TMI Blog2002 (9) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... ee : In the return filed, the assessee has shown his status as non-resident. The A/R filed a statement showing that during the relevant previous year the assessee was in India for 172 days and there abroad for the remaining 193 days. This verified with reference to copy of pass port produced by the A/R. Hence in view of provision of section 6(1)(a) of Income-tax Act the assessee was not a resident for the relevant previous year. 3. In my opinion while deciding the residential status of an assessee the Assessing Officer should consider the provisions of both sections 6(1)(a) and 6(1)(c) of the said Act and this is a mandatory requirement of law. An assessee may not be a resident of India under section 6(1)(a) but may be a resident of India under section 6(1)(c) of the said Act. In Vijay Mallya v. Asstt. CIT [W.P. No. 213 of 1996] by judgment and order dated 10-9-2002 I held that an assessee may be a resident in India either under section 6(1)(a) or section 6(1)( c) of the said Act. I held that an Assessing Officer while holding an assessee as non-resident within the meaning of section 2(30) of the said Act, is duty bound to record his reasons as to why he is not hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Act. It should not be ignored that power has been conferred upon some of the functionaries under the said Act who can suo motu call for the records and pass necessary orders in accordance with the provisions of the said Act. Determination of residential status of an assessee is a very important matter having huge impact upon the collection of revenue. Therefore, the authorities functioning under the said Act who have been empowered to see that proper revenues are collected can suo motu call for the records to see whether question of residential status has been properly determined by the Assessing Officer or not. Unless the Assessing Officer records the reasons, even while accepting the claim of the assessee, it would not be possible for the competent authorities functioning under the said Act to see whether the Assessing Officer correctly decided the residential status of an assessee or not. Under the circumstances I am of the view that even when the Assessing Officer accepts the claim of an assessee and decides that the assessee is a non-resident under section 2(30) of the said Act then also he is duty bound to record the reasons as to why he is not holding the assessee as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er statutory obligation to make an enquiry before assessment. The learned advocate for the respondents argued that by issuing the aforesaid three notices the Assessing Officer only discharged his statutory duties for proper appreciation of the subject-matter involved in the aforesaid three notices. It is necessary to have a look to the said three notices. The relevant part of the notice dated 10-10-1995 is set out hereinbelow : Sub: Assessment proceedings for assessment years 1992-93 and 1993-94 Matter req : Please refer to your reply and details submitted vide letter dated 23-9-1995. Certain details regarding expenses in connection with your travel and stay in India, details of custom duty paid, details of Helicopter owned either by you or by the companies in which you are a Director, have not been filed by you which are awaited. It is seen that you have claimed the status as resident, but not ordinarily resident accordingly you have taken the stand not to furnish the details of your global income, global assets and return filed and tax paid in countries outside India. However, from the details of stay filed by you for various years, it appears that your claim of not ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure which is also dated 30-11-1995. The relevant part of the enclosure of the notice dated 30-11-1995 is set out hereinbelow : Sub: Assessment proceedings for assessment years 1992-93 and 1993-94 In connection with assessment proceedings and various queries raised and reply and explanation submitted by you, the following points are being noted and a conclusion para has been arrived at- (1)Residential status : Vide my letter dated 10-10-1995, a show cause was served on you that you are an ordinary resident under section 6(1)(c) read with section 6(6) of the Income-tax Act. I have gone through your reply dated 17-10-1995 on the matter. It is to clarify you that principle of res judicata does not apply to the income-tax proceedings and the mere fact that in some of the earlier years, residential status has been determined as non-resident does not mean that a mistake, if made earlier, will perpetuate for time to come. Moreover finding of an Assessing Officer is not binding on another Assessing Officer. So, your argument of being treated as non-resident in some of the earlier years does not preclude me from treating you resident, the correct status in those years. Furtherm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and violative of provisions of section 142(1) wherein Assessing Officer is empowered to call for full information in respect of income or loss of a person and to ask for production of all accounts or documents as the Assessing Officer may require. However, you are hereby required to furnish full details of your world income and world assets. More so, that you are an ordinarily resident and liable to pay tax in India on your world income under section 5 of the Income-tax Act. A notice under section 142(1) is being issued for the purpose of compliance by you. You are also required as asked earlier on various occasions to furnish details of income-tax and wealth-tax returns filed and assessments made in U.K. or any other country outside India as support of your declared global income and global assets for the purpose now for the years under consideration. Your non-compliance to the above will be viewed seriously and while appropriate penalty proceedings may be undertaken I will be constrained to make an estimate of your world income and other related matter on my own pace and make a best of judgment assessment under section 142 on above account. (3)Export made by various compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all to one hundred and eighty two days or more; or (b)****** (c )having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. Explanation.