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Facts
The assessee, B. Ramalinga Raju, Chairman of Satyam Computer Services Limited (SCSL), filed his return for AY 2003-04 which was originally assessed under Section 143(3). The assessment was subsequently reopened under Section 147 by issuing a notice under Section 148, based on a confession statement by the assessee regarding fudged accounts of SCSL. The Assessing Officer made additions for interest income, unexplained credits, and unaccounted salary payments from SCSL's Vienna bank account in the assessee's hands. The CIT(A) upheld the reopening but deleted the addition relating to salary payments, noting they pertained to the company.
Held
The Tribunal observed that the Telangana High Court had already declared assessments for SCSL, including AY 2003-04, illegal and void abinitio, remanding them for de novo re-computation based on re-casted books. Given this, and the direct bearing of SCSL's re-casted accounts and intra-group transactions on the assessee's income (especially the Vienna bank account payments), the Tribunal set aside the CIT(A)'s order and remanded the assessee's assessment to the Assessing Officer for de novo consideration. The AO is directed to provide a copy of the forensic audit report to the assessee, and other issues, including the validity of reopening, were kept open.
Key Issues
1. Whether the reopening of assessment under Section 147/148 was valid based on a confession statement primarily relating to the company's accounts and after a period of four years. 2. Whether additions made in the individual assessee's hands, particularly for unaccounted salary payments from the company's foreign bank account, are sustainable when the company's assessments for the same period are under de novo re-computation based on re-casted books.
Sections Cited
143(3), 147, 148, 131, 142(1), 142(2A), 119
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Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.1865/Hyd./2019 Assessment Year 2003-2004 Sri B. Ramalinga Raju, The DCIT, Hyderabad – 500 033. vs. Central Circle-8, PAN ACVPB8311J Hyderabad. (Appellant) (Respondent) ITA.No.56/Hyd./2020 Assessment Year 2003-2004 The ACIT, Sri B. Ramalinga Raju, Central Circle-3(1), vs. Hyderabad – 500 033. PAN ACVPB8311J Hyderabad. (Appellant) (Respondent) For Assessee : CA K C Devdas For Revenue : Sri B Bala Krishna, CIT-DR Date of Hearing : 16.06.2025 Date of Pronouncement : 03.07.2025 ORDER PER MANJUNATHA G. :
These cross-appeals are filed by the Assessee and Revenue against the order dated 19.08.2019 of the learned CIT(A)-11, Hyderabad, relating to the assessment year 2003-2004.
2 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020
The assessee has raised the following grounds in his appeal ITA.No.1865/Hyd./2019 for the assessment year 2003-2004 :
1. “The order of the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad [CIT (A)] in confirming the re- assessment proceedings U/s. 143(3) r.w.s 147 is totally unsustainable on both facts and in law.
2. The learned CIT(A) failed to note that there was no nexus between the reasons recorded and the income escaping assessment and therefore ought to have held that the entire re-assessment proceedings are invalid, bad in law and without jurisdiction and in the process therefore ought to have annulled the re-assessment proceedings.
3. The learned CIT(A) on a wrong foundation of reasoning and non-appreciation of facts and merely on the basis of statement of the appellant on 07/01/2009 which related to M/s. Satyam Computer Services Limited (SCSL) came to an erroneous conclusion that the income escaping assessment belonged to the appellant and hence erred in upholding the re-assessment proceedings U/s. 147 r.w.s 148 of the Act. 4. The learned CIT(A) failed to note that the nexus or live link between the reasons recorded and income escaping assessment and further failed to note that the entire
3 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 reassessment proceedings was after a period of four years and failed to note that there was no omission or failure on the part of the appellant to disclose truly and fully all the material facts necessary for completion of the original assessment U/s. 143(3) on 17/3/2006 wherein the income assessed was Rs.2,99,95,090/-.
