TMI Blog2018 (5) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... s outside India and claimed exemption u/s.5(1)(c) of the Act, we are of the substantive opinion that the matter requires further examination and verification of facts by the AO. Accordingly, we restore the disputed issue to the file of AO and we direct the assessee to substantiate its stay in India for claim of exemption and the assessee shall cooperate in submitting the details for early disposal of the case. - Decided in favour of assessee for statistical purposes. - ITA No.389/CTK/2014 - - - Dated:- 17-5-2018 - SHRI N.S.SAINI, AM AND SHRI PAVAN KUMAR GADALE, JM For The Assessee : Shri S.C.Bhadra, AR For The Revenue : Shri S.C.Mohanty, DR ORDER Per Shri Pavan Kumar Gadale, JM: This is an appeal filed by the assessee against the order of CIT(A)-I, Bhubaneswar, dated 24.07.2014, passed in I.T.Appeal No.0271/13-14, for the assessment year 2011-2012. 2. Earlier this appeal was disposed off by this Tribunal vide order dated 31.11.2015. Thereafter on miscellaneous application filed by the Department, this order has been recalled vide order dated 31.10.2017 and appeal has been restored to its original number. Today i.e. on 19.04.2018 we heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer that As per Board s Circular No.549 dated 31.10.1989 the assessee income cannot be less than the returned income is not in consonance with the words of the said circular which are reproduced below verbatim and hence is misplaced. 4. That the finding of the learned assessing officer that Changing the income figure from ₹ 27,43,360 to NIL cannot be considered as mistake apparent from the record is also not a finding based upon facts on record. This finding is not a mistake suggested by the assessee to be apparent on record in view of the facts and the points of law as discussed above. This finding being rendered extraneous to the issue is liable to be ignored. 5. For that the appellant craves leave to add, alter, amend and/or rescind any of the above submissions made in the statement of facts/grounds of appeal at the time of or before the hearing of the appeal. 4. Brief facts are that the assessee is a non-resident India citizen who worked as a crew member of foreign ships during the previous year relevant to the assessment year under consideration. The total number of days of stay in India was 181 days. The assessee received a total salary income of US$ 51, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is an NRI and salary income which has been offered to tax is exempt. However, the NRI status of the appellant is not apparent mistake on record committed by the AO/CPC and determination of status cannot be covered under apparent mistake but a substantive issue. In any case, the status shown by the appellant and income offered for taxation has been duly accepted and it cannot be said that a mistake has taken place in the order of the AO. Since there is no apparent mistake on record, no rectification of mistake could have been done by the AO. In view of the same, the AO is correct in rejecting the petition filed by the appellant u/s.154. 6. Aggrieved by the order of CIT(A), the assessee filed an appeal before the Tribunal, wherein the Tribunal vide order dated 30.11.2015 considering the submissions of assessee and findings of both the lower authorities, remitted the matter back to the file of AO to verify regarding actual status of the assessee and the number of days spent abroad and dispose of the rectification petition filed by the assessee u/s.154 of the Act. The observation of the Tribunal at page 3 is as under :- 7. We have heard the rival contentions, perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us of the assessee, the number of days spent abroad and dispose of the rectification petition filed by the assessee u/s.154 of the Act. Hence, the appeal is restored back to the file of the AO for necessary verification and consider for rectification petition u/s.154 afresh. 10. In the result, appeal of the assessee is treated as allowed for statistical purposes. 7. Being aggrieved with the above order, the Department has filed a miscellaneous application before the Tribunal stating that when the return of income was voluntarily filed by the assessee declaring certain total income, no part of which is claimed as exempt from tax in the return of income itself. Therefore, the assessee cannot make a fresh claim after the completion of proceedings u/s.143(1) of the Act and submitted that the order passed by the Tribunal constitutes a mistake apparent from record as the direction of the Tribunal to verify the status of assessee and rectify if necessary the status so returned is not in conformity with the law laid down by the Hon ble Jurisdictional High Court in the case of M/s Orissa Rural Development Corporation Ltd. (2012) 247 CTR 137(Orissa). 8. The Tribunal considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee is ₹ 4,97,448/- after excluding the amount of salary income of ₹ 22,45,912/- being the salary income in the capacity of a crew member of a foreign ship which was received outside India and is not deemed to have been received or on his behalf in India and did not accrue/arise in India and hence is not deemed to have accrued/arisen in India and exempt u/s.5 of the I.T. Act. 10.2 Ld. AR further submitted that the CIT(A) observed that the NRI status of the assessee is not apparent mistake on record committed by AO/CPC and termination of the status cannot be covered under apparent mistake but a substantive issue, however, neither the CPC nor the AO has disputed the status of the assessee. The ld. AR relied on the following judgments :- i) ACIT Vs. Rupam Impex, ITA No.472/RJT/2014 (Rajkot Tribunal). 11. Contra, ld. DR relied on the order of lower authorities. 12. We have heard rival submissions and perused the record available on record. The substantive dispute that arises for consideration in the present case is as to whether the authorities below are justified in denying the claim of the assessee, which has not been claimed in the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s original return to file a revised return. The further requirement is that this omission or wrong statement in the original return must be due to a bona fide inadvertence or mistake on the part of the assessee. 13. There is a distinction between a revised return and a correction in the originally filed return. If an assessee files an application for correcting a return already filed or for making some amendments therein, it would not certainly mean that he has filed a revised return. Such a petition is not recognized under the Income Tax Act. The basis of assessment is the return filed by the assessee. If a revised return is filed under Section 139(5) of the I.T. Act the assessment can be completed only on the basis of revised return and not otherwise. 