JUMTA HANKAR,UPPER SUBANSIRI vs. ITO, WARD-NORTH LAKHIMPUR, NORTH LAKHIMPUR

Brief facts of the case are that the assessee is an individual and had filed the return of income for AY 2022-23 on 15.11.2022, showing total income of ₹5,450/- and claimed a refund of ₹1,07,650/-. The case was selected for scrutiny under Computer Assisted Scrutiny Selection (in short 'CASS') for the reason of large deduction claimed u/s 57 of the Act and the amount paid/credited as per Form 26AS being more than the receipts shown in the return of income. Consequently, statutory notices u/s 143(2) and 142(1) of the Act were issued, followed by multiple show-cause notices; however, the assessee remained entirely non-responsive to all the communications. Therefore, the Assessing Officer (hereinafter referred to as Ld. 'AO') proceeded to complete the ITA No(s). 122/GTY/2026 Assessment Year(s) 2022-23 assessment ex-parte u/s 144 r.w.s. 144B of the Act. During the assessment proceedings, the Ld. AO observed that the assessee had admitted ₹1,93,83,022/- as income from other sources and claimed the exact amount as a deduction u/s 57 of the Act, whereas on a perusal of Form 26AS and GSTR-3B, it was noted that this was the turnover of the business. Therefore, a sum of ₹ 1,93,83,022/- was added as business receipts. Furthermore, the Ld. AO found that an amount of ₹73,57,997/- credited by the Executive Engineer PHE & W/s Division and EE PWD RAGA was not shown in the return of income, resulting in a corresponding addition of ₹73,57,997/-. Additionally, the Ld. AO disallowed the assessee's claim for exemption of income of ₹17,55,350/- u/s 10(26) of the Act due to the lack of documentary evidence and explanation and determined the total income of the assessee at ₹2,84,96,369/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) with a delay of 579 days, which the Ld. CIT(A) condoned after finding the explanation of prolonged health issues to be justified and the same being a reasonable cause. On merits of the case, the Ld. CIT(A) noted that despite being given multiple opportunities through notices issued u/s 250 of the Act, the assessee failed to comply, submit any details, or present any evidence to substantiate the claims made in the grounds of appeal. The Ld. CIT(A) concluded that the assessee failed to discharge the onus and had no evidence to controvert the detailed findings recorded by the Ld. AO. Accordingly, the Ld. CIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. The Bench noted that the assessee had declared ₹1,93,83,022 as "Income from Other Sources" and simultaneously claimed the exact same amount as a deduction under Section 57 of the Income-tax Act, effectively neutralizing it. Cross-verification with Form No.26AS and GSTR 3B revealed that this amount actually represented business turnover. The Ld. AO issued show-cause notices asking the assessee to explain why the amount should not be treated as business income. Due to the lack of explanation and response, the Ld. AO rejected the assessee's classification and added the full amount of ₹1,93,83,022/- to the total returned income as "business receipts." No deduction was allowed as an expenditure even though the amount had been treated as business turnover. The AO made another ex parte addition of approximately ₹ 73.57 lakhs because the assessee failed to report contract receipts reflected in their Form No. 26AS and subsequently ignored the show-cause notices asking for an explanation. The Assessing Officer (AO) noted that the assessee failed to furnish any documentary evidence to prove their Scheduled Tribe status. Furthermore, the assessee did not respond to the show-cause notices asking them to justify the exemption. Due to the complete absence of proof and explanation, the AO disallowed the exemption and added the amount back to the returned income. However, there is error in the Ld. AO's concluding sentence. The text states: "In the absence of response and explanation, an amount of Rs.73,57,997/- is added..." inadvertently repeating the figure from the previous contract receipt addition. However, the final bracketed addition for this specific ground correctly reflects [Rs. 17,55,350/-]. The additions were confirmed by the appellate authority and it is alleged that adequate opportunity was not ITA No(s). 122/GTY/2026 Assessment Year(s) 2022-23 provided by the appellate authority. The Ld. AR requested that the matter may be remanded to the Ld. AO as the assessee has sufficient evidence for the exemption claimed, and the fact that the receipts represented business receipts and the expenditure claimed was justified. The assessee has filed a detailed paper book which was neither filed before the Ld. AO but is claimed to be filed before the Ld. CIT(A) and has requested that the matter may be remanded to the Ld. AO so that the exemption claimed can be allowed. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). We find that the assessee, despite being provided sufficient opportunities of being heard before the Ld. CIT(A), did not present in the appellate proceedings and therefore, cannot agitate on account of violation of the principles of natural justice. The assessee claims that the income is exempted under section 10(26) of the Act as the same was earned in Arunachal Pradesh and such a claim was made before the appellate authority but was denied on account of non-prosecution of the appeal. Even the assessment order is ex parte. However, in the interest of justice and so as to grant the assessee adequate opportunity to substantiate the claim of exemption, the Bench was of the view that one more opportunity may be provided to the assessee so as to substantiate the claim that the income is exempt. Thus, the order of the Ld. CIT(A) is set aside and the issues in this appeal are restored to the file of the Ld. AO for re-adjudication and framing of the assessment de novo after granting an opportunity of being heard to the assessee and subject to the cost of ₹ 5,000/- (Rupees Five Thousand) only as there was non-compliant at both the assessment as well as at the appellate stage, which shall be payable to the Revenue under the relevant head within sixty days from the date of this order and to produce the challan as a proof for the payment of the same before the Ld. AO at the first hearing. Should the assessee not pay the abovementioned cost within the prescribed period of sixty days from the date of this order, the order of the Ld. CIT(A) shall stand confirmed. Hence, the Grounds of appeal are partly allowed for statistical purpose.

In the result, the appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 2nd June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 02.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order