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TMI Blog2014 (8) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. On 10 March 2005, the reasons recorded for issuing the notice were communicated to the petitioners. They read as under : "The assessee has requested for grant of credit to TDS of Rs. 32,71,118/- on interest of Rs. 1,32,30,000/-. The securities in question were sold by the assessee exinterest to Hindustan Steel Ltd contributory Provident Fund. The assessee claims credit for TDS without offering the interest income for taxation in their hands. Therefore, omission on the part of the assessee to offer the interest of Rs. 1,32,30,000/- to tax for A.Y.1997-98 which has escaped assessment. It is proposed to reopen the assessment u/s 147 of the I.T.Act." 5. On 16 March 2005 and 18 March 2005 the petitioner filed its objections to the reasons communicated on 10.3.2005. In particular, the petitioners pointed out that the impugned notice is result of the petitioner having filed an application under Section 119(2)(b) of the Act seeking condonation of delay in making an application for refund of the Tax Deducted at Source (TDS) of Rs. 32,71,118/- in respect of A.Y. 1997-98. The reason for the above application and the consequent impugned notice arose on following facts :- (a) On 10 Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner's case that the impugned notice dated 16 March 2004 is not sustainable as no income chargeable to tax had escaped assessment nor was there any failure on its part to disclose truly and fully all material facts necessary for its assessment for A.Y. 1997-98. 6. By an order dated 5 April 2005 the Assessing Officer rejected the petitioner's objections to reopening of the assessment. It inter alia holds that there was a failure on the part of the assessee to disclose all the material facts necessary for assessment in as much as the petitioner had not disclosed the receipt of interest in the assessment proceedings for A.Y. 1997-98. This fact became known to Revenue when the petitioner had filed an application to the CBDT on 2 January 2001 under Section 19(2) (b) of the Act seeking admission of their claim for refund of the TDS of Rs. 32,71,118/-. Besides, he holds that there is reason to believe that income liable to tax has escaped assessment as the CBDT circular dated 30 March 1967 being relied upon by the petitioner is inapplicable in view of the amendment to Section 199 of the Act by the Finance Act 1968 with retrospective effect from1 April 1962.Thus taking a prima f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opportunity during the assessment proceedings to justify its stand. 9. We have considered the rival submissions. The petitioner's assessment for the subject A.Y. 1997-1998 was completed under section 143 (3) of the Act by an order dated 31 December 1999. The impugned notice is issued on 16 March 2004. Therefore, notice has been issued beyond the period of 4 years from the end of the relevant assessment year. It is wellsettled that where the assessment which is completed under Section 143(3) of the Act is sought to be reopened beyond the period of 4 years, from the end of the relevant assessment year, then Assessing Officer acquires jurisdiction to issue notice for reopening only on the satisfaction of the following two conditions : (a) failure on the part of the assessee to make a full and true disclosure necessary for its assessment ; and (b) such failure to make a full and true disclosure leads to a reason to believe that the income chargeable to tax has escaped assessment. 10. We shall whilst keeping the above jurisdictional requirement in mind examine the facts arising herein for our consideration. On 10 January 1996 the petitioner sold securities to Hindustan Steel. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of which credit for TDS is being claimed by the petitioner. However, in the present facts it is seen that it was as far as back as on 2 January 2001 that the petitioner had made an application to the CBDT seeking condonation of delay and consideration of its application for refund of the TDS of Rs. 32,71,118/-, on merits . In its application the petitioner had clearly pointed out the complete nature of the transaction including the fact that the gross amount (including TDS amount) had been paid over by them to Hindustan Steel. Thus, indicating that there has been no interest income to the petitioner from the securities during the A.Y. 1997-98. Further reliance was placed upon the Circular dated 30.3.1967. The CBDT has even after having made queries and granting a hearing to the petitioner has not yet rejected the petitioner's application dated 2 January 2001 for refund or found that the facts stated therein are in any manner incorrect. The application before the CBDT is still pending. In the aforesaid circumstances, according to us it is very clear that there is no interest income earned by the petitioner on the sale of securities. These securities had been sold in the immedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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