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TMI Blog2023 (11) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... LE returnable forthwith. Mr. Dev D. Patel learned advocate waives service of Rule for the respondent. 3. Having regard to the controversy involved in this petition in the narrow compass, with the consent of the learned advocates for both the sides, the matter is taken up for hearing. 4. In this petition under Article 226 of the Constitution of India, the petitioner has challenged the legality and validity of the notice dated 29.03.2021 issued under Section 148 of the Income Tax Act, 1961 (hereinafter to be referred to as 'the Act' for short) for assessment year 2016-17. 5. Brief facts of the case are as under. 6. The petitioner company is engaged in the business of manufacturing of the engineering goods. The petitioner filed return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the reasons recorded for reopening are as under: "The assessee company filed its return for A.Y 2016-17 on 14.10.2016 declaring total income of Rs. NIL/-. The assessment order u/s. 143(3) of the I.T. Act was completed on 30/10/2018 at Rs Nil/- by setting off brought forward loss of Rs. 36,93,791/-. 2. Subsequently, on verification of records submitted by the assessee it is observed that the assessee company had taken secured loan amounting of Rs 3,76,16,864/- and has paid interest @ 14.44% of Rs. 53,49,654/-. Further, the assessee company had advanced long term unsecured loan amounting to Rs 10,34,48,836/- and short term loan advances amounting to Rs. 2,98,59,940/-. The assessee company did not charge any interest on the above fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is factually incorrect because no such loan was advanced in the either long term or short term was granted to any party which is evident from the annual report pertaining to financial year 2015-16. It was further contended by the assessee that approving authority under Section 151 had not considered the reasons properly and by a mechanical approach, the sanction is granted. 13. The Assessing Officer after considering the objections raised by the assessee, passed an order dated 15.03.2022 rejecting the same. The assessee therefore has preferred this petition. 14. Learned advocate Mr. Hardik Vora for the petitioner submitted that on bare perusal of the reasons recorded, it appears that the Assessing Officer has no material except the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received during the previous year. 16. On the other hand, learned advocate Mr. Dev Patel for the revenue submitted that the Assessing Officer has reason to believe that the assessee ought to have charged interest at the rate of 12% on the loans advanced on one hand whereas the assessee has availed the finance from the bank and claimed interest expenses during the course of previous year. It was therefore submitted that the assessee has diverted the funds and claimed the interest expenses on the funds which were not utilized for the business purpose and the same funds were advanced without charging any interest. It was therefore submitted that as the assessment was reopened within a period of four years, the assessee can submit all the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer that the income has escaped assessment by not charging the income interest on the loans advances by the assessee. 22. In view of the above facts, 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. 23. In view of the above facts emerging from the record, we are of the opinion that when the Assessing Officer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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