Case Law Details
SFS Infinite Ltd Vs DCIT (ITAT Delhi)
The appeal filed by SFS Infinite Ltd against the order of the Commissioner of Income Tax (Appeals)-X, New Delhi (CIT(A)), emerges from the assessment order passed by the Assessing Officer (AO) under Section 143(3) r.w. Section 147 of the Income Tax Act, 1961 for AY 2003-04. The case revolves around the legitimacy of the AO’s jurisdiction under Section 147 and the validity of additions under Section 68 of the Act.
In this case, the AO invoked jurisdiction under Section 147 based on information suggesting that SFS Infinite Ltd had benefitted from accommodation entries provided by certain operators. An alleged receipt of Rs. 2,15,220 from S.J. Capital Ltd was presented as evidence of the supposed accommodation entry, leading to the reopening of the assessment.
However, the ITAT Delhi held that the AO had acted on vague and insufficient information, without any substantial material to corroborate the alleged accommodation entry. Critically, the tribunal emphasized the absence of ‘reasons to believe’, which must be supported by written reasons – a requirement that was found to be unmet in this instance.
Further, the tribunal observed that the alleged information lacked tangible connections and rational links to support the AO’s belief. Highlighting the crucial fact that the formation of belief cannot be relegated and requires mindful application, the tribunal concluded that the AO had invoked jurisdiction under Section 147 without legal justification.
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