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2019 (10) TMI 247 - AT - Income TaxRevision u/s 263 - Assessment of interest income on FCNR-B deposits - joint FCNR(B) Bank account with the assessee’s non-resident - HELD THAT:- AO cannot remain passive in the face of a claim, which calls for further enquiry to know the genuineness of it. In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. AO was statutorily required to make the assessment u/s 143(3) after scrutiny and not in a summary manner as contemplated by Sub-section (1) of Section 143. AO is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. AO should protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. AO is not expected to put blinkers on his eyes and mechanically accept what the assessee claims before him. It is his duty to ascertain the truth of the facts stated and the genuineness of the claims made in the return. The order passed by the AO becomes erroneous when an enquiry has not been made before accepting the genuineness of the claim which resulted in loss of revenue. In the present case. there was a joint FCNR(B) Bank account with the assessee’s non-resident daughter with State Bank of India, NRI Branch. The parties concerned with the Bank Account had not changed it as per notification by Reserve Bank of India in FEMA 5/2000-RB dated 03/05/2000 Being so, resident in India cannot have FCNR(B) bank accounts jointly with non-resident which was relaxed by the Reserve Bank of India vide notification RBI/201M2/174, A.P(DIR series) Circular No.13 dated 15.09.2011 which was not retrospectively applicable to assessments relating to F.Y. prior to 2011-12. Hence, in our opinion, the PCIT is justified in giving direction to the Assessing Officer to verify, re-quantify and tax the interest amounts accrued which were wrongly not taxed in the earlier assessment order after giving appropriate opportunity of being heard. However, the Assessing Officer shall determine in whose hands the interest income is to be assessed and decide the same independently without being influenced by the directions of PCIT. Thus, the grounds of appeals of the assessee are dismissed.
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