TMI Blog2019 (3) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of investor and requirement of further investigation. These observations in para 3 of the reasons, would not further the case of the Revenue, these being no information with the Assessing Officer, prima facie, indicating that the investments were not genuine. The investigation into the source of genuineness and creditworthiness of the investor company would fall within the relam of fishing enquiries, which is wholly impermissible in law in the context of the reopening of the assessment. For such reasons, impugned notice is set aside. - Decided in favour of assessee. - WRIT PETITION NO. 3618 OF 2018 - - - Dated:- 7-3-2019 - AKIL KURESHI M.S. SANKLECHA, JJ. Mr. Percy Pardiwalla, Sr. Advocate with Mr. Jeet Kamdar i/b. Mr. Sameer Dalal, for the Petitioner. Mr. Sham Walve, for Respondent Nos 1 to 3. P.C: Heard learned Counsel for the parties for final disposal of the Petition. 2. Petitioner has challenged a notice of re opening of an assessment dated 28th September, 2018, for the Assessment Year 2011 12. 3. Brief facts are as under: Petitioner is a Limited Company. For the Assessment Year 2011 12, the Petitioner had filed the return of income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2010 11 being subscription towards 0.000% Compulsory Convertible Cumulative Preference Share (4,99,048 nos.) On perusal of Form 2 filed with ROC in this respect clearly indicates that 4,99,048 no shares has been allotted by M/s. NuPower Renewables Pvt. Ltd., on 31.12.2010 Firstland Holdings Limited, Mauritius. The source, genuineness and creditworthiness of the foreign entity M/s. Firstland Holdings Limited, Mauritius remains unexplained needs further investigation. In this respect reference to the competent authorities of Mauritius through FT TR Division has been made. 6. Escapement of income chargeable to tax in relation to any assets (including financial interest in any entity) located outside India: Not applicable. 7. Findings of the AO on true and full disclosure of the material facts necessary for assessment under Proviso to section 147: Findings on examination of records and verification thereof that the assessee had not disclosed fully and truly all material facts necessary for his assessment or that the facts of the case are covered by the explanation 1 to section 147 of the Act. 8. Applicability of the provisions of section 147/151 to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly, attracting provisions of Explanation 1 of section 147 of the Act. It is evident from the above discussion that in this case, the issues under consideration were never examined by the AO during the course of regular assessment/ re assessment. This fact is corroborated from the contents of notices issued by the AO u/s 143(2)/142(1) and order sheet entries dated 31.10.2013 to 26.12.2013 recorded during the 143(3) proceedings. It is important to highlight here that material facts relevant for the assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P L A/c. balance sheet and books of account in such a manner that it would require due diligence by the AO to extract these information. For afore stated reasons, it is not a case of change of opinion by the A.O. In view of the above facts, I am satisfied that the assessee's income of ₹ 49,90,48,000/ or above, has escaped assessment for the A.Y. 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing of the department, on the basis of which, he records that, the source, genuineness and creditworthiness of the foreign entity remains unexplained and needs further investigation. 8. With this back ground, we may peruse the material which was brought during the course of original scrutiny assessment. The Assessing Officer had issued notice under Section 142(1) of the Act, on 2nd August, 2013, asking for various details from the assessee, which included the following: copy of balance sheet and profit and loss account alongwith all annexure. Whether the company has issued any fresh share during the year or raised any amount by way of debenture/FD etc. If so, how the issue expenses have been dealt with in the accounts. 9. Such notice was replied by the assessee under a letter dated 8th August, 2013. This contained various annexures. One of them, being the assessee's balance sheet as on 31st March, 2011. This balance sheet included the following information: Sources of Funds Schedules 2011 2010 Shareholder's funds 3 49,95,48,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and Exchange Board of India, for the purposes of listing the securities of the company, or such other date as may be mutually agreed upon between the parties in writing and where the Commencement Date shall mean the date when the relevant government authority grants a commissioning certificate in respect of the last WEG of the last phase of the 150 MW Project. 10. On 30th October, 2013, the Assessing Officer issued yet another notice, calling upon Petitioner to supply further details one of them was as under: Share capital increased to ₹ 499548000/ from ₹ 500000/ please explain the source of fund utilized. 11. In another notice dated 12th November, 2013, the Assessing Officer asked the assessee to supply the details of share capital increased and source of the funds utilized. In response to such further notices, assessee supplied various details under a communication dated 12th November, 2013, in which, it was stated as under: Information and details pertaining to the increase in share capital by ₹ 49,90,48,000/ . The amount has been received towards compulsorily convertible cumulative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores from Firstland a Mauritius based company towards subscription for 4,99,048 compulsorily convertible cumulative preference shares. The Assessing Officer does not refer to any further information received from the Investigation Wing. In short, according to the Assessing Officer, the information received from the Investigation Wing, was confined to the fact that, the assessee had received share application money to the tune of ₹ 49.99 Crores from Firstland . 15. This information is not something new to the Assessing Officer. The fact that the assessee had received such share application money from Firstland was part of the assessee's return. It is not as if the Assessing Officer did not notice this information during scrutiny assessment. As noted above through series of correspondence between the assessee and the Assessing Officer, this information was highlighted time and again. The channel of movement of the fund, the source of the fund, purpose of investment and the ultimate destination of the fund, were all part of the record during the assessment proceedings. There is nothing in the reasons recorded by the Assessing Officer to suggest that, such investment is b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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