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Commissioner of Income Tax, Dehradun Versus Uttarakhand Van Vikas Nigam

2015 (9) TMI 969 - UTTARAKHAND HIGH COURT

Reopening 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 .....

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d 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 .....

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lved, therefore, with the consent of learned counsel for the parties, all these appeals are taken up together for hearing and are being decided by this common judgment. All these three appeals are directed assailing the common judgment dated 11.3.2015 passed by Income Tax Appellate Tribunal, Delhi Bench 'H', New Delhi, whereby three appeals filed by the assessee against the re-assessment orders for assessment year 2002-03, 2003-04 and 2004-05 were allowed on the ground that notice issued .....

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State of Uttarakhand, UPFC was bifurcated and Uttarakhand Forest Development Corporation (hereinafter referred to as 'UFDC') came into existence and as per the directions issued by the Central Government, UFDC was held to be entitled for 54 % of the total assets of UPFC, therefore, tax liability of UPFC over the total interest income earned should not be more than 46%. ITAT, Lucknow Bench, vide judgment/order dated 6.3.2009, was pleased to hold that UPFC cannot be held liable to pay inc .....

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total interest income accrued on different FDRs was escaped assessment. It was further mentioned in the notice that since ITAT, Lucknow Bench has held that liability to pay income tax on 54% of the total interest accrued on the FDR is of the UFDC, therefore, reassessment is required to be made. UFDC has challenged the reassessment made on the ground that UFDC was not heard by ITAT, Lucknow Bench, therefore, notice issued under Section 148 of the Act for reassessment was hopelessly time barred in .....

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, 150 and Explanation 3 of 153 (3) of the Income Tax Act read as under: "149. Time limit for notice. [(1) No notice under section 148 shall be issued for the relevant assessment year,- [(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) [or clause (c)]; (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amoun .....

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147 shall apply as they apply for the purposes of that section.] (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after .....

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notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or W.P.(C) Nos. 7944/11, 7945/11, 7946/11 & 7947/11 Page 6 of 14 recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-section (1) shall not apply in any case where an .....

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y an order [referred to in clause (ii) of sub-section (3)], any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed." .....

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aped assessment amounts to or is likely to amount to one lakh rupees or more for that year, while, as per clause (c) of Section 149 (1), limitation to issue notice for reassessment under Section 148 shall be extended till 16 years from the date of previous assessment if income chargeable to tax has escaped assessment in relation to any asset (including financial interest in any entity) located outside India and is chargeable to tax, has escaped assessment. As per Section 150 (1) of the Act, ther .....

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hat 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 .....

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