GREENLINE ECOFAB PVT. LTD.,SURAT vs. ACIT, CIRCLE 1(1)(2), SURAT

Brief facts of the case are that in the instant case, the assessee-company filed its return of income on 20.10.2012 declaring total income at Rs.Nil. The case of the assessee was selected for scrutiny and assessment order u/s 143(3) was passed by the ITO Ward-1(2) Surat on 28.03.2014 accepting the returned income. The assessee has raised share capital and share premium of Rs.1,26,00,000/- from 8 companies during the subject assessment year. Subsequently, the case was reopened by issue of notice u/s 148 of the Act dated 30.03.2019. The reasons for re-opening was the information received by the AO from the Investigating Wing, Kolkata, that the assessee received accommodation entry of Rs.15,00,000/- from M/s Avtar Trading Co. (Proprietor: Deep Bhattacharya) through various shell companies. A fund movement chart is produced in the reasons recorded as well as the assessment order, as per which M/s Avtar Trading Co. deposited cash of Rs.13,06,000/- in its bank account and paid Rs.80,00,000/- to a bank account in the name of Highlight Goods Vintrade Pvt. Ltd., who made investment of Rs.15,00,000/- in the appellant-company as share capital and share premium. The assessee raised objection against the re-opening of its completed assessment, which was rejected by the AO by passing an order dated 19.07.2019. Subsequently, the assessee filed various details and supporting evidences in support of the share capital and share premium received from 8 different companies. However, the AO was not satisfied with the reply of the AY 12-13 Greenline Ecofab Pvt. Ltd. assessee and added the impugned sum of Rs.1,26,00,000/- u/s 68 of the Act. Aggrieved by the aforesaid assessment order, assessee preferred appeal before CIT(A).

The assessee raised various grounds including validity of re-opening assessment u/s 147 of the Act. It submitted that the re-opening u/s 147 of the Act was not valid and hence, the consequent re-assessment order is wrong, invalid and bad-in-law. The main plea of the assessee was that re-opening of the case after 4 years from the end of the assessment year is invalid and contrary to the first proviso of Section 147 of the Act. The CIT(A) dismissed the ground by observing that the reasons recorded is self-explanatory. The assessee had filed similar reply before the AO which was not accepted by the AO. The CIT(A) has reproduced the reasons recorded by the AO and held that it was self-explanatory and does not require interference. Accordingly, CIT(A) dismissed the grounds raised

On the other hand, Ld. Sr. DR for the revenue relied upon the order of the lower authorities. He submitted that notice u/s 148 was issued after recording the reasons and after obtaining approval of the Ld.PCIT u/s 151 of the Act. He submitted that the re-opening was based on specific information received from the Investigation Wing of Kolkata. Copy of the reasons recorded by the AO was provided to the assessee and its objection was duly disposed of by the AO by passing a speaking order.

We have heard both the parties and perused the materials on record. We have also deliberated on the decisions relied upon by the Ld. AR of the appellant. There is no dispute that the case was re-opened after expiry of 4 years from the end of the assessment year 2012-13 by issue of notice u/s 148 of the Act dated 30.03.2019. It is also not in dispute that the original assessment in case of assessee was completed u/s 143(3) of the Act. As per the first proviso of Section AY 12-13 Greenline Ecofab Pvt. Ltd. 147 of the Act where an assessment under sub-section (3) of Section 143(3) of the Act has been made for the relevant assessment year, no action shall be taken under this sub-section after expiry of 4 years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reasons of the failure on the part of the assessee to make a return u/s 139 or in response to notice issued u/s 142(1) or 148 or “to disclose fully and truly all materials facts necessary for his assessment of that assessment year”. Admittedly, there was no failure on part of the appellant in filing the return. The appellant filed its return of income u/s 139 of the Act on 20.10.2012, which was taken up for scrutiny and assessment order u/s 143(3) was passed on 28.03.2012 by the ITO Ward-1(2), Surat. It is evident from the paper book submitted by the appellant that complete details with evidences of share capital and share premium were furnished during the original assessment proceedings. Copy of such details have been filed by the appellant, which are at pages 18 and 19 and 39 to 140 of the paper book. Specific reply was given by the appellant in regard to the share capital, share premium received during the year. It also furnished copy of IT acknowledgement, balance sheet and bank statement of the parties. The appellant had submitted details of all 8 investor companies to the AO which are at pages 39 to 122 of the paper book. It is, therefore, clear that the appellant have submitted all details to the AO, during the proceedings u/s AY 12-13 Greenline Ecofab Pvt. Ltd. 143(3) of the Act, which were duly considered by him before accepting the share capital and share premium received by the appellant during the year. There is no mentioned in the reasons recorded about the failure of the appellant in furnishing all material facts fully and truly before the AO. The Hon’ble jurisdictional High Court in case of Kanak Fabric (supra) held that where the AO failed to record its satisfaction that income had escaped assessment by reasons of failure on part of assessee to disclose fully and truly all materials facts necessary for its assessment, assumption of jurisdiction u/s 147 was invalid. 7.1 In case of Shreem Design LLP (supra), the Hon’ble jurisdictional High Court held that where the issue of unsecured loan was scrutinized during regular assessment proceedings with assessee furnishing confirmation letters, ITR and bank statements of lender and AO, being satisfied with details, found no failure by assessee to fully and truly disclose material facts, same issue could not be considered for assumption of jurisdiction to reopen assessment as it would amount to mere change of opinion. 7.2 The Hon’ble Supreme Court in case of Kayathwal Estate (P.) Ltd. (supra) dismissed SLP against High Court ruling that where assessee-company had furnished all details including bank statements of party from whom, loan was taken during original scrutiny assessment and further, said loan was also paid back subsequently with interest after deducting TDS thereon, impugned AY 12-13 Greenline Ecofab Pvt. Ltd. reopening notice issued against assessee after four year from relevant assessment year on ground that such loan transaction was bogus was unjustified. 7.3 We find that there is no mention in the reasons recorded of any such failure on part of assessee in the instant case. Hence, reopening is based on mere change of opinion on the same set of facts. Therefore, respectfully following the decisions cited supra, we hold that the notice issued u/s 148 of the Act was not valid in terms of the first proviso to Section 147 of the Act. As a corollary, the assessment order passed u/s 143(3) r.w.s. 147 of the Act is also invalid. Accordingly, the order of CIT(A) is set aside and the ground raised