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Facts
The assessee filed his return of income for AY 2021-22, claiming an exempt income of Rs. 30,72,614 under Section 10(26). The AO initiated scrutiny, and upon the assessee's failure to furnish details, completed the assessment ex-parte under Section 144, disallowing the exemption claim as the village was not within the defined area and making an addition for cash deposits. The CIT(A) dismissed the assessee's first appeal.
Held
The Tribunal observed that the CIT(A) dismissed the appeal because the assessee failed to file an application under Rule 46A for submitting additional documents. Considering the assessment was completed ex-parte, the Tribunal set aside the CIT(A)'s order and remanded the case to the AO for fresh assessment, directing the AO to provide adequate opportunity to the assessee to substantiate claims.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without considering additional evidence under Rule 46A, and if the assessment completed under section 144 without due opportunity to the assessee to substantiate claims under section 10(26) was valid.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 139 of the Income Tax Act, 1961, Section 10(26) of the Income Tax Act, 1961, Section 144 of the Income Tax Act, 1961, Rule 46A of the Income Tax Rules
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Income Tax Appellate Tribunal, : GAUHATI BENCH: GUWAHATI
Before: SHRI MANOMOHAN DAS, HON’BLE & SHRI RAKESH MISHRA, HON’BLE
The assessee filed the captioned 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 09.01.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) which pertains to the Assessment Year [AY] 2021-22.
Page 1 of 4 DangthanSanga-Vs- The DCIT / ACIT Circle-Silchar AY: 2021-22 2. The brief facts of the case are that, the assessee filed his return of income u/s 139 of the Act on 08.12.2021 for AY 2021- 22 declaring net income at Rs. 2,090/-, wherein exempt income of Rs. 30,72,614 u/s 10(26) of the Act was claimed by the assessee. The case of the assessee was selected for scrutiny through CASS so as to verify the claim of the assessee that he claimed substantial exempt income as per ITR and also deposited substantial cash in bank accounts. It was needed to ascertain whether claim for exempt income is correct or not. A number of notices were issued to the assessee including reminder letter, show cause notice on various dates asking the assessee to submit details / documents. However, the assessee failed to furnish any details in response to the notices issued under the Act. Since, the assessee remained non-responsive, the ld. AO completed the assessment u/s 144 of the Act. The ld. AO observed that, the claim of the assessee for exemption u/s 10(26) is not tenable as the village Vengthlang of Champhai District of Mizoram is not covered within the defined area. Accordingly, the claim of the assessee u/s 10(26) of the Act of Rs. 30,72,614/- withdrawn. The ld. AO vide the assessment order dated 23.12.2022 has made addition of Rs. 30,72,614 on account of withdrawal of claim u/ s 10(26), Cash deposit of Rs. 5,93,19,800/- Being aggrieved, the assessee filed 1st appeal before the ld.
CIT(A). The ld. CIT(A) vide order dated 09.01.2025 dismissed the appeal of the assessee.
Being aggrieved, the assessee filed the present appeal before the Tribunal.
Heard the representatives of both the parties and perused the material on record.
Page 2 of 4 DangthanSanga-Vs- The DCIT / ACIT Circle-Silchar AY: 2021-22 6. We observe that, the ld. CIT(A) dismissed the appeal of the assessee due to non-filing of any application under section 46A of the Act while furnishing certain documents before the ld. CIT(A) in order to substantiate the claims for exemption from tax under section 10(26) of the Act.
The ld. CIT(A) observed that, the assessee filed (i) Scheduled Tribe Certificate (ii) Distribution agreement (iii) GSTR-9 (iv) Bank details and (v) Balance sheet, profit and loss account for consideration of the ld. CIT(A) for the first time without any application under Rule 46A of the Income Tax Rules. The ld. CIT(A) further observed that , the assessee failed to show justification as to why the assessee could not attend the assessment proceedings before the ld. AO. No affidavit was also filed to prove his bona-fides. Accordingly, the ld. CIT(A) did not interfere with the additions made by the ld. AO under section 144 of the Act.
Since, the assessment was completed under section 144 of the Act by the ld. AO and the dismissal of the appeal of the assessee on the ground of non-filing of application for accepting the additional documents under Rule 46A by the ld. CIT(A), it is our considered opinion that, the assessee should get another opportunity to substantiate his claims before the ld. AO. Accordingly, we set aside the order of the ld. CIT(A) dated 09.01.2025 and remand the case of the assessee to the ld. AO for fresh assessment. We direct the ld. AO to reframe the assessment after giving the assessee an adequate opportunity of being heard. At the same time, we direct the assessee to substantiate his claims before the ld. AO by participating in the assessment proceedings. The Ld. DR also has no objection in remanding the case for fresh assessment. Thus, we allow the appeal of the assessee for statistical purposes only.
In the result, the appeal of the assessee is allowed for statistical purposes only.