5. The learned CIT(A) failed to note that no additions were made on the basis of reasons recorded for reopening of assessment and therefore erred in confirming the additions in respect of interest income at Rs.1,41,857/-, unexplained credits in an amount of Rs.53,15,331/-and unexplained credits in bank account of Rs.10,75,630/-.
6. Without prejudice to any of the aforesaid grounds, the Ld. CIT(A) erred in confirming the addition of Rs.1,41,857/- towards interest.
7. The order of the Ld. CIT(A) in confirming the addition of Rs.53,15,331/- which represented unreconciled differences and not being in the nature of income.
8. Without prejudice to any of the aforesaid grounds, Ld. CIT(A) erred in confirming the additions of Rs.10,75,630/- as unexplained credits in bank account.
Any other ground or grounds that may be urged at the time of hearing of the appeal.”
4 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020
The Revenue pleads the following grounds in it’s instant appeal ITA.No.56/Hyd./2020 for the assessment year 2003-2004 :
“The Id. CIT(A) erred both in law and on facts of the case in allowing relief to the assessee.
2. The learned CIT(A) failed to appreciate the fact that the entries found in the United Bank of Vienna were not reflected in the books of M/s. Satyam Computers Services Ltd., (SCSL) to the tune of Rs.501 crores as per forensic audit.
3. The learned CIT(A) failed to appreciated the fact that the assessee failed to discharge the onus of explaining the debit entries either in his individual capacity or in the capacity of Managing Director of M/s. SCSL. 4. The learned CIT(A) ought to have appreciated the fact that the assessee is the only authorized signatory for the operation of banks accounts and the amounts of Rs.501 crores reflected is in the knowledge of the assessee. 5. The learned CIT(A) erred in giving relief to the assessee ignoring the fact that the forensic report mentions un- reconciled payments to the tune of Rs.501 crores which was put in the suspense account was not explained by the assessee who is the only Director having knowledge of such transaction.
5 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 6. The learned CIT(A) erred in giving relief without appreciating the fact that the assessee being the Managing Director of M/s. SCSL and fully aware of the affairs of the company failed to submit evidences to the satisfaction of the Assessing Officer. 7. The Appellant craves leave to amend or alter any ground or add any other grounds which may be necessary.”
Briefly stated facts of the case are that, the assessee is an individual and Chairman of M/s. Satyam Computer Services Limited [in short “M/s. SCSL”], filed it’s return of income for the assessment year 2003-2004 on 30.09.2003 declaring an income of Rs.2,99,95,090/-. The assessment has been completed u/sec.143(3) of the Income Tax Act, 1961 [in short “the Act”] on 17.03.2006 and accepted the income returned by the assessee. The assessment has been subsequently reopened u/sec.147 of the Act and notice u/sec.148 of the Act dated 26.03.2010 was issued and served on the assessee. The assessment has been reopened on the basis of reasons recorded, as per which, income chargeable to tax has been escaped assessment on account of confession statement given by 6 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 Shri B. Ramalinga Raju-Assessee, Chairman of M/s. SCSL on 07.01.2009 in his letter sent to the Board of Directors with a copy marked to Securities Exchange Board of India [in short “SEBI”] that, the books of accounts of M/s. SCSL have been fudged for the last several years to manipulate the book results. He has filed a detailed letter indicating various types of manipulation of accounts including inflated revenues and corresponding non-existing cash in bank balance, understated liability on accounts of funds arranged by himself etc., Accordingly, a sworn statement of Sri B. Ramalinga Raju was recorded by the Assessing Officer u/sec.131 of the Income Tax Act, 1961 on 21.02.2009, in the Central Prison, Chanchalguda, Hyderabad, where he has confirmed and reiterated the facts and figures that were mentioned in his letter email/letter dated 07.01.2009. The Assessing Officer on the basis of confession statement and it’s contents has recorded reasons for reopening of the assessment and observed that, income chargeable to tax has been escaped assessment for the year under consideration and accordingly, issued notice u/sec.148 of 7 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 the Act. In response, the assessee filed his return of income for the assessment year under consideration on 19.04.2010. The assessee has requested for reasons recorded for reopening of the assessment and the same was communicated to the assessee vide letter dated 02.07.2010.
