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TMI Blog2005 (2) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... n or deemed intimation u/s 143(1). But such power has to be seen in the light of powers conferred u/s 143(1). The returns were processed u/s 143(1) on 28-3-2000. Provisions of section 143 have been drastically amended by the Finance Act, 1999 w.e.f. 1-6-1999. Highlights of these amendments are that powers of the Assessing Officer to make adjustments u/s 143(1)(a) and consequent levy of additional tax u/s 143(1A) have been taken away. Since the action of the Assessing Officer for withdrawing exemption of interest u/s 10(4) of the Act falls outside the scope of powers conferred u/s 143(1), the Assessing Officer had no jurisdiction to pass orders u/s 154(1)(b). Even if the assessee had agreed before the Assessing Officer due to wrong appreciation of law, such agreement would have not made the illegal orders as legal because the Assessing Officer had no authority or jurisdiction to do so. Therefore, such orders are bad in law and void ab intio and deserve to be quashed on this ground itself. In the present case, returns were filed on 31-12-1998 and 15-12-2000. Therefore, the time limit for issue of notices u/s 143(2) expired before 31-12-2001. The present orders u/s 154 have been passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 the orders of CIT(A). It was submitted before the CIT(A) that assessee had agreed before the Assessing Officer under wrong appreciation of law. It was contended before the CIT(A) that interest had accrued in the amount represented by foreign currency and in the case of a non-resident after his return from abroad, his status for the next 8 years would be resident but not ordinarily resident under section 6(6) of the Income-tax Act, and, therefore, the assessee would be entitled to exemption on the interest income under section 10 of the Income-tax Act, 1961. Reliance was also placed on the judgment of Hon'ble Gujarat High Court in the case of Rambhai L. Patel v. CIT [2001] 252 ITR 846. During the course of appeal proceedings, the assessee also filed copies of the passport alongwith copies of bank account where N.R.I. account was opened on the basis of which the interest income was claimed under section 10(4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls 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 abroad in July, 2001. After a stay of about fortnight, returned to India. He submitted that assessee opened N.R.E. Account and deposited amounts in fixed deposits. Interest earned thereon was claimed exempt under section 10(4) of the Income-tax Act. He submitted that authorities below have wrongly interpreted the provisions of section 10(4) inasmuch as they considered the residential status as per provisions of the Income-tax Act instead of considering the same under the Foreign Exchange Regulation Act (In short FERA), 1973. He drew my attention to sub-section (4) of section 10 as per which interest on amounts standing to the credit in a non-resident (External) account in any bank in accordance with the FERA, and the Rules made thereunder is exempt. He further drew my attention to provisio to section 10(4) of the Act as per which such person should be resident outside India as defined in clause (q) of section 2 of the said Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 provisions of section 154(1)(b), the Assessing Officer was vested with the powers to rectify any intimation or deemed intimation. In exercise of such powers, the Assessing Officer has rightly rectified the orders. Thus, he submitted that orders of CIT(A) do not merit any interference. 6. I have heard both the parties at some length and given my thoughtful consideration to the rival submissions. I have also examined the facts, evidence and material on record. In fact, the assessment records were called for from the Income-tax Department and examined. In the returns of income filed assessee had claimed exemption in respect of interest on FDRs in non-resident (External) account under section 10(4) of the Income-tax Act. In the returns the assessee had also shown the residential status as 'Resident'. Now the provisions of clause (ii) of sub-section (4) of section 10 read as under: "Clause (ii) in the case of an individual, any income by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility 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 Assessing Officer. This is not a case of G.P. addition or addition on account of cash credit where there could be two possible views. It is a case, which involved allowing of exemption under section 10(4) where only one view is possible. Assessee is either entitled to exemption or not entitled. Therefore, the judgment of Hon'ble Punjab Haryana High Court in the case of Banta Singh Kartar Singh v. CIT [1980] 125, ITR, 239 has been cited by the CIT(A) out of context. If the assessee is entitled to such exemption, the same should not be denied to him simply because he had agreed before the Assessing Officer on account of wrong appreciation of law. The certificate of the Bank, which indicated that money kept in the NRE account was as per guidelines of Reserve Bank of India, went to the very root of the issue. The CIT(A) has inherent powers to admit such evidence under Sub Rule 4 of Rule 46A of the Income-tax Rules. This would have helped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 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) would need be sent to the assessee. The Assessing Officer has not been conferred any other powers to make any adjustments for disallowing or allowing any claim to the assessee. Thus, powers conferred under section 154(1)(b) for rectification of intimation or deemed intimation have to be considered in the light of powers conferred under section 143(1). If the Assessing Officer is not vested any authority to make adjustments or disallowing the claim of the assessee under section 143(1), he cannot do so under section 154(1)(b) of the Income-tax Act. Therefore, the issue whether there is a mistake in the intimation or deemed intimation is to be seen in the light of powers conferred under section 143(1). If such powers do not exist under section 143(1), i.e., the main section, such powers cannot be conferred under section 154(1)(b). Section 154(1)(b), cannot be pressed into service for making adjustment of the nature mentioned under section 143(1)(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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