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Facts
The assessee, Trenistone D. Sangma, did not file an income tax return for AY 2016-17. The Assessing Officer initiated reassessment proceedings based on information from ITBA/AIMS, which indicated significant cash deposits and other transactions. Despite multiple notices, the assessee failed to comply, leading to a best judgment assessment under section 144 and additions under section 69A and for non-offered TDS amounts. The CIT(A) dismissed the assessee's first appeal, partly due to non-payment of advance tax and non-participation in assessment proceedings.
Held
The Tribunal noted that the CIT(A) did not admit the appeal for non-payment of advance tax as per section 149(4)(b) and that the AO completed assessment under section 144 due to the assessee's non-participation. Observing that the assessee belongs to a Scheduled Tribe in Meghalaya and her income might be exempt under section 10(26), the Tribunal, with no objection from the DR, set aside the orders of the AO and CIT(A). The case was remanded to the AO to grant the assessee a fresh opportunity to substantiate her claims for exemption under section 10(26).
Key Issues
Whether the best judgment assessment under section 144 was valid given the assessee's non-compliance. Whether the assessee, as a member of a Scheduled Tribe, is entitled to exemption under section 10(26) of the Income Tax Act. Whether the CIT(A) erred in dismissing the appeal for non-payment of advance tax under section 149(4)(b).
Sections Cited
Section 250, Section 147, Section 144, Section 69A, Section 10(26), Section 148, Section 142(1), Section 149(4)(b), Section 194A, Section 194C
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Income Tax Appellate Tribunal, : GAUHATI BENCH :
Before: SHRI MANOMOHAN DAS, HON’BLE JUDICIAL & SHRI SANJAY AWASTHI, HON’BLE
ORDER
PER MANOMOHAN DAS, JM
The assessee filed this against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as the Page 1 of 5 Trenistone D. Sangma -Vs- ITO, Ward Goalpara AY: 2016-17 (“CIT(A)” dated 28.12.2023 passed under Section 250 of the Income Tax Act, 1961 (hereinafter called the ‘Act’) and pertain to the Assessment Year [AY] 2020-21 to 2016-17. The grounds of appeal
of the assessee are submissive in nature which as under:- (i) The order passed under section 147 read with section 144 is legally unsound, given the facts and circumstances of the case as well as the relevant points of law. (ii) The Assessing Officer erred in making an addition of Rs. 1,08,64,155 under section 69A of the Income Tax Act. Furthermore, the learned Commissioner of Income Tax (Appeals) also erred in upholding this addition. (iii) Both the Assessing Officer and the learned Commissioner of Income Tax (Appeals) incorrectly denied the benefits provided under section 10(26) of the Income Tax Act, despite the facts and circumstances of the case warranting such benefits. (iv) The Assessing Officer failed to accept the income tax return filed on September 4, 2021, in response to the notice issued under Section 148.
2. The brief facts of the case are that, the assessee has not filed return of income for the AY 2016-17. Notice under section 147 of the Act was issued to the assessee for reopening of the case upon information available with the jurisdictional Assessing Officer [AO]. The same formed the reasons for reopening of the assessment. A brief description of reason for reopening is as under:- “In the light of information available in the ITBA, AIMS (Actionable information Monitoring System) module, Trenistone D Sangma an assessee of this ward. The under mentioned information has been found from the system in connection with the assessee Trenistone D Sangma. Info. Code Information Value description
Page 2 of 5 Trenistone D. Sangma -Vs- ITO, Ward Goalpara AY: 2016-17 AIR-001 Deposit of cash of Rs. Rs. 1,03,44,700/- 10,00,000/- in a saving bank account TDS-194A TDS Return – Other (Section-Rs. 2,07,198/- - 194A) TDS-194C Payment to Rs. 3,12,257/- Contractor (194C)
Notice u/s 148 of the Act dated 25.03.2021 was issued and served upon the assessee through ITBA portal for filing of return of income. However, no return was filed by the assessee. Thereafter notice u/s 142(1) of the Act was issued to the assessee on 24.09.2021 asking to submit certain details. The assessee failed to comply this notice also. Notice u/s 142(1) again issued to the assessee on 08.01.2022, however, no response from the assessee. Such notice dated 04.03.2022 was also not responded by the assessee. Show cause notice was issued on 16.03.2022 why addition of Rs. 1,04,64,155/- should not be made to the total income. The assessee ignored this show cause notice also. Since, the assessee failed to comply the statutory notices, the case was completed under section 144 of the Act. The ld. AO treated the amount of Rs. 1,03, 44,700/- as unexplained money and has added to the total income of the assessee u/s 69A of the Act. Rs. 2,07,198/- has been added which was received from State Bank of India due to non-offering the same for taxation. Similarly, Rs. 3,12,257/- also added to the total income of the assessee as the same was not offered for taxation. Being aggrieved, the assessee filed 1st appeal before 4. the ld. CIT(A). The ld. CIT(A) vide order dated 28.12.2023 dismissed the appeal of the assessee. Page 3 of 5 Trenistone D. Sangma -Vs- ITO, Ward Goalpara AY: 2016-17 5. Being aggrieved, the assessee filed the present appeal before the Tribunal.
We observe that, the ld. CIT(A) did not entertain the appeal of the assessee due to non-payment of advance tax as per section 149(4)(b) of the Act. The assessee was enquired by the ld. CIT(A) whether the assessee has paid tax or not. The assessee replied that, he is not liable to pay income tax. The ld. CIT(A) observed that, the assessee has ignored the provisions of section 149(4)(b) of the Act and therefore, the appeal of the assessee was not admitted by the ld. CIT(A). 6.1 We observe that, the assessee did not participate in the assessment proceedings. Consequently, the ld. AO was constrained to complete the assessment under section 144 of the Act and has added the entire amount to the total income of the assessee. Secondly, his appeal was not admitted due to non-payment of advance tax. 6.2 We observe that, the assessee is a member of the Scheduled Tribe community of the State of Meghalaya and his income may be exempted from tax under section 10(26) of the Act if the assessee gets another opportunity to substantiate his/ her claims regarding exemption from payment of income tax subject to the fulfilment of certain condition. The Ld. DR also has no objection for giving the assessee another opportunity to the assessee to substantiate his claims.
In view of the aforesaid discussions, we set aside the orders of the ld. CIT(A) dated 28.12.2023 as well as order of the ld. AO dated 29.03.2022 and remand the case of the assessee to the ld. AO for reconsideration the case of the Page 4 of 5 Trenistone D. Sangma -Vs- ITO, Ward Goalpara AY: 2016-17 assessee. We direct the ld. AO to pass a fresh order on the case of the assessee after giving the assessee an adequate opportunity of being heard. At the same time, we direct the assessee to substantiate his/ her claims before the ld. AO. 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. Order pronounced in the open court on this 29th day of 9. May, 2025.