The case has been selected for scrutiny and during the course of assessment proceedings, a detailed questionnaire along with notice u/sec.142(1) of the Act was issued to the assessee. In response, the assessee has submitted relevant details as called for by the Assessing Officer. Subsequently, due to complexity of accounts and in the interest of the Revenue, a direction has been issued for Special Audit of the accounts u/sec.142(2A) of the Act on 04.11.2010. After considering relevant objections filed by the assessee for Special Audit, M/s. Anjaneyulu & Co. Hyderabad has been appointed as Special Auditor for carrying-out the auditing for accounts in terms of sec.142(2A) of the Act. The Special Auditors have submitted the report and stated that, the books of accounts are in the custody of Investigating Agency such as CBI and thus, they
8 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 are unable to comment on many of the transactions as the records were not available to them. A letter has been addressed to the CBI on 22.06.2021 for obtaining image copies of books of accounts and other materials. The CBI in their letter dated 01.07.2011 stated that, some of the material have been returned, which has been seized from M/s. SRSR Advisory Services Pvt. Ltd., listed in D-0011 in the charge-sheet filed by the CBI. The Assessing Officer after obtaining certain records, has issued a detailed questionnaire u/sec.142(1) of the Act on 17.06.2011. Further, in the meantime, a forensic audit report has been obtained from KPMG and in the said report, certain observations has been made with regard to foreign bank account held by the company and it’s operation. The Assessing Officer after considering various evidences filed by the assessee coupled with Special Audit Report submitted by the Special Auditor and also forensic Audit Report submitted by the KPMG, has completed the assessment u/sec.143(3) r.w.s.147 of the Income Tax Act, 1961 on 04.08.2011 and determined the total income of the assessee
9 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 at Rs.504,65,27,908/- by making additions towards interest income on accrual basis, addition towards unexplained credits and addition towards undisclosed income being unmatched salary payments from the bank accounts of the company held at Vienna.
6. Being aggrieved by the assessment order passed by the Assessing Officer, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee has challenged the validity of the reopening of the assessment and contended that, there is no live nexus between the ‘formation of belief of escapement of income’ and material considered by the Assessing Officer which is evident from the reasons recorded for reopening of the assessment. The assessee had also challenged the additions made by the Assessing Officer towards interest income on accrual basis, unexplained credits and unaccounted income being un-reconciled salary payments from bank account held at Vienna on the ground that, the said transactions pertains to the Company M/s. SCSL, but, not the assessee.
10 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 7. The learned CIT(A), after considering the relevant submissions of the assessee and also taken note of reasons recorded by the Assessing Officer for reopening of the assessment, has rejected the arguments taken by the assessee challenging the validity of reopening of the assessment and held that, issue of notice u/sec.148 is in accordance with law and there is no merit in the arguments of the assessee that, there is no fresh material which suggest escapement of income in the hands of the assessee. The learned CIT(A) has discussed the issue at length in light of confession letter filed by Sri B. Ramalinga Raju-Assessee to the Board of Directors and it’s contents and observed that, there is enough material in the form of subsequent confession letter filed by the assessee which is altogether a new information which was not available to the Assessing Officer at the time of completion of the assessment u/sec.143(3) of the Act. Further, the confession statement clearly establishes fudging of accounts of Company and said fudging is having a direct bearing on the total income of the assessee for the year under consideration. Therefore, he
11 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 rejected the arguments of the assessee and upheld the reasons given by the Assessing Officer for reopening of the assessment.
