TMI Blog2019 (10) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... tated 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 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he daughter of the appellant had already been considered by the Commissioner (Appeals) and hence the Principal Commissioner of Income Tax, had no jurisdiction to revise this issue as the matter had already merged with the order of the Commissioner of Appeals. As per s. 263(1) the power of the Principal Commissioner of Income Tax to revise an assessment u/s 263 would extend only to such matters as had not considered and decided in appeal by the Commissioner (appeals). 4. The AO has to exercise the powers of assessment judiciously and shall not complete an assessment as directed by any superior including the Principal Commissioner of Income Tax. The learned 'rincipal Commissioner of Income Tax has no authority to direct the AO to complete the assessment in a particular manner. In a proceedings u/s 263 he can at best explain the position of law in the given facts of the case and direct the AO to complete the assessment as per the provisions of law. The order of the Principal CIT directing the AO to tax the interest amount in the hands of the appellant is not sustainable. 3. The facts of the case are that the PCIT on perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest earned for any account holder including the assessee in respect of the period from F.Y.2011-12 onwards. The PCIT found that the details furnished by the banks while giving effect to the ITAT's direction also averred that the above notification dated 15.09.2011, NRIs were not permitted to entitle joint FCNR(B)/RNE account with resident. Hence, the following schematic courses of action should have been taken for the period prior to the F.Y. 2011-12. The Authorised Dealer (SBI) should have i) Redesignated the NRE account as a resident account ii) Delete the name of the assessee in the NRE account. It was observed that in both the scenarios, only the primary account holder of the FCNR-B NRI SB account Smt Asha B Nair had the liability to be taxed. In both the cases, the above scenario had not been followed by the State Bank of India, as in the prevailing situation, account would remain an NRE account and the assessee being the joint account holder in former or survivor' mode of operation, would also be liable to be assessed on any interest accruals. The State Bank of India ought to have resorted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it ought to be, resulting in an order erroneous and prejudicial to interests of revenue. The PCIT relied on the judgments of the Gauhati High Court in the case of CITVs. Jawahar Bhattacharjee (2012) 341 ITR 434 (Gau.)(FB) and the High Court of Delhi in the case of Toyoto Motor Corporation 306 ITR 49 wherein it was held that The order passed by the Assessing Officer should be a self-contained order giving the relevant facts and reasons for coming to the conclusion based on those facts and law. Thus, the PCIT set aside the assessment order with a direction to the Assessing Officer to verify, requantify and tax the interest amounts accrued which were wrongly not taxed in the earlier assessment order after giving appropriate opportunity of being. 4. Against this, the assessee is in appeal before us. The ld. AR submitted that the assessment was originally completed u/s 143(3) read with section 147 on 17.04.2015. At the time of completion of the original assessment, the Assessing Officer, inter-alia, made an addition of ₹ 4,13,134/- being the interest on FCNR(B) account and NRE Savings Bank account, maintained with State Bank of India, NRI Branch, Trivandrum. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Ltd. vs. Deputy CIT (274 ITR (AT) 167). It was submitted that it is now well settled that the powers of the Commissioner under s.263 extends only to such matters as had not been considered and decided in the order passed in appeal. It was submitted that the subject matter of the appeal before the Commissioner (Appeals) consisted of taxing the interest on FCNR-B and NRE SB accounts with NRI branch of SBI, Trivandrum, in the hands of the assessee and the Commissioner (Appeals) had considered and given his findings in his appellate order. Hence, it was contended that this particular matter has already been merged in the order of the Commissioner (Appeals) and in view of explanation (c) to s.263(1), the Commissioner would not have any jurisdiction to invoke the provisions of s.263 to revise the order on this matter. The Ld. AR relied on the third member decision of the Agra Tribunal in the case of SK Jain Vs Commissioner of Income Tax ( 127 ITD 217)(Agra) which was based on the decision of the Supreme court in the case of CIT vs. Shri Arbuda Mills Ltd ( 231 ITR 50)(SC). 4.2 It was submitted that the PCIT had himself in his order mentioned as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer takes a wrong decision without considering the materials available on record or he takes a decision without making an enquiry into the matters, where such inquiry was prima facie warranted. The Commissioner is well within his powers to treat an order as erroneous on the ground that the Assessing Officer should have made further inquiries before accepting the wrong claims made by the assessee. The Assessing Officer 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. The Assessing Officer was statutorily required to make the assessment under Section 143(3) after scrutiny and not in a summary manner as contemplated by Sub-section (1) of Section 143. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. The Assessing Officer should protect the interests of the revenue and to see that no one dodged the ..... 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