TMI Blog2014 (8) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities has been earned by the petitioner in respect of the interest received on 8 June 1996 on the securities which were already sold to Hindustan Steel. Notice for reopening of assessment u/s 148 - Time-barred notice – Held that:- Notice has been issued beyond the period of 4 years from the end of the relevant AY - where the assessment which is completed u/s 143(3) of the Act is sought to be reopened beyond the period of 4 years, from the end of the relevant AY, then AO acquires jurisdiction to issue notice for reopening only on the satisfaction of the conditions - interest income received on the securities on 8 June 1996 was never claimed as the petitioner's income is also borne out by its communication dated 2 January 2001 to the CBDT in its application u/s 19(2)(b) of the Act, the occasion to disclose the same never arose - there was no occasion for the petitioner to disclose receipts which was not its income and therefore, not necessary for its assessment – it cannot be said that there was failure on the part of the petitioner to make a full and true disclosure for the purposes of its assessment – there could be no reason to believe that income chargeable to tax has esca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributory Provident Fund. (Hindustan Steel) 14% Government of India 2005 Securities (Securities) issued by the Reserve Bank of India (R.B.I.); (b) The interest on securities was payable on 8 December 1995 and 8 June 1996; (c) For the A.Y. 1996-97, the petitioner had offered to tax income on the sale of securities to Hindustan Steel and also the interest attributable for the period 9 December 1995 to 1O January 1996 on the securities. (d) In spite of the sale of securities, the petitioner's name was continued to be shown as holder of securities in the record of RBI till 8 June 1996.This even after the above transfer was duly informed to the R.B.I. (e) This resulted in the petitioner receiving interest of ₹ 1,32,300,000/- from R.B.I. being payable on 8 June 1996. The R.B.I. deducted tax at source to the extent of ₹ 32,71,118/- on the above interest; (f) However, as the above interest belonged to Hindustan Steel the petitioner paid the entire amount of ₹ 1,32,30,000/- i. e. inclusive of TDS to Hindustan Steel by a demand draft dated 19 July 1996. This was on the basis of the CBDT Circular dated 30 March 1967 which provided that in such cases, the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the income chargeable to tax has escaped assessment. 7. On the aforesaid facts, Mr. J.P. Mistry learned Senior Counsel in support of the petition submits as under : (i) The impugned notice is hit by the proviso to section 147 of the Act in as much as there has been no failure on the part of the petitioner to disclose material facts necessary for its assessment. It is the petitioner's case that an amount of ₹ 1,32,30,000/- was not its income and never claimed to be its income. Therefore, it was not a fact necessary to be disclosed for the purpose of its assessment. (ii) There is no reason to believe that the income chargeable to tax has escaped assessment for the simple reason that the income of ₹ 1,32,30,700/- is undisputedly not the petitioner's income. (iii) The entire reasons as recorded for the purpose of reopening has proceeded on misunderstanding of law. The petitioner can be only charged to tax on income which is earned by it or which belongs to it. In this case, admittedly interest income belongs to Hindustan Steel on the securities sold to them on 10 January 1996. The entire proceedings seeking to reopen the assessment for A.Y. 1996-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities to Hindustan Steel. These securities are issued by the R.B.I. and interest is payable on 8 December 1995 and 8 June 1996 by the R.B.I. The petitioner received halfyearly interest payable on 8 June 1996 in respect of securities which were already sold to Hindustan Steel. The petitioner received the interest as the change of ownership was not recorded till 8 June 1996 in the R.B.I. records. On 19 July 1996 the petitioner paid over the gross amount of interest received from the R.B.I. on securities (including TDS amount ). This was done by the petitioner as in fact the entire income belonged to Hindustan Steel i.e. the beneficial owner of the shares. Besides this was also in accordance with the CBDT circular dated 30 March 1967. The above circular provided that the registered holder would not be charged to tax but would be entitled to refund of the TDS. However, as there was a delay in receiving TDS Certificate from the R.B.I. the petitioner could not claim the refund from the R.B.I. under Section 237 of the Act within the period of limitation provided in Section 239 of the Act. In view of the above, on 2 January 2001 the petitioner applied under Section 119 (2) (b) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e securities had been sold in the immediately preceding assessment year i.e. A. Y. 1996-97 to Hindustan Steel. Therefore, the aforesaid interest income which belongs to Hindustan Steel cannot be brought to tax in the hands of the petitioner. The sina qua non to tax income is earning of income either actual or notional or deemed. In the present facts, it is very clear that the petitioner has not earned the income as owner and/or holder of securities which had been already sold to Hindustan Steel. The petitioner had received the interest amount in its capacity as a registered holder and/or as a transferor for Hindustan Steel. Thus, we conclude that no income as interest on account of securities has been earned by the petitioner in respect of the interest received on 8 June 1996 on the securities which were already sold to Hindustan Steel. 12. In the above view there is no reason for us to consider the issue of applicability of the Circular of the CBDT or Section 199 of the Act and the appropriate interpretation of Section 199 of the Act. 13. Besides as the assessment being sought to be reopened by the impugned notice dated 16 March 2004 is beyond a period of four years from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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