14. Where an assessee, following mercantile system of accounting, furnishes a return of income on the basis of accrued income, the filing of a revised statement of income, on the ground that such interest income had not been received during the relevant previous year, is of no avail. In absence of the revised return as provided under Section 139(5), the Assessing Officer is bound to make assessment on the basis of origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the assessment in the above case was completed u/s.143(3) of the Act on the basis of original return filed u/s.139(1) of the Act. However, in the present case, on the advice of CPC, Bangalore the assessee has filed an application for rectification in respect of the original return of income. We find the ld. AR relied on judicial decisions where once the assessee has established that it is not subject to be taxed on certain income but however, it was included in returned income then such income in the return of income shall become a mistake, which is apparent and the assessee gets the right to modify the same by filing rectification petition u/s.154 of the Act. 15. We find that in the case of CIT vs Pruthvi Brokers Shareholders [2012] 23 taxmann.com 23 (Bom.) the Hon ble Bombay High Court while dealing with a claim for deduction under Section 43B of the IT Act which was made through a letter and not in the original return of income, has held that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims not made in the return filed by it. Even assuming that an amendment to the original return could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n raised' and not 'were not in existence'. Grounds which were not in existence when the return was filed or when the assessment order was made fall within the second category viz., where 'the ground became available on account of change of circumstances or law.' [Paras 12 and 13] It is indeed a question of exercise of discretion whether or not to allow an assessee to raise a claim which was not raised when the return was filed or the assessment order was made. As held by the Supreme Court in the case of Jute Corpn. India Ltd. (supra) there may be several factors justifying the raising of a new plea in appeal and each case must be considered on its own facts. However, such cases include those, where the ground though available when the return was filed or the assessment order was made, was not taken or raised for reasons which the appellate authorities may consider valid. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground or claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made. [Para 15] The conclusion that the error in not claiming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the total income being declared by it. [Para 6] Conclusion In view of the above relevant extracts of the return of income it is clear that the Commissioner committed a fundamental error in proceeding on the basis that no deduction on account of dividend income and income from capital gains under section 10 was claimed. Therefore, there was an error on the facts of the order of Commissioner and the same was not sustainable. [Para 7] 17. The Hon ble Supreme Court in the case of Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688/[1990] 53 Taxman 85, held that the declaration of law is clear that the power of the AAC is co-terminous with that of the ITO, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an appellate authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should consider it as their duty to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs. The Officers should take the initiative in guiding a Tax Payer where proceedings or other particulars before them indicate that some refund or relief is due to him. The circulars issued by the CBDT are binding on the Income-tax Authorities under section 119(1) of the IT Act. 22. We find that Hon ble Madras High Court dealt on the issue of considering fresh claim made outside of the Return of Income filed in the case of CIT vs Abhinitha Foundation (P.) Ltd [2017] (83 taxmann.com 100) and held that the claims made by the Tax Payer which does not form part of the original return or even revised return; can still be considered by the Assessing Officer as well as ITAT if the genuine material is available on record and observed as under :- The power of entertaining the claim vests with the Appellate Authorities based on the facts and circumstances of the case. The power of the Appellate Authorities to consider claims made based on material already on record is co-terminus with the power of the Assessing Officer. The failure to advert to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and loss account is not the profit as per the profit and loss account. It is profit as stated to be, in the computation of income by the assessee- though wrongly, the profit as per profit and loss account, but clearly at variance with the profit and loss account on the assessment record. Clearly, the Assessing Officer did not even apply his mind to the material on record. He did a simple cut and paste job from the statement of taxable income filed by the assessee. The starting point of his computation of income was incorrect, he accepts it but still fights shy of giving effect to the natural corollaries of discovering this mistake. If there is a mistake, it is to be rectified. There cannot be any justification of Assessing Officer s inertia in this respect. The same is the position with respect to the depreciation figure, and the same is the stand of the Assessing Officer. 9. A lot of emphasis is placed on the fact that the mistake was committed by the assessee himself which has resulted in the error creeping in the assessment order as well. Instead of being apologetic about the complete non application of mind to the facts and making a mockery of the scrutiny assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance to the field officers. The best thing that the field officers can do to enhance the respect for and trust in the Department, is to follow these valuable words of advice in letter and in spirit, but then, sometime overzealous, even if well meaning, efforts to collect the revenue end up sacrificing these humane niceties on the way, and thus derail the efforts of the CBDT to earn taxpayer s confidence and trust. That must not be allowed to happen. An action or inaction which erodes any taxpayer s faith in Indian tax and judicial system does not do any of us any good. The well meaning advice given by the CBDT must be implemented to the fullest extent. As to what is binding nature of this advice, we may only refer to s. 119 of the Act and Hon ble Supreme Court s judgment in the case of UCO Bank vs. CIT [(1999) 237 ITR 889 (SC)]. Hon ble Supreme Court has time and again held that the circulars of the CBDT are legally binding on the Revenue and that this binding character attaches to the circular even if they be found not in accordance with the correct interpretation of section or they depart or deviate from such construction. The advice contained in the circular, which is reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income Tax Act reads as under :- Residence in India. 6. For the purposes of this Act,- (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in 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. 26. In the present case, the contention of the ld. AR is that the assessee is NRI and that the salary income was wrongly offered in the return of income and if such salary income is excluded from the total income, as the assessee has stayed for 181 days in India, the income received by the assessee which accrued to him outside India during such year, does not fall under the scope of total income and referred to section 5(1)(c) of the Act, which is as under :- Section 5(1)(c) of the Income- Tax Act, (1) Subject to the provisions of this Act, the total income of any previous year of a person who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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