TII Instant Update - 2017-TII-INSTANT-ALL-480

CASE LAWS

2017-TII-45-HC-MUM-NRI

PRASHANT M TIMBLO Vs CCIT: BOMBAY HIGH COURT (Dated: July 25, 2017)

Income Tax - NRI - Sections 142(1), 143(1)(a), 143(2), 143(3) & 148 - India-UAE DTAA - Article 4(b).

Keywords - Change of opinion - DTAA - Rre-opening of assessment & Tax Residency Certificate.

Whether when the law itself did not mandate production of a tax residency certificate for claiming benefits under the DTAA, any fault can be found with the assessee - NO: HC

Whether when the assessee has produced all the relevant documents to establish his NRI-status and the same was also accepted by the Revenue, even then the assessment can be reopened on the same issue - NO: HC

The Assessee, an NRI, filed his return declaring a total income of Rs.55,37,400/-. During the assessment, the AO asked the assessee to explain the difference in interest income shown in the returns. The assessee was also asked to file copies of his passport and a computation of the number of days he was abroad. Table giving total number of days spent by him outside the Country was submitted. In the meanwhile, the Asst. Commissioner of Income-tax issued another show cause notice under Section 143(2) of the Act, calling upon the assessee to appear before him. Accordingly, necessary details were submitted by the assessee. Thereafter, by another show cause notice issued under Section 143(2), the Revenue once again called upon the assessee to appear before him. Subsequently, the assessment was concluded u/s 143(3) with the AO not making any addition. Later, a notice u/s 148 was issued by Dy. Director of Income-tax which was challenged by the Assessee.

In a writ, the High Court held that,

++ the only reason which led to reopening of the assessment is because the Tax Residency Certificate or any other details were not supplied by the Assessee. It is to be noted that the requirement to produce the Tax Residency Certificate was introduced in the Finance Act, 2012 with effect from 1st April, 2013. The present proceedings are in connection with the A.Y. 2005-06 and there was no need of producing such certificate as on that date. Besides that, the requirement of stay in UAE for a period of six months, has been introduced in Article 4(b) of the amended DTAA between Indian and UAE which came into effect only from 28/11/2007. As already pointed out, the subject A.Y. is 2005-06 and, as such, the question of applying the said requirement for the subject assessment would not at all arise. In fact, it was pointed out that the details of residence were being sought to examine whether the Assessee would meet the requirement as provided in the DTAA between India and UAE. The Assessee had disclosed that he was governed by the DTAA with UAE. It further discloses that details called for have been furnished and placed on record. The passport also was produced to establish the number of days the Assessee was abroad to qualify to be a Non-Resident. In such circumstances, it cannot be said that the Assessee had not disclosed the fact to show that he was entitled for the benefits of DTAA with UAE and that for such qualification, the AO had called upon to produce the passport;

++ we find that there are no specific reasons recorded what was the material which was not truthfully disclosed. As pointed out, the fact that the Assessee was claiming the benefit of the DTAA between India and UAE would clearly disclose that at the relevant time the requirement of period of residence in UAE was not necessary. Whilst completing the regular assessment the queries sought by the AO were answered by the Assessee and accordingly, being satisfied, the regular assessment came to be completed. In this background, whilst the action on the part of the Revenue is a change of opinion, it cannot be the reason for reopening the assessment u/s 148. We find that the question of reopening the assessment under Section 148 of the said Act would not at all be justified. Considering the view that we have taken on the aforesaid aspect, the contention of the Senior Counsel that the Dy. Director of Income-tax had no jurisdiction or that the proceeding itself is barred by limitation need not be gone into in the present petition.

Assessee's writ allowed