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TMI Blog2014 (2) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that Shri Dhirubhai Sambhubhai Diyora neither had any experience of job work nor did he have any infrastructure for the same; 3. The ld. CIT(A) erred in observing that Shri Dhirubhai Sambhubhai Diyora got done the job work through two other persons. Shri Dhirubhai Sambhubhai Diyora could not give any details of these persons such as their address, details of factories etc; 4. The ld. CIT(A) has failed to appreciate that the diamonds are very high priced goods and their processing require highly technical and precise work and therefore, it is impossible that the assessee would give these diamonds for processing to a person (Shri Dhirubhai Sambhubhai Diyora) with no experience and infrastructure and that persons would further give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order u/s 147 of the Act. However, ld. CIT(A) deleted the addition made by AO on account of claim of labour charges. Hence, department is in appeal disputing the deletion of the addition made by AO on account of claim of labour charges and whereas assessee has disputed by way of Cross-objection the validity of initiation of re-assessment proceedings. 6. Since the cross-objections filed by assessee go to root of validity of assessment order passed by AO, we have heard ld. Representative of the parties on the reasons recorded by AO to initiate re-assessment proceeding. Ld. AR submitted that at the time of making the original assessment u/s 143(3) dated 28.12.2006, the AO examined claim of labour charges. He submitted that asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observe that from the contents of letter filed by the assessee disputing the initiation of re-assessment proceedings that the assessee, at the time of making original assessment, filed requisite details of labour charges claimed by the assessee in the profit and loss account. Assessee also filed confirmation letters to whom labour charges were paid during the financial year relevant to the assessment year under consideration. Thus, assessee made full disclosure of the labour charges paid at the time of original assessment made by AO. The ld. DR has also not disputed the fact that the assessee filed tax audit report along with the return of income. Further, assessee also deducted TDS on the job-work charges carried out by Shri Dhirubhai Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving reasons, it would not be permissible to reopen the assessment even within four years on very same grounds. It was also held that if the Assessing Officer, after scrutinizing the claim during the assessment proceedings, does not reject such a claim, but chooses not to give any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It was also held that in the assessments of larger corporations in the modern day, involve large number of complex claims, voluminous material, numerous exemptions and deductions. That if the Assessing Officer is burdened with the responsibility of giving reasons for several claims so made and accepted by him, it would even otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ships that the recording of the reasons is a pre-requisite to the assumption of jurisdiction by the Income-tax Officer for initiating the proceedings. It is only the recorded reasons which can indicate as to why the Income-tax Officer was made to believe that income has escaped assessment for the relevant assessment year. The Income-tax Officer is not authorised to refer to any other reason even if it can be otherwise inferred and/or gathered from the records. The Hon'ble Calcutta High Court in the case of Berger Paints India Ltd. V/s ACIT (2004) 266 ITR 462) (Cal) held that not only exist reasons for formation of the belief that income has escaped the assessment but there must also be a rational connection or relevant bearing with the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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