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2023 (11) TMI 1109 - HC - Income TaxValidity of Reopening of assessment - petitioner was selected for scrutiny assessment under CASS for limited scrutiny to verify the low income compare to high loans/advances/investment in shares and high interest expenses relatable to exempt income u/s 14A during the previous year - HELD THAT - It appears that the respondent has recorded the reasons for reopening only on the basis of the material available during the course of the original assessment and there is no fresh material to form a reason to believe that income has escaped assessment. The assessee has disclosed all material facts during the course of the original assessment and even in response to the notices issued u/s 143(2) and 142(1) of the Act. The assessment order is passed after considering the details provided by the assessee and therefore it cannot be said that the assessee has withheld any information during the course of the original assessment. Merely because the AO was of the opinion the assessee ought to have charged interest at the rate of 12% on the loans advances vis-a-vis the interest paid on the borrowed funds would not have been the basis of reopening the assessment as such inference is based without any material in support thereof. It is also emerging from the record that the assessee has not mentioned any exact income u/s 14A which might have given a reason to believe to the respondent AO that the income has escaped assessment by not charging the income interest on the loans advances by the assessee. Only because the assessee company did not charge the advance made to the other loans and advances such Assessing Officer even otherwise could not have made the notional addition on the basis of the income accrued in the regular course of assessment and such on the basis of the principle of real income. We are of the opinion that when the AO did not have any jurisdiction to issue the impugned notice in absence of any basis except assumptions and presumptions accorded in the reasons recorded to come to the conclusion that he has reason to believe that the income has escaped assessment. Petition succeeds and is accordingly allowed
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