In so far as addition made by the Assessing Officer towards unaccounted income being un-reconciled salary payments from the bank account held at Vienna, the learned CIT(A) deleted the addition made by the Assessing Officer by holding that, from the perusal of the reasons given by the Assessing Officer in light of relevant evidences, there is no evidence of any payments made by the assessee from his individual status and whatever payments claimed to have been made from bank account held in the name of the Company at Vienna is pertains to the Company M/s. SCSL. Further, there is no allegation in the charge-sheet filed by the Investigating Agency on misappropriation of funds or diversion of funds and further, the charge-sheet mainly mentions about the inflation of revenues in the hands of the Company and corresponding creation of artificial cash and bank balances. Further, the company has declared turnover as per fudged accounts and whatever
12 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 dividends received by the appellant, were accounted and declared for taxes. The so-called fudging of accounts may have a bearing on the assessment of the Company, but, it has no relevance to the individual assessment as there is no allegation of misappropriation of funds or diversion of funds. Therefore, un-reconciled amount in the hands of the Company, if any, cannot be treated as income of the assessee. Therefore, directed the Assessing Officer to delete the addition.
9. Aggrieved by the order of the learned CIT(A), the Assessee as well as the Revenue are in appeal before the Tribunal.
CA, K C Devdas, Learned Counsel for the Assessee, referring to the reasons recorded by the Assessing Officer for reopening of the assessment submitted that, the original assessment in the present case has been completed u/sec.143(3) of the Act on 17.03.2006. Notice u/sec.148 of the Act has been issued on 26.03.2020 after a period of 4 years from the end of the relevant assessment year. There is no fresh tangible material available for reopening of the 13 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 assessment which is having a bearing on the escapement of income of the assessee. Although, there is a reference of confession statement of the assessee and it’s contents for the reasons recorded for reopening of the assessment, but, the said confessional statement refers to fudging of books of accounts of M/s. SCSL and inflated revenues with corresponding cash and bank balances. The said information is nothing to do with individual assessment of the assessee. Therefore, in absence of any fresh tangible material which suggest escapement of income, the formation of belief of escapement of income arrived at by the Assessing Officer for reopening of the assessment is illegal, void abinitio and liable to be quashed. In support of this contention, the Learned Counsel for the Assessee relied upon plethora of judicial precedents including decision of Hon’ble Supreme Court in the case of ITO vs., Kayathwal Estate (P) Ltd., 442 ITR 507 (SC).
Learned Counsel for the Assessee further, referring to the addition made by the Assessing Officer towards unaccounted income being un-reconciled salary
14 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 payments from the bank account held in the name of the Company at Vienna submitted that, the reference to the forensic audit report for making addition is illegal because, the said forensic audit report and it’s contents were not shared with the assessee for his comments and rebuttal. Further, the said account is belongs to the Company and it has nothing to do with individual assessment of the assessee. In case, any un-reconciled payment is there, the same can be considered in the hands of the Company, but, not in the hands of the assessee. Further, the sole basis for reopening of the assessment is confessional statement given by the assessee and if we go by the said confession statement, it is on fudging of accounts of the Company and corresponding inflated income and cash and bank balances. Nowhere it was stated that the Company has diverted it’s funds to the assessee for any of the assessment year including for the impugned assessment year. Therefore, the additions made by the Assessing Officer on the basis of forensic audit report towards un-reconciled salary payments of Company in the hands of the assessee is illegal and 15 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 incorrect and cannot be sustained. Therefore, he submitted that, the additions made by the Assessing Officer should be deleted.
