2018 (2) TMI 976 - AT - Income Tax

Rectification of mistake - mistake apparent from records - determination of the residential status of the assessee for period under consideration - Unit Trust of India ( which is claimed to be government documents by the assessee) application forms/ receipts filed by the assessee w.r.t. subscription of US 64 securities issued by UTI in July 1995 which were subscribed by the assessee wherein the assessee declared herself to be Non Resident in the application form - Held that - To determine the residential status of the assessee from the point of view of the 1961 Act, it is essential to know the period of stay outside India of an individual as is required under the provisions of Section 6 of the 1961 Act r.w.s. 2(30) which we are afraid that this document does not throw any light to conclude that the assessee was non-resident during the relevant period and had satisfied the conditions of being out of India for stipulated period(s). These documents are merely in the nature of self declaration and are not conclusive to determine residential status of the assessee as required under the provisions of 1961 Act. These are the documents for making investments in UTI in the US 64 securities offered by UTI for which self declaration by the assessee could be sufficient but to establish the residential status in India of the assessee from the view point of the 1961 Act , the assessee has to prove through cogent evidences such as passport to prove her stay outside India for stipulated period as per conditions stipulated u/s 6 of the 1961 Act. Scope of provisions of Section 254(2) is restricted to correction of the mistakes apparent from record and wherein in the instant case a conscious decision was taken by the DB of Tribunal which is not shown by the assesee to be a perverse view not sustainable in the eyes of law , and hence the same is not amenable to corrections within limited mandate of provisions of Section 254(2). Thus this contention of the assessee lacks merit and is hereby rejected. The assessee did not submit passport for relevant period nor any bank statements were submitted and it was claimed that bank statement and passport was lost. The tribunal has duly deliberated on these issues in its order in details and came to conclusions after due application of mind and the said view of the tribunal is not shown to be a perverse view dehors material on records and hence in our considered view there is no mistake apparent from records in tribunal order dated 17-03-2017 which is amenable to correction within limited mandate of provisions of Section 254(2) - Decided against assessee.

Summary

Issues Involved:
1. Recall of ITAT order dated 17-03-2017.
2. Validity of invoking Section 263 by Pr. CIT.
3. Adequacy of enquiry and verification by AO.
4. Determination of residential status under Section 6 of the Income-tax Act, 1961.
5. Relevance of documents submitted by the assessee.
6. Scope of Section 254(2) for rectifying mistakes apparent from the record.

Issue-wise Detailed Analysis:

1. Recall of ITAT order dated 17-03-2017:
The assessee filed a Miscellaneous Application (MA) seeking recall of the ITAT order dated 17-03-2017. The Tribunal dismissed the appeal filed by the assessee for the assessment year 1996-97, upholding the Pr. CIT's invocation of Section 263. The Tribunal found no merit in the MA, stating that the order was passed after due application of mind and all relevant contentions were considered.

2. Validity of invoking Section 263 by Pr. CIT:
The Pr. CIT invoked Section 263, citing that the AO accepted the assessee's non-resident status without proper enquiry or verification. The Tribunal upheld this invocation, noting that the AO's order was erroneous and prejudicial to the interests of the Revenue. The AO failed to verify the assessee's residential status and the existence of a bank account in Switzerland.

3. Adequacy of enquiry and verification by AO:
The Tribunal observed that the AO did not conduct any enquiry or verification regarding the assessee's residential status or the bank account in Switzerland. The AO accepted the assessee's contentions without any supporting evidence, leading to an erroneous assessment order. The Tribunal emphasized that the AO's complete lack of enquiry vitiated the reassessment.

4. Determination of residential status under Section 6 of the Income-tax Act, 1961:
The Tribunal highlighted that the determination of residential status under Section 6 requires evidence of the period of stay outside India. The assessee failed to provide her passport or any other cogent evidence to prove her non-resident status. The Tribunal rejected the self-declaration documents submitted by the assessee, stating they were insufficient to establish her residential status under the Income-tax Act, 1961.

5. Relevance of documents submitted by the assessee:
The assessee claimed that the Unit Trust of India (UTI) application forms and receipts, where she declared herself as a non-resident, were sufficient to establish her non-resident status. The Tribunal rejected this claim, noting that these documents were self-declarations and did not provide conclusive evidence of her residential status as required under the Income-tax Act. The Tribunal emphasized the need for cogent evidence, such as a passport, to determine the residential status.

6. Scope of Section 254(2) for rectifying mistakes apparent from the record:
The Tribunal clarified that the scope of Section 254(2) is limited to correcting mistakes apparent from the record. The Tribunal found no mistake in its earlier order that warranted correction under Section 254(2). The Tribunal stated that the assessee's contentions lacked merit and did not demonstrate any perverse view or unsustainable decision in the earlier order.

Conclusion:
The Tribunal dismissed the MA filed by the assessee, upholding the Pr. CIT's invocation of Section 263 and the validity of the reassessment order. The Tribunal emphasized the necessity of proper enquiry and verification by the AO and the insufficiency of self-declaration documents to establish residential status under the Income-tax Act, 1961. The Tribunal also clarified the limited scope of Section 254(2) for rectifying mistakes apparent from the record.