erred in holding that the interest expenditure of Rs. 40,77,057 would go towards addition of cost of the assets and could not be deducted against interest income. 10. The order of the Ld. CIT(A) in holding that the Vehicle Road Tax expenses at Rs. 4,306 should be added to the cost of the asset of the vehicle is unsustainable in law. 11. The order of the CIT(A) in disallowing the Tractor Maintenance Expense at Rs. 8,656 and depreciation of Tractor at Rs. 54,336 is unsustainable in law. 12. Without prejudice to any of the aforesaid grounds the Ld. CIT(A)-VII, Hyderabad, having found that no specific additions were made on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here 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) 256 ITR 1 (FB) 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 reads as under : 4. On going through the changes, quoted above, made to s. 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfillment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of Court rulings in the past and was well settled and its omission from s. 147 would give arbitrary powers to the AO to reopen past assessments on mere change of opinion. To allay 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 same." 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. Satyam Computer Services Limited. We find there is no rationale nexus with such statement by Sri Ramalinga Raju and reassessment made. As seen from the order of AO even though the assessment was reopened to examine the transaction between M/s Satyam computers and assessee, no such exercise was undertaken and no findings were given on that issue. The additions made are routine disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd., Hyderabad vs. ITO (OSD)-2, Central Range-1, Hyderabad in ITA.No.1233/Hyd/2011 for the A.Y. 2002-03 dated 31.12.2013, coordinate bench has analysed the legal propositions and facts and came to following conclusions vide Paras 18 and 19 as under. 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 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 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, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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