Earlier interest receipts cannot be reassessed after limitation expires under section 34, even if treated as suspense by the assessee.

Amounts actually received as interest in earlier years could not be brought into reassessment under section 34 of the Indian Income-tax Act once the statutory period had expired. The receipts in question had been received in 1922, 1928, 1929 and 1930, and their treatment by the assessee as lying in suspense, or as not yet taxable because litigation was pending, did not change their character as completed receipts. The revenue's reliance on authority concerning appropriation of open payments was inapposite, because these sums were not unappropriated payments on account but interest already received. Accordingly, the reassessment of Rs. 79,532 for assessment year 1939-40 was invalid.

---

---

Issues: Whether the sum of Rs. 79,532 could validly be assessed under section 34 of the Indian Income-tax Act for the assessment year 1939-40, when the receipts said to constitute that amount had in fact been received as interest more than eight years before the reassessment proceedings.

Analysis: The receipts forming the disputed amount were shown to have been actually received as interest in the years 1922, 1928, 1929 and 1930. The fact that the assessee treated them as lying in suspense, or believed that they were not yet taxable because litigation was pending, did not alter their character as receipts already received. Section 34 permitted reassessment only within the prescribed period counted from the relevant year of receipt. The decision relied on by the revenue concerning appropriation of open payments had no application, because these sums were not mere unappropriated payments on account but were treated and received as interest. Once the earlier interest receipts were excluded from the 1939-40 reassessment, the balance of Rs. 79,532 could not be brought to tax under section 34.

Conclusion: The reassessment of Rs. 79,532 under section 34 was invalid and the answer to the question was in the negative, in favour of the assessee.

Ratio Decidendi: Amounts actually received as income in earlier years cannot be reassessed under section 34 after the statutory period has expired merely because the assessee did not disclose them or treated them as not yet taxable.

---