TMI Blog2014 (1) TMI 1928X X X X Extracts X X X X X X X X Extracts X X X X ..... o nexus between the reasons recorded and additions made in the guise of escapement of wealth. We rely upon the decision of case of Ganga Saran Sons P. Ltd. [ 1981 (4) TMI 5 - SUPREME COURT] for the proposition that if there is no rational nexus between the reasons and the belief , so that on such reasons the A.O. cannot have reason to believe that any part of the income of the assessee has escaped assessment and such escapement was by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts, the notice issued by the A.O. is to be struck as invalid. We find that recording of reasons before the issue of notice under section 17 has absolutely no nexus with the assessment made. AO had no tangible material to come to the conclusion that there was escapement of income from the original assessment. The assessment made under sec. 16(3) has been wrongly reopened under sec. 17 beyond period of 4 years, as there is no failure on the part of the assessee to disclose fully and truly all the material facts in the original assessment itself. The reopening was on wrong foundation of reasoning of the financial implication between the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28-03-2009. Assessee filed a return on 11-05-2009 in response to notice u/s 17 admitting the taxable wealth at Rs. 1,11,32,600/- as was admitted in the original return of wealth. 3.1 During the course of assessment proceedings, a reference was made to Sub-Registrar s offices holding jurisdiction on the assets owned by Sri B. Ramalinga Raju and his family members as well as various entities connected with Satyam Group, requiring them to furnish the value of the properties as on 31-03-2003 31-03-2007 as per SRO records. Such reference was also made in respect of immovable properties held by Assessee. From a perusal of the details furnished by the SROs, it was observed by AO that the guideline value adopted by Assessee in respect of all the properties tallied with the value as per the SROs records. However, in respect of following properties i.e. 3 plots located at Nandi Hills (held in the name of minor son), S.No. 5/3, P No. 181 191 admeasuring 695 sq. yds, value adopted by Assessee is Rs. 1425/- per sq. and whereas the value as per SROs records is Rs. 3,500/- per sq.yard. Thus, the total area of these 3 plots comes to 2085 sq.yds. Since, there is variation in the value adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not includible in the net wealth of the appellant. 5. Without prejudice to any of the aforesaid grounds the learned CWT(A) having regard to the provisions of section 2(ea) of Wealth Tax Act, 1957 ought to have clearly held that the sum of Rs. 13,19,300/- was not an asset belonging to the appellant within the meaning of the aforesaid section. 6. The learned CWT(A) failed to note having regard to the location and distance of lands which are claimed as exempt were not urban lands within the meaning of section 2(ea) of the WT Act and therefore erred in confirming its taxability. 7. The learned CWT failed to note that the claim made by the appellant for exempted asset were considered and exempted in the past wealth tax assessments and there being no chance in the facts and circumstances ought to have clearly held that they are not taxable. 8. The learned CWT(A) erred in confirming the addition of Rs. 43,26,375/- on account of valuation of immovable properties. 5. Before us, the learned Counsel for Assessee Shri K.C. Devadas objected to issue of notice under section 17 stating that the assessment cannot be reopened after expiry of 4 years unless there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be treated as an in-built 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) 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, q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe from s. 147 and their substitution by the opinion of the AO. It was pointed out that the meaning of the expression, reason to believe had been explained in a number 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 8. Therefore, the additions made in reassessment can not be sustained. We also find that CWT(A) erred in holding that the Assessing Officer had valid reasons to reopen the assessment of the assessee-company to examine the veracities and financial implications between the assessee-company and M/s. Satyam Computer Services Limited. As seen from the order of AO even though the assessment was reopened to examine the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of reopening raised before us in Ground Nos. 1 2. Since, we have quashed the reopening of assessment itself, the other grounds on merits of the additions do not require any consideration as they become academic in nature. Accordingly, we allow the appeal WTA. No. 02/Hyd/2012 of the assessee. 12. In other cases of the group, the facts are similar and AO simply denied the exemption claimed and in two cases made small addition on revaluation. In the case of Sri B. Ramalinga Raju, the AO made an addition of Rs. 47.57 crores on the reason that siphoned off amount from the company is to be considered as accretion to the wealth within the meaning of section 2(ea)(vi) of the Wealth Tax Act. This is only a presumption and no evidence in this regard. Therefore, the addition per se cannot be sustained in the absence of any accretion to wealth. As the facts and grounds in WTA Nos. 03, 04, 05, 06/Hyd/2012 and WTA No. 09/Hyd/2011 are materially identical to that of the case decided by us in case of B. Rama Raju in ITA No. 02/Hyd/12 (supra), following the discussion and conclusions drawn therein, we set aside the orders of the CWT(A) in the said appeals and quash the ground raised on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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