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TMI Blog2002 (9) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... set out hereunder : "Residential status of the assessee : 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the authorities functioning under the provisions of the said Act to discharge their functions in accordance with the provisions of the said 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 "n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot; of India. The learned advocate for the respondents argued that under the provisions of sections 143(2), 142(1) and 142(2) of the said Act the Assessing Officer is under 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, gl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u 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. Furthermore, you have taken shelter of Explanation (b ) to section 6(1)(c). It is to remind you that the particular explanation will apply to a person who comes on a visit to India. This Explanation, if at all, could have applied only in one year i.e., previous year 1989-90. The 'visitor' as understood in a common parlance is a person who goes or comes to see (person or place) as act of friendship or on ceremony of for curiosity. Having accepted this definition of visitor it is very difficult to treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 companies of U.B. Limited and the group of companies You are required to furnish details of export of various produce like Bear and other IMF liquor by your various Breveries & Distilleries for the two years under consideration. You are also required to show the claim of deduction under section 80HHC made by those companies in the IT Returns in those years and to prove the remittance of foreign exchange on account of the export made in those years. These details covering total amount of export amount remitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 explanation (a) to section 6(1)(c) and therefore, the permissible period of stay was only 90 days." 10. It is an admitted case that the writ petitioner has filed returns and notices under section 143(2) of the said Act have been issued in respect of the assessment years 1992-93 and 1993-94. 11. The learned senior advocate for the writ petitioner argued that in the aforesaid three notices the residential status of the writ petitioner has been finally determined by the Assessing Officer though no final order of assessment has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 calling upon an assessee to produce any document, the ITO must be satisfied that such a document would be needed for the purpose of making the assessment or in other words the document must have its bearing on the pending assessment, and, secondly, that he requires the document to be so produced for the purpose of making the assessment. To fulfil these requirements it is quite obvious that the ITO must apply his mind because without such application of mind he can never arrive at any bona fide satisfaction on the two points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary). 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 making of the order would be held to be non-existent. 16. A necessary corollary of what has been observed above is that mind had to be applied with regard to the necessity to obtain and examine all the documents mentioned in the order. An application of the mind with regard to the necessity to obtain and examine only a few of the many documents mentioned in the order, while there has been no such application of mind in respect of the remaining documents would not be sufficient compliance with the requirements o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nection 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 accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-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. Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 detailed information I am of the view that these three notices clearly show that the Assessing Officer has complied with the requirements laid down in Barium Chemicals Ltd.'s case (supra) and Grindlays Bank Ltd.'s case (supra). I am of the view that the Assessing Officer acted within the four corners of his power and jurisdiction and did not travel beyond his jurisdiction. 18. In view of the discussions made hereinabove I am of the view that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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