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The Tax Publishers B. Radha & Ors. v. Dy. CIT [ITA Nos. 767 to 773 (Hyd.) of 2015, dt. 13-5-2016] : 2016 TaxPub(DT) 2455 (Hyd.-Trib.) Satyam computers confession and reopening/reassessment of family member's assessments *Facts:* Arising out of the confessional statement of Mr. Ramalinga Raju the assessment of the family members were all reopened for the said assessment year. The reassessment notice was issued and additions were made. The reassessments were questioned and the additions as well by various family members which were decided in this collection of appeals. Held in favour of the assessee - the re-opening was bad as it was a change of opinion based on suspicion of income having escaped assessment with no reason to believe recorded. The additions were not correct as they were made only on surmises and conjectures with no co-relation. Co-ordinate bench orders in the group concern's decisions against revenue as under were applied -- 1. Danishta Farms Pvt. Ltd., v. ACIT & Ors., ITA No. 535/Hyd/14 & Ors., dated 12-12-2014. 2. Rohini Biotech (P) Ltd. v. ITO & Ors., in ITA Nos. 1233/Hyd/2011 & Ors, dated 31-12-2013. 3. SRSR Advisory Services Pvt. Ltd. v. ACIT, in ITA No. 1227/Hyd/2014, 9-10-2015. 10. We also find that Commissioner (Appeals) 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. Sat yam 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 assessing officer 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 disallowances out of already allowed expenditure in original assessment. There is no nexus between the reasons recorded and additions made in the guise of escapement of income. We rely upon the decision of the Hon''ble Supreme Court in the case of Ganga Saran & Sons P Ltd. v. ITO & Ors., 130 ITR 1 (SC) for the proposition that if there is no rational nexus between the "reasons" and the "belief'; so that on such reasons the AD 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 assessing officer is to be struck as invalid. As there is no rational nexus between the ''reasons I' and the "belief'; and on such reasons the assessing officer cannot have reason to believe that any part of the income of Assessee has escaped assessment and such escapement was by reason of omission or failure on the part of Assessee to disclose fully and truly all material facts, the notice issued by the assessing officer is to be struck down as invalid. The assessing officer had no tangible material to come to the conclusion that there was escapement of income from the original assessment. The assessment made under section 143(3) has been wrongly reopened under section 147 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 company and M/s. Satyam Computer Services Limited, which was not established in the reassessment to justify the reopening.

The Tax Publishers

B. Radha & Ors. v. Dy. CIT [ITA Nos. 767 to 773 (Hyd.) of 2015, dt. 13-5-2016] : 2016 TaxPub(DT) 2455 (Hyd.-Trib.)

Satyam computers confession and reopening/reassessment of family member's assessments

Facts:

Arising out of the confessional statement of Mr. Ramalinga Raju the assessment of the family members were all reopened for the said assessment year.

The reassessment notice was issued and additions were made. The reassessments were questioned and the additions as well by various family members which were decided in this collection of appeals.

Held in favour of the assessee - the re-opening was bad as it was a change of opinion based on suspicion of income having escaped assessment with no reason to believe recorded.

The additions were not correct as they were made only on surmises and conjectures with no co-relation.

Co-ordinate bench orders in the group concern's decisions against revenue as under were applied --

1. Danishta Farms Pvt. Ltd., v. ACIT & Ors., ITA No. 535/Hyd/14 & Ors., dated 12-12-2014.

2. Rohini Biotech (P) Ltd. v. ITO & Ors., in ITA Nos. 1233/Hyd/2011 & Ors, dated 31-12-2013.

3. SRSR Advisory Services Pvt. Ltd. v. ACIT, in ITA No. 1227/Hyd/2014, 9-10-2015.

10. We also find that Commissioner (Appeals) 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. Sat yam 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 assessing officer 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 disallowances out of already allowed expenditure in original assessment. There is no nexus between the reasons recorded and additions made in the guise of escapement of income. We rely upon the decision of the Hon''ble Supreme Court in the case of Ganga Saran & Sons P Ltd. v. ITO & Ors., 130 ITR 1 (SC) for the proposition that if there is no rational nexus between the "reasons" and the "belief'; so that on such reasons the AD 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 assessing officer is to be struck as invalid. As there is no rational nexus between the ''reasons I' and the "belief'; and on such reasons the assessing officer cannot have reason to believe that any part of the income of Assessee has escaped assessment and such escapement was by reason of omission or failure on the part of Assessee to disclose fully and truly all material facts, the notice issued by the assessing officer is to be struck down as invalid. The assessing officer had no tangible material to come to the conclusion that there was escapement of income from the original assessment. The assessment made under section 143(3) has been wrongly reopened under section 147 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 company and M/s. Satyam Computer Services Limited, which was not established in the reassessment to justify the reopening.