Shri B. Bala Krishna, learned CIT-DR, on the other hand, supporting the order of the learned CIT(A) on the issue of validity of reopening of the assessment submitted that, there is fresh tangible material in the form of confession statement given by the assessee to the Board of Directors of M/s. SCSL and copy marked to SEBI which clearly shows fudging of accounts of Company with corresponding diversion of funds to various group companies of the appellant. Further, the appellant himself has stated that, there are understated liabilities to the tune of Rs.1230 crores and the same has been funded by himself which is having a bearing on the total income of the appellant. Since, there is enough material which suggest escapement of income, which came to the possession of the Assessing Officer, subsequent to the completion of the original assessment u/sec.143(3) of the Act, the Assessing Officer has reopened the assessment on sound footing. The 16 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 learned CIT-DR further, referring to the decision of Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd., vs., ITO [1999] 236 ITR 34 (SC) submitted that, at the time of issue of notice u/sec.148 of the Act, what is required to be seen is, the prima facie material which suggest escapement of income, but, the Assessing Officer does not require to prove escapement of income. Since the Assessing Officer has fresh material in the form of confession statement, there is a valid ground for reopening of the assessment and thus, the arguments of the assessee on the issue of reopening of the assessment fails. Therefore, the ground taken by the assessee should be rejected.
The learned CIT-DR on the issue of addition made towards unaccounted income being un-reconciled salary payments submitted that, the sole basis for the addition is, un-reconciled payment from bank account held at Vienna. The appellant could not explain the payments made from the bank account towards salaries. Even the forensic audit report clearly suggest payments, without there being any evidence. Although, the bank account belongs to the 17 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 Company, but, the fact remains that, the said bank account has been opened in the name of the Company and exclusive right of operation has been given to the appellant and, therefore, it is the responsibility of the appellant to explain the payments from the said bank account. Since the appellant could not explain the payments, the Assessing Officer has rightly considered un-reconciled payments as income of the assessee. The learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Assessing Officer and thus, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and the orders of the authorities below. The sole basis for reopening of the assessment is confession statement given by the appellant on 07.01.2009 to the Board of Directors of M/s. SCSL with a copy to SEBI. As per the said letter, the appellant admitted fudging of accounts of the Company and inflated revenues with corresponding non-existing cash and bank balances. Further, the appellant stated in the said letter that, there are 18 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 understated liabilities to the tune of Rs.1230 crores on account of funds arranged by himself. The Assessing Officer reopened the assessment on the basis of reasons recorded for reopening and as per the reasons recorded by the Assessing Officer, there is a fresh tangible material in the form of confession letter which suggest escapement of income in the hands of the assessee and thus, completed the assessment by making various additions including addition towards unaccounted income being un-reconciled payments from bank account held in the name of the Company at Vienna.
We had given due consideration to the relevant facts in light of arguments of the Counsel for the Assessee on the issue of reopening of the assessment and additions made by the Assessing Officer towards unaccounted income and we find that, there is no dispute on the issue of fudging of accounts of M/s. SCSL because, the appellant himself has admitted in his letter dated 07.01.2009 addressed to the Board of Directors of the Company with a copy marked to the SEBI that, the books of accounts of the assessee-
19 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 company have been fudged. It is also note in dispute that, on the very same day, the Government of India intervened by filing a petition before the Company Law Board to suspend the existing Board of Directors and takeover the Company in the interest of employees and shareholders. The Company Law Board vide order dated 09.01.2009 approved the application filed by the Government and suspended the Board of Directors and appointed 6 eminent persons on the Board of the Company to manage the affairs from 09.01.2009 to 16.04.2009. Thereafter, M/s. Tech Mahindra Limited has taken-over M/s. SCSL. Subsequently, M/s. Tech Mahindra Limited has filed an application before the Company Law Board for re-casting of books of accounts and submission before the Appropriate Authorities. The Company Law Board after considering the application filed by M/s. Tech Mahindra Limited and also considering the affidavit filed by the Government of India, allowed the application filed by M/s. Tech Mahindra Limited. Thereafter, the appellant company has filed a petition before the CBDT u/sec.119 of the Income Tax Act, 1961, seeking permission
