Case Law Details
CASE LAWS DETAILS
DECIDED BY: ITAT, DELHI BENCH `D’, NEW DELHI,
IN THE CASE OF: ITO Vs. Lakshya Exim Pvt. Ltd., APPEAL NO: ITA No. 2328/Del/2008, DECIDED ON April 16, 2010
RELEVANT PARAGRAPH
17. Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for assessment year has escaped assessment. It is also well settled that words “reason to believe” used in section 147 of the Act are stronger than the words “is satisfied”. The belief entertained by the AO for the purpose of initiating proceedings u/s. 147 of the Act must not be arbitrary or irrational. It must be reasonable. In other words, it must be based on reasons, which are relevant and material as held by the Hon’ble Supreme Court in the case of Ganga Saran and Sons Pvt. Ltd. vs. ITO (1981) 130 ITR 1. It is also well settled that the Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the AO in coming to the belief, but the Court can certainly examine whether reasons are relevant and have a bearing on the matters in regard to which he is required to entertain a belief before he can issue notice u/s. 147/148 of the Act. If there is no rational or intelligible nexus or link between the reason to believe, so that, on such reasons, no one properly instructed on fact and law could reasonably entertain the belief, the conclusion would be inescapable that the AO could not have reason to believe that any part of the assessee’s income had escaped assessment, and the notice issued by him would be liable to be struck down as invalid.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
