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TMI Blog2015 (3) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... AT is correct in its decision that the finding of the Assessing Officer regarding excessive and bogus claim of labour charges in subsequent A. Y. order does not constitute tangible material, new information and fresh material for reopening the assessment of the earlier year? (b) Whether on the facts and circumstance of the case and in law, the ITAT is correct in not sustaining the reopening of assessment on the reasons recorded by the A. O. that income has escaped the assessment on account of excessive claim of labour charges and unexplained source of capital introduced by partners? (c) Whether on the facts and circumstance of the case and in law, the ITAT is correct in observing that the reopening is bad in law if the basis on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges paid amounting to Rs. 4,80,95,728/- which has been paid in higher rate and has been found and proved to be bogus. Therefore, disallowance amounting to Rs. 4,80,95,728/- on this account has been made by the assessing officer. During this year, the assessee has claimed labour charges paid amounting to Rs. 4,44,09,104/ for manufacturing and processing 1,20,547.58 carat of diamonds. It is seen that the above mentioned parties are also among these labour parties and therefore, I have reason to believe that income to the extent of Rs. 2,30,85,067/- has escaped for A. Y. 2004-05." During the assessment u/s. 143(3) for AY 2005-06, the capital introduced by the partners was added as mentioned below since the partners could not establish the sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered by the Revenue, it would have moved a rectification application which it does not urge to have been made. Thus, the second issue which is raised in Question (d) above is being dismissed as it does not arise out of the impugned order as no submission in that regard were urged before the Tribunal. Hence, Question (d) dismissed. 6. The Tribunal by the impugned order held that the notice issued under Sections 147 and 148 of the Act seeks to reopen the assessment for the subject Assessment Year could not be sustained as the same proceed on a mere change of opinion. This in view of the fact that the issue of labour charges was a subject matter of consideration by the Assessing Officer during regular assessment proceedings. 7. The grieva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 30th August, 2006 called upon the RespondentAssessee to give details of the labour charges. The RespondentAssessee's in its reply by letter dated 13th September, 2006 (referred in the order of CIT(A) made available details of labour charges along with the quantum of work done by each of the labour contractor, the TDS amount on the labour charges and the sample bills. It is only after Assessing Officer was satisfied with the claim of labour charges that he accepted the claim of the RespondentAssesee in regular assessment proceedings. In the following Assessment Year i.e. A. Y. 2005-06, the labour charges has been disallowed to the extent the same were found bogus. This conclusion/ opinion formed by the Assessing Officer in the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2006-07. Consequently, the mere formation of another view in the course of assessment proceedings for the assessment year 2007-08 would not justify the Revenue in reopening the assessment for the assessment year 2006-07 though the reopening of the assessment has taken place within a period of four years. The power to reopen assessments is structured by law. The guiding principles which have been laid down by the Supreme Court in Kelvinator [2010] 320 ITR 561 (SC) must be fulfilled. In the present case, there was no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment for the assessment year 200708 which can justify the reopening of the assessment for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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