20 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 to file revised returns along with re-casted books of accounts as on 31.03.2009. The application filed by M/s. Tech Mahindra Limited has been rejected by the CBDT. Therefore, M/s. Tech Mahindra Limited has challenged the order passed by the CBDT before the Hon’ble High Court for the State of Telangana at Hyderabad and the Hon’ble High Court for the State of Telangana vide it’s Judgment dated 31.01.2025 in W.P.No.23255, 17528, 17526, 19622 of 2011, W.P.No.3906 of 2012 and W.P.No.9667 of 2013, has set-aside the order passed by the CBDT dated 11.07.2011 and also held that, assessment for the assessment years 2003-2004 to 2008-2009 are illegal and violative of Article 265 of the Constitution of India and also void abinitio. The Hon’ble High Court of Telangana further directed that, the CBDT and the Assessing Officer to re-compute the income of M/s. SCSL by considering revised financial statements prepared by the Company for the assessment years 2003- 2004 to 2008-2009. Based on the order passed by the Hon’ble High Court of Telangana, the ITAT, Hyderabad Bench, Hyderabad in the appeals filed by M/s. Tech
21 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 Mahindra Limited [M/s. SCSL] in ITA.Nos.1252, 1253, 1254, 1255/Hyd./2010 and ITA.Nos.24 & 25/Hyd./2011 for the assessment years 2003-2004 to 2008-2009, vide order dated 10.03.2025, has set-aside the matter back to the file of Assessing Officer for de novo re-consideration in light of re-casted books of accounts filed by M/s. Tech Mahindra Limited. The relevant findings of the Tribunal are as under :
“5. We have heard both the parties, perused the orders of the authorities below and arguments advanced by both the sides, in light of Judgement dated 31.01.2025 of Hon’ble High Court for the State of Telangana at Hyderabad in W.P.Nos.23255, 17528, 17526, 19622 of 2011, W.P.No.3906 of 2012 and W.P.No.9667 of 2013. We find that the Hon’ble High Court for the State of Telangana at Hyderabad vide it’s Judgment dated 31.01.2025 has allowed the above mentioned six writ petitions filed by the assessee and took the W.P.No.23255 of 2011 as a “lead” case and framed substantial issues involved in all writ petitions filed by the assessee and answered the issues raised by the appellant-company in paras 71 to 76 of it’s Judgment which has been reproduced hereinabove in the preceding paragraphs. As per the Judgment of the 22 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 Hon’ble High Court for the State of Telangana at Hyderabad, the assessment for the assessment years 2003-2004 to 2008-2009 are held to be illegal and violative of Article 265 of the Constitution of India and also void abinitio. The Hon’ble High Court for the State of Telangana at Hyderabad directed the respondents no.1 and 3 to re-quantify/re-compute the income of the petitioner-company by conducting a fresh and appropriate assessments for the assessment years 2003-2004 to 2008-2009 based on the revised financials of the petitioner company for the year ending 31.03.2009. The petitioner company has further directed to file a revised return for assessment years 2003-2004 to 2008-2009 based on the audited financial statements for the said years along with the audited financial statements for the year ending 31.03.2009 and thereafter, conduct a proper assessment excluding fictitious sales and interest income reflected in the books of accounts.
Further we note that the appeals filed by the appellant-company and Revenue before the Tribunal are also pertains to very same assessment years which has been considered by the Hon’ble High Court for the State of Telangana at Hyderabad in it’s Judgment dated 31.01.2025 in W.P.Nos.23255, 17528, 17526, 19622 of 2011, W.P.No.3906 of 2012 and W.P.No.9667 of 2013,
23 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 in our considered view, these appeals needs to be remitted back to the file of Assessing Officer. Thus, we remand all these appeals filed by the appellant- company and Revenue back to the file of Assessing Officer with a direction to the Assessing Officer to reconsider the issues involved in these appeals for the assessment years 2003-2004 to 2008-2009 in light of the judgement of Hon’ble High Court for the State of Telangana at Hyderabad in it’s Judgment dated 31.01.2025 in W.P.Nos.23255, 17528, 17526, 19622 of 2011, W.P.No.3906 of 2012 and W.P.No.9667 of 2013. Accordingly, the appeals filed by the Assessee and Revenue are allowed for statistical purposes.
