IMSANGBA AMONGLA WALLING,KOHIMA vs. INCOME TAX OFFICER, WARD-1, DIMAPUR

The present appeal is directed against the Assessment Order dated 22/01/2026 passed u/s 250 of Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals) having DIN & Order No: ITBA/NFAC/S/250/2025-26/1085067130(1), which is bad in law and on facts.

The Ld. CIT(A) erred in disposing of the appeal ex-parte without providing a reasonable and effective opportunity of being heard, thereby violating the principles of natural justice.

The Ld. CIT(A) failed to appreciate that the appellant could not respond to notices due to severe and continuous medical conditions, supported by documentary evidence and thus the non-compliance was neither intentional nor deliberate.

The Ld. CIT(A) erred in confirming the additions made by the Assessing Officer without properly examining the evidences already on record.

The Ld. AO erred in making addition of 11,82,466 as unexplained cash, ignoring the fact that the same was duly explained through rental receipts, property-related transactions and other disclosed sources.

The Ld. AO further erred in making addition of 13,52,660 on account of alleged short disclosure, without appreciating that the appellant had correctly disclosed her income as exempt under law.

The authorities below failed to appreciate that the appellant belongs to a Scheduled Tribe residing in Nagaland and is eligible for exemption under Section 10(26) of the Income Tax Act, 1961. 8. Without prejudice, the additions made are unjustified as the sources of income stand explained and no addition under Sections 68/69/69A is warranted.

The initiation of penalty proceedings under Sections 270A and 271D is bad in law and deserves to be quashed.

The appellant craves leave to add, alter, amend or withdraw any ground at the time of hearing."

Brief facts of the case are that the assessee failed to file her original return of income u/s 139(1) of the Act. Subsequently, the case was reopened, and the assessee filed her return of income in response to the notice u/s 148 of the Act on 06.05.2024, declaring total income of ₹NIL and claiming an exempt income of ₹42,53,126/- u/s 10(26) of the Act based on her Scheduled Tribe status in Nagaland. During the assessment proceedings, the Ld. AO observed that the assessee had made total cash deposits of ₹61,51,916/- in three bank accounts. While the assessee explained the sources as salary and rental income, the Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the ITA No(s). 167/GTY/2026 Assessment Year(s) 2020-21 Imsangba Amongla Walling. salary receipts of ₹11,97,466/- could not have been in cash, thereby capping the explainable cash receipts at ₹49,72,450/-. Consequently, the Ld. AO treated the unexplained differential amount of ₹11,82,466/- as unexplained money and added it to the total income of the assessee. Further, the Ld. AO observed a discrepancy where the disclosed salary and rent receipts of ₹29,00,466/- fell short of the total claimed exempt income of ₹42,53,126/-, leading to an additional undisclosed income and consequential addition of ₹13,52,660/- due to lack of satisfactory explanations and improper filling of ITR schedules. The Ld. AO finalized the assessment u/s 147 r.w.s. 144B of the Act on 17.03.2025, determining the total income of the assessee at ₹25,35,126/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee failed to respond to multiple notices, leading the Ld. CIT(A) to adjudicate the appeal ex- parte on merits based on the materials available on record. The Ld. CIT(A) observed that while the assessee is eligible for exemption u/s 10(26) of the Act towards tax liability, this does not absolve her from compliance requirements and the obligation to explain the sources of her bank deposits and cash transactions. Since the assessee did not furnish any evidence or explanation during the appellate proceedings to rebut the Ld. AO's findings regarding the unexplained money and undisclosed income, the Ld. CIT(A) found no reason to interfere with the assessment order. 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. In the appeal before us, the assessee has also filed additional evidence along with an application for admission of the same under rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and it is stated that the appeal may be decided on merits after granting an opportunity of being heard. The Ld. AR submitted that the income of the assessee is exempt u/s 10(26) of the Act as the assessee is resident of Nagaland and requested for one more opportunity by remanding the matter to the Ld. AO. 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). Since there was no proper compliance before both the Ld. AO as well as before the Ld. CIT(A), in the interest of justice and fair play it was considered that the request of the assessee to set aside the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided as the assessee is claiming that the income is exempt and additional evidence filed before us go to the root of the matter, which may be examined by the Ld. AO. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter to the Ld. AO for making the reassessment de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission she wants to make in support of her grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 5th June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 05.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order