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Facts
The assessee, a Khamti Tribe member from Arunachal Pradesh, filed a nil income tax return for AY 2020-21, claiming exempt agricultural income under Section 10(1) and exempt business income under Section 10(26). The Assessing Officer disallowed the agricultural income, treating it as unexplained money under Section 69A and taxing it under Section 115BBE due to lack of documentation. The CIT(A) upheld the AO's order, dismissing the assessee's first appeal.
Held
The Tribunal observed that income derived by a Scheduled Tribe member within Arunachal Pradesh may be exempt under Section 10(26), irrespective of the source if from a specified area. Recognizing the assessee's claim and the interest of justice, the Tribunal decided to provide another opportunity for the assessee to substantiate claims before the AO. Consequently, the CIT(A)'s order was set aside, and the case was remanded to the AO for fresh consideration.
Key Issues
Whether the agricultural income claimed as exempt by a Scheduled Tribe member from Arunachal Pradesh should be taxed due to insufficient documentation, and if the case warrants a fresh examination by the Assessing Officer to allow substantiation of claims.
Sections Cited
Section 250, Section 143(1), Section 10(1), Section 10(26), Section 69A, Section 115BBE
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Income Tax Appellate Tribunal, : GAUHATI BENCH: GUWAHATI
Before: SHRI RAJESH KUMAR, HON’BLE & SHRI MANOMOHAN DAS, HON’BLE
ORDER
PER MANOMOHAN DAS, JM
The assessee filed this appeal against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi (hereinafter referred to as the (“CIT(A)” dated 03.02.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) and pertains to the Assessment Year 2020-21.
Phung Peng Namchoong -vs- The ITO, Ward- 1, Digboi AY : 2020-21 2. The brief facts of the case are that, the assessee is a Khamti Tribe of Arunachal Pradesh, filed his income tax return for the AY 2020-21 on 30.03.2021, declared Nil income. The return was processed under section 143(1) on 07.05.2021 at the returned income. The assessee claimed exempt agricultural income of Rs. 34,98,705/- u/s 10(1) and exempt business income of Rs. 31,12,493 u/s 10(26). The case of the assessee was selected for limited scrutiny due to (i) Large agricultural income without ITR filings for the past two years and (ii) Risk analysis of agricultural income. During the assessment, the learned Assessing Officer disallowed the agricultural income of Rs. 34,98,705/- citing lack of proper documentation and treated it as unexplained money u/s 69A, resulting in taxation u/s 115BBE of the Act. Being aggrieved, the assessee filed 1st appeal before the 3. learned CIT(A). The ld. CIT(A) vide order dated 03.02.2025 dismissed the appeal of the assessee and upheld the assessment order passed by the learned Assessing Officer [AO].
Being aggrieved, the assessee filed the present appeal before the Tribunal.
The appeal of the assessee is dismissed by the ld. CIT(A) citing the reasons that, the assessee failed to produce acceptable evidences regarding the income derived from agricultural activities carried on by the him.
We observe that, the assessee is a member of a Scheduled Tribe community of the State of Arunachal Pradesh and is covered under section 10(26) of the Act. The income derived within the State of Arunachal Pradesh by the assessee may be exempted from payment of income tax. The indication of the lower authorities are that, since the assessee failed to Phung Peng Namchoong -vs- The ITO, Ward- 1, Digboi AY : 2020-21 substantiate his claims that, the income derived by carrying on of agricultural activities by him may not be from the specified area.
Here, we may observe that, irrespective of the sources of income derived by the assessee, the same would be exempted from payment of income tax, if that income is / was derived within the specified area as mentioned in section 10(26) of the Act.
We further observe that, the assessee claims that, he derived income from the agricultural activities carried on within the State of Arunachal Pradesh. Therefore, it is our considered opinion that, another opportunity should be given to the assessee to substantiate his claims before the learned Assessing Officer for the interest of justice, and we do so. Accordingly, we set aside the order of the ld. CIT(A) dated 03.02.2025.
We direct the ld. AO to reconsider the case of the assessee after giving him an adequate opportunity of being heard. At the same time, we direct the assessee to substantiate his claims before the ld. AO. The Ld. DR has no objection in remanding the case to the ld. AO for fresh consideration. Thus, we allow the appeal of the assessee for statistical purposes only.
In the result, the appeals of the assessee are allowed for statistical purposes only. Order pronounced in the open court on this 21stday of 12. August, 2025. Sd/- Sd/- ( Rajesh Kumar ) (Manomohan Das) Accountant Member Judicial Member Date: 21 .08 .2025 Phung Peng Namchoong -vs- The ITO, Ward- 1, Digboi AY : 2020-21