ITAT quashes Reassessment based on vague and Innocuous Information regarding Accommodation Entry provided to Entry Operators

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reopening of the assessment based on vague and innocuous information regarding accommodation entry provided to the entry operators.

The assessee SFS Infinite Ltd’s assessment was reopened after a gap of nearly seven years from the end of the relevant financial year. As per the recorded reasons under Section 148(2) of the Income Tax Act,1961, the action under Section 147 has been taken on the basis of some alleged information that a receipt of Rs. 2,15,220/- has been obtained by the assessee from S.J. Capital Ltd. and that such receipt was an accommodation entry. Based on such alleged information, the Assessing Officer has

invoked the reopening provisions.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)], who dismissed the appeal of the assessee. Thus, we the assessee filed a second appeal before the tribunal.

When the matter was considered for hearing, it was observed that the Assessing Officer has acted on some obscure, vague and innocuous information without reference to any material and no substantive material or any content has been referred to support the alleged information that impugned receipt was an accommodation entry.

The reasons recorded under Section 148(2) of the Income Tax Act for invoking jurisdiction under Section 147 of the Income Tax Act were based on the information received from the investigation department. It was alleged that SFS Infinite Ltd., New Delhi has been a beneficiary of accommodation entries being provided by certain entry operators.

They further informed that the assessee was involved in bogus transactions. This was the reason for initiating the proceedings after 7 years as per section 147 of the Income Tax Act by the Assessing officer.

Thereafter, the tribunal determined that the Assessing Officer has purported to usurp jurisdiction under Section 147 of the Income Tax Act without legal foundation. Hence, there is a lack of jurisdiction assumed under Section 147 of the Income Tax Act.

After considering the facts, the two-member bench of Chandra Mohan Garg (Judicial Member)  And  Pradip Kumar Kedia(Accountant Member) allowed the appeal filed by the assessee. 

Om Prakash, counsel appeared for the revenue. No one appeared for the assessee while the appeal was considered before the tribunal.

To Read the full text of the Order CLICK HERE

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