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Facts
The assessee, a Sikkimese individual, claimed exemption for income from her contractor business in Sikkim under Section 10(26AAA) and did not file an income tax return. The Assessing Officer reopened the case, treated cash withdrawals as unexplained investment, and made an addition. The CIT(A) partially allowed the appeal, directing estimation of income at 8%.
Held
The Tribunal held that the assessee should be a Sikkimese and the source of income should be within Sikkim for exemption under Section 10(26AAA). It also noted that the CIT(A) admitted additional evidence without proper procedure and without affording an opportunity to the AO. Therefore, the Tribunal set aside the orders and remitted the matter back to the AO for de novo assessment.
Key Issues
1. Whether the assessee is eligible for exemption under Section 10(26AAA) as a Sikkimese resident earning income within Sikkim. 2. Whether the CIT(A) erred in admitting additional evidence and allowing the appeal without following due process.
Sections Cited
147, 148, 144, 144B, 10(26AAA), 69, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & SHRI RAKESH MISHRA
order : February 13th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: These cross appeals filed by the assessee and the Revenue are against the order of the Ld. Commissioner of Income Tax (Appeals)- Page 2 of 10 “8. Adjudication: The averments of the Assessing Officer and the submission of the appellant have been considered by me carefully. The only issue raised in this appeal relates to addition made under sec.69 towards cash withdrawals made during the financial year 2017-18 relevant to Asst Year 2018-19. The assessment in this case was reopened to examine the source for cash withdrawals made by the appellant to the tune of Rs.1,08,28,180/-. When the assessment was reopened under Sec.147 to examine the source for cash withdrawals to the tune of Rs. 1.08,28,180, appellant submitted as below: The appellant is carrying the proprietorship business in the name and style of Nirmala Sharma having its registered office at Samsing Gelling Pipalay, Soreng West Sikkim. Mrs Nirmala Sharma is in the business of construction within the State of Sikkim. The enlistment Certificate as issued by the Government of Sikkim proving that she is a contractor is attached herewith. However, the appellant did not file a return of income under Sec.139(1) making a claim of exemption under Sec 10(26AAA). Appellant in the grounds of appeal and in her submission in the appeal was harping on the only issue that she was residing in Sikkim for a long period and also produced the certificate granted by the Sikkim Government and she also explained that she was working as contractor and the withdrawals in the bank account were payments made to labourers and it also consists of expenditure for building materials for executing the contract work.
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