In the result, appeals filed by the Assessee ITA.Nos.1252, 1253, 1254, 1255 /Hyd/2010 and ITA.Nos.24 & 25/Hyd./2011 and the appeals filed by the Revenue ITA.Nos. 1298 & 1299/Hyd./2010 are allowed for statistical purposes. A copy of this common order be placed in the respective case files”.
Further, although, a reference of the order passed by the Hon’ble High Court of Telangana on the writ petitions filed by M/s. Tech Mahindra Limited for the assessment years 2003-2004 to 2008-2009, is not directly related to the assessment of the appellant for the year under 24 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 consideration, but, in our considered view, going by the letter dated 07.01.2009 filed by the appellant to the Board of Directors of M/s. SCSL and a copy marked to the SEBI and it’s contents, it is undisputedly clear that, the assessment of M/s. SCSL is definitely having a bearing on the total income of the appellant for the year under consideration because, the appellant himself in his letter dated 07.01.2009 stated that, there is an understated liability to the tune of Rs.1230 crores and the same has been funded by himself. Further, the Assessing Officer in the reasons recorded for reopening of the assessment has brought-out various facts including investment by the appellant in the group companies and various intra-group transactions between M/s. SCSL and other group companies including the appellant. Further, the additions made by the Assessing Officer towards unaccounted income being un-reconciled payments from bank account held in the name of M/s. SCSL at Vienna has been made on the basis of forensic audit report submitted by KPMG without providing a copy of said forensic audit report to the assessee
25 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 for his comments and rebuttal. Since the forensic audit report is the basis for additions in the hands of the assessee and further, the assessment of M/s. SCSL has been set- aside to the file of Assessing Officer for reconsideration for considering re-casted books of accounts, in our considered view, the assessment of M/s. SCSL [M/s. Tech Mahindra Limited] is definitely having a bearing on the income of the appellant for the year under consideration. Further, once the re-casted books of accounts of M/s. SCSL is considered for assessment of M/s. Tech Mahindra Limited, then, the intra-group transactions between M/s. SCSL and other group companies including the appellant will have an impact and these effects needs to be considered while framing the assessment of the assessee for the year under consideration. Further, the appellant claims before the Assessing Officer that, the un-reconciled payments from the bank account at Vienna in the name of the Company has been subsequently considered in the re-casted books of accounts of the Company and accounted under the Head “Prior period Adjustment A/cs.”. Therefore, in our
26 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 considered view, it is proper to re-consider the assessment of the assessee for the year under consideration especially on the issue of additions towards un-reconciled payments from bank account held in the name of the Company at Vienna after considering the re-casted books of accounts of M/s. SCSL and it’s assessment order passed by the Assessing Officer. Since the assessment year in question is 2003-2004 and the assessment of the Company for the assessment year 2003-2004 has been set-aside to the file of Assessing Officer as per the directions of Hon’ble High Court of Telangana (supra), in our considered view, the issues involved in this appeal also, needs to be set-aside to the file of Assessing Officer for reconsideration. The learned CIT(A) without considering these aspects has simply deleted the additions made by the Assessing Officer towards unaccounted money being un-reconciled payments from bank account held in the name of the Company at Vienna. Therefore, we set-aside the order of the learned CIT(A) and remit the issue back to the file of Assessing Officer for de novo consideration. The Assessing Officer is directed to re-
27 ITA.No.1865/Hyd./2019 & ITA.No.56/Hyd./2020 consider the assessment de novo, after providing adequate opportunity of hearing to the assessee and also by providing copy of forensic audit report relied upon by the Assessing Officer for making additions in the hands of the assessee.
All other issues raised by the Assessee and the Revenue in the present appeals including challenging validity of reopening of the assessment is kept open for the assessee to be assailed at appropriate time.
In the result, appeal filed by the Assessee and the appeal filed by the Revenue are allowed for statistical purposes. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 03.07.2025.