-In the case of an individual, being a citizen of India,- (a )who leaves India in any previous year for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words one hundred and eighty two days had been substituted; (b)who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words ninety days had been substituted. You are claiming status of non-resident under Explanation (b) to section 6(1)(c). For this the maximum permissible stay to be non-resident was 90 days. You were in India for a period of 172 days. Thus, the benefit of this section is not available to you. I may remined you that you are claiming the benefit under explanation (b) to section 6(1)(c) and not under explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information to be so produced for the purpose of making the assessment. The learned senior advocate for the writ petitioner argued that to fulfil these requirements the Assessing Officer must apply his mind because without such application of mind he can never arrive at any bona fide satisfaction. He argued that Assessing Officer never acquires jurisdiction to issue a notice under section 142(1) of the said Act for production of any document or information until he on application of his own mind arrives at a satisfaction that the document or information so directed to be produced would have its bearing on the assessment and that he requires the same to be produced for making the assessment. In support of this contention the learned senior advocate for the writ petitioner referred to and relied upon a Division Bench decision of this High Court in Grindlays Bank Ltd. v. ITO [1978] 115 ITR 799. The relevant lines referred to and relied upon by the learned advocate from the reported decision in Grindlays Bank Ltd. s case (supra) are set out hereinbelow : We feel no hesitation in agreeing with the learned trial Judge that before any notice under this provision could be issued callin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows : 15. The words considers it necessary postulate that the authority concerned has thought over the matter deliberately and with care and it has been found necessary as a result of such thinking to pass the order. The dictionary meaning of the word consider is to view attentively, to survey, examine, inspect (arch), to look attentively, to contemplate mentally, to think over, meditate on, give heed to, take note of, to think deliberately, behind oneself, to reflect (vide Shorter Oxford Dictionary). According to words and phrases-Permanent Edn: Vol. 8-A to consider means to think with care. It is also mentioned that to consider is to fix the mind upon with a view to careful examination; to power; study; meditate upon, think or reflect with care. It is, therefore, manifest that careful thinking or due application of the mind regarding the necessity to obtain and examine the documents in question in sine qua non for the making of the order. If the impugned order were to show that there has been no careful thinking or proper application of the mind as to the necessity of obtaining and examining the documents specified in the order, the essential requisite to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 143 of the said Act. The learned advocate for the respondents argued that the view of the Assessing Officer regarding residential status of the writ petitioner as appears from the aforesaid three notices are tentative views and no final views. 16. I am inclined to accept the argument of the learned advocate for the respondents. Determination of residential status of an assessee is a very important matter for the purpose of determining the total income of any previous year of an assessee. In this connection reference may be made to section 5 of the said Act which reads as follows : Scope of total income.-(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which- (a )is received or is deemed to be received in India in such year by or on behalf of such person; or (b)accrues or arises or is deemed to accrue or arise to him in India during such year; or (c )accrues or arises to him outside India during such year : Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of appointment letter furnished by you go a long way to show that the Assessing Officer is not carrying any kind of bias and is keeping an open mind and not arrived at a final decision or conclusion regarding residential status of the writ petitioner. Therefore, it cannot be said that the Assessing Officer made a piece-meal order deciding the residential status of the writ petitioner. Admittedly, no assessment order has been passed yet for the assessment years 1992-93 and 1993-94. In my view the decisions in Barium Chemicals Ltd. s case (supra) and Grindlays Bank Ltd. s case (supra) support the case of the respondents because all the aforesaid three notices without any doubt show that the Assessing Officer had applied his mind in the subject-matter and by asking the petitioner to disclose his global income did not do any wrong because the global income of the writ petitioner is very much relevant for the purpose of proper assessment. I am of the view that the aforesaid three notices show the satisfaction of the Assessing Officer which confers jurisdiction upon the Assessing Officer to issue notice under section 142(1) of the said Act asking for production of document and d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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