TMI Blog2005 (2) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... st on FDRs in Non resident-External Account amounting to Rs. 7,050, Rs. 1,29,927, Rs. 2,48,888 and Rs. 2,94,198 for the assessment years 1997-98, 1998-99, 1999-2000 and 2000-01 respectively as exempt under section 10(4) of the Income-tax Act, 1961. The Assessing Officer processed the returns under section 143(1) under the amended provisions of section 143(1) effective from 1-6-1999 and allowed the exemption in respect of interest on FDRs in NRE account under section 10(4) of the Act. Thereafter, the Assessing Officer issued show-cause notices under section 154 for all the assessment years proposing to add the interest on FDRs in Non resident External Account on the ground that status shown in the Returns was Resident and, therefore, interest was not exempt under section 10(4) of the Income-tax Act. In response to such notices, the assessee alongwith his counsel attended before the Assessing Officer and agreed that assessee was not entitled to exemption under section 10(4). Accordingly, the Assessing Officer added the interest to the total income vide his orders dated 14-2-2002 passed under section 154 of the Income-tax Act. 3. Being aggrieved, the assessee filed appeals against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard. It was not the case where the Assessing Officer has refused the additional evidence, which ought to have admitted, or the Assessing Officer has made order appealed against without giving sufficient opportunity to the appellant to adduce the evidence. On the other hand, the appellant has not been able to point out any sufficient cause because of which he was prevented from producing the evidence before the Assessing Officer. In fact during the course of appellate proceedings, no request was made for admission of additional documentary evidence. Therefore, it is not possible to admit the same because it has not been established that there were unavoidable circumstances due to which the same could not be furnished before the Assessing Officer. In view of these facts, the action of the Assessing Officer in taxing the interest income is confirmed." Assessee is aggrieved by the orders of CIT(A). Hence, these appeals before us. 4. The learned counsel for the assessee reiterated the submissions before the authorities below. It was submitted that assessee left India in 1980 and joined Employment in Germany, Married German national and came to India in 1995. He again went abroa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.) Ltd. [1997] 228 ITR 463 where it was held that rectification is not possible, if the question is debatable and the point, which was not examined on fact or in law, cannot be dealt with as a mistake apparent from the record. He further relied on the decisions of various High Courts in the cases of CSTv. Motwane (P.) Ltd. [1992] 84 STC 377 (Bom.), Master Construction Co. (P.) Ltd. v. State of Orissa [1996] 17 STC 36 (SC), CIT v. Harnandrai Shrikishan Akodia [1966] 61 ITR 57 (MP) and Nirmala Udhyog v. CIT [1998] 232 ITR 493 (MP). He submitted that in this case, mistake was not apparent from record and it could have not been determined without calling for further details and investigation. Therefore, the same fell outside the scope of provisions of section 154 of the Income-tax Act. 5. The learned DR, on the other hand, relied on the orders of authorities below. He submitted that as per provisions of section 139, the assessee is required to file return in the prescribed form and is also required to be verified. In the return the assessee is also required to indicate the residential status, which in the present case was shown as Resident. He further submitted that as per provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of India. Thus, on the basis of returns and documents accompanying the returns it could not be said that assessee was not entitled to exemption under section 10(4) of the Act. 7. The learned CIT(A) has upheld the orders of Assessing Officer on the ground that assessee agreed before the Assessing Officer and further declined to admit fresh evidence in the form of bank certificate which indicated that amounts kept in the NRE Account was as per Reserve Bank of India's guidelines. I think the approach on the part of CIT(A) was more technical than showing any concern for imparting justice to the assessee. It is settled position under the law that powers of CIT(A) are co-terminus with the Assessing Officer. He can do what an Assessing Officer can do. He is also vested with powers of enhancement of income. The Appellate proceedings are extension of assessment proceedings as these aim at determining the correct income and correct tax liability of the assessee for a particular assessment year. If the assessee had agreed before the Assessing Officer because of wrong appreciation of provisions of law, doors should not be closed for him for the simple reason that he had agreed before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) If any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee. Provided that except as otherwise provided in this sub-section, the acknowledgement of the return shall be deemed to be an intimation under this sub section where either no sum is payable by the assessee or no refunds is due to him. Provided further that no intimation under sub-section shall be sent after the expiry of (one year from the end of the financial year in which the return is made:)" A bare reading of the aforesaid provisions shows that now the Assessing Officer, on the basis of return filed, can determine the tax and interest, if any payable by the assessee after allowing credit for TDS and pre-paid taxes and send the intimation specifying therein the sum so payable. In case any refund is due on the basis of such return, Assessing Officer shall grant the refund and send the intimation to the assessee. It is only if any tax is payable or refund is due to the assessee, intimation under section 143(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by the Reserve Bank of India to keep the deposits in NRE Account was highly debatable, contentious and where two views were possible. In any case, the same could have not been determined without calling for further details and making further enquiries, which are, not permitted under section 154(1)(b). Therefore, I am of the opinion that Assessing Officer exceeded his powers and jurisdiction in passing the orders under section 154 for withdrawing the exemption in respect of interest on deposits kept in NRE Account. Such powers are vested with the Assessing Officer under section 143(2). However, the time limit for issue of notice as prescribed in the Act is 12 months after the end of month in which return is filed. In the present case, returns were filed on 31-12-1998 and 15-12-2000. Therefore, the time limit for issue of notices under section 143(2) expired before 31-12-2001. The present orders under section 154 have been passed on 14-2-2002 i.e., after the expiry of time limit of issue of notices under section 143(2). In any case, section 154 cannot be substituted for issue of notices under section 143(2). 10. Thus, in the light of detailed discussions in the preceding par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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