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2015 (9) TMI 969 - HC - Income TaxReopening of assessment - 54% of the total interest income accrued on different FDRs was escaped assessment - whether notice issued under Section 148 of the Act for reassessment was hopelessly time barred in view of the provisions of Section 149 read with Section 150 and 153 (3) Explanation 3 of the Income Tax Act? - Held that:- Bare perusal of Explanation 3 of Section 153 (3) of the Act shall demonstrate that excluded income of original assessee, can be assessed in the income of third party, if third party was heard by the Authority, making observations or issuing direction that excluded income is of third party, therefore, shall be excluded from the income of original assessee. Meaning thereby, the third person whose liability is found by the assessing authorities while making assessment against the original assessee, such third party has to be heard before fixing his liability. If such third party is heard then only reassessment under Section 148 read with Sections 149 and 150 of the Act is permissible. However, if he is not heard, then notice for reassessment has to be issued within the period of limitation, as provided under Section 149 (1) (b) of the Act.In the present case, admittedly, assessee was not heard by ITAT, Lucknow Bench, while observing that out of total income derived from the interest on FDRs, tax liability of UPFC is only to the extent of 46% and liability on the total interest income to the extent of 54 % shall be of UFDC. Therefore, we do not find any illegality in the order passed by ITAT, Delhi Bench 'H', New Delhi. Therefore, question is answered against the Revenue and in favour of the assessee.
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