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TMI Blog2019 (10) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... ad rightly concluded that the interest on FCNR-B deposits was not assessable in the hands of the appellant. The deposit belonged to Dr Asha, the daughter of the appellant and the appellant had only survivor rights in the deposit. He had no operational rights . The Principal Commissioner of Income Tax should have appreciated that the applicability of FEMA was to be looked into the Reserve Bank of India and not by the Income Tax department . The NRE status of the deposit would only affect the taxability of the interest in the hands of the depositor who in this case was the daughter of the appellant and not the appellant who had only survivor benefits. Even if for arguments' sake it is accepted that the AO had not applied her mind in this particular issue, there was no error in the order as under no circumstances could the interest accruing the daughter of the appellant could be included in the hands of the appellant irrespective of the NRE status of the deposit. 3. The issue of taxability of interest on FCNR-B deposits held by the daughter of the appellant had already been considered by the Commissioner (Appeals) and hence the Principal Commissioner of Income Tax, had no ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is not permissible". 3.1 The PCIT observed that while giving effect to the Hon'ble ITAT's direction, the additions made vide order u/s 143(3) r.w.s. 147 had been deleted from the total income by accepting the details furnished by State Bank of India (NRI Branch), Thiruvananthapuram affirming that resident individual can be made joint to FCNR(B)/NRI SB account in former or (survivor) mode operation as per RBI notification RBI/201M2/174, A.P(DIR series) Circular No.13 dated 15.09.2011 and therefore, there is no tax liability on interest earned for any of the account holders. But the notification is seen issued on 15.09.2011, which is not retrospectively applicable to assessments relating to F.Y. prior to 2011-12. The circular stating that "NRI may be permitted to open NRE/FCNR(B)__account with their resident close relative " would apply only from F.Y.2011-12 which would imply that there would be no tax liability on 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d NRI accounts and that as per Section 263(1) "where any order passed by the Assessing Officer has been the subject matter of any appeal, the power of the Commissioner of Income tax would extent only to such matters as had not been considered and decided in appeal. According to the PCIT, the ITAT had only admitted additional evidences and hence restored the matter to the Assessing Officer. After considering the evidences, the Assessing Officer had passed orders u/s 143(3) r.w.s. 254 on 11.05.2017 and since there was a mistake in the Assessment Order, the PCIT considered this order as erroneous and prejudicial to the interest of the revenue. 3.2 The PCIT also examined the assessment records of the assessee and found that the assessment was completed by the Assessing Officer without due verification and application of mind in the manner 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263, where any order passed by the AO had been the subject matter of any appeal, the power of the Commissioner would extend to such matters as has not been considered and decided in such appeal. The matter of taxability of interest on FCNR(B) and NRE SB account with State Bank of India , NRE Branch, was already subject matter of an appeal before the Commissioner(Appeals) which was considered and decided by him and hence, the jurisdiction of the Commissioner, does not extend to this matter as per the above explanation. 4.1 The Ld. AR relied on the judgment of the Supreme court in the case of CIT vs. Alagendran Finance Ltd. (293 ITR 1) (SC) and also the decision of the Chandigarh Bench of the Tribunal in the case of Haryana State Co-operative Supply And Marketing Federation 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or primary account holder. The mere re-designation of the account does not change the ownership of the deposit and the interest is always taxable in the hands of the primary account holder. Thus, it was submitted that the order of the Commissioner is without any basis and is not sustainable. 4.3 The Ld. DR strongly relied on the order of PCIT cited supra. 5. We have heard the rival submissions and perused the record. Section 263 of the Income-tax Act seeks to remove the prejudice caused to the revenue by the erroneous order passed by the Assessing Officer. It empowers the Commissioner to initiate suo moto proceedings either where the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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