Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 1996-97 - Where assessee by mistake had offered interest income on FCNR deposits to tax and subsequently it filed revision application for exclusion of said exempt income, Commissioner was not justified in dismissing said application merely on ground that it was assessee who had shown said income to be his income [In favour of assessee] The assessee being not ordinary resident in India was entitled to exemption of interest on the FCNR deposits under the provisions of section 10(15)(iv)(fa) at the relevant time but by mistake, he had offered the said amount for tax. However, upon noticing the error committed by him, the assessee had filed the revision application under section 264. The Commissioner turned down the application mainly on the ground that it could not be the assessee's case that he was not aware of the exemption under section 10(15)(iv)(fa) despite which, he had disclosed the income. Held that it was an undisputed position that the income in the nature of interest earned on the FCNR deposits held by a person 'not ordinary resident in India' is exempt under section 10(15)(iv)(fa). If the assessee had made a mistake while filing the return, it was for the Assessing Officer to assist the assessee by pointing out the said mistake to him and ensuring that he was taxed only in respect of the income which was chargeable to tax. However, that having not been done, once the assessee had approached the Commissioner under section 264, the Commissioner was required to apply his mind to the facts of the case as to whether the assessee was entitled to the relief prayed for in the application under section 264. The Commissioner was not justified in dismissing the said application merely on the ground that it was the assessee who had shown the said income to be his income for the year under consideration. CASES REFERRED TO S.R. Koshti v. CIT [2005] 276 ITR 165 / 146 Taxman 335 (Guj.), Ramdev Exports v. CIT[2001] 251 ITR 873 /[2002] 120 Taxman 315 (Guj.), C. Parikh & Co. v. CIT [1980] 122 ITR 610/ 4 Taxman 224 (Guj.) and Pradip J. Mehta v. CIT…

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