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Facts
The assessee appealed against an ex-parte assessment by the AO, confirmed by the CIT(A), which made additions for unexplained cash deposits, time deposits, and professional income. The assessee contended exemption under Section 10(26) as a Scheduled Tribe member in Meghalaya, but authorities disregarded this due to lack of proof that the income's source was within specified territories. The delay in filing the appeal was condoned due to the assessee's ill-health.
Held
The Tribunal held that the assessee's coverage under Section 10(26) and the geographical origin of the income were critical issues requiring proper examination. It remanded the case back to the Assessing Officer to re-examine all documents, determine if the income was earned from specified territories, and pass a fresh reasoned order after providing the assessee an opportunity to be heard.
Key Issues
1. Whether the assessee is entitled to exemption under Section 10(26) of the Income Tax Act. 2. Whether the income leading to additions was derived from specified geographical territories as per Section 10(26).
Sections Cited
Section 10(26), Section 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
In this case, the ITAT Registry has pointed out that there is a delay in filing of the appeal. The assessee has filed a petition for requesting condonation of the same as under:
“1. That the above appeal has been filed against the order of the learned Commissioner of Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi, dated 21st March, 2024 2. That the said appellate order was served on the assessee on 31st March, 2024 and, as such, the last date for filing the appeal was 30th May, 2024.
3. That the assessee has been suffering from carcinoma prostate and had to undergo a surgery on 13th of May, 2024 at Apollo Hospitals, Kolkata and is still under medication. Hence, because of his ill-health there is a delay in filing the appeal. Hospital discharge summary is being enclosed herewith in this regard.
Themis T Diengdoh 4. That the delay in filing of appeal is unintentional, bona fide and the appellant was prevented from sufficient cause.” 1.1 Considering the reasons given in the said application, the delay is hereby condoned and the appeal is admitted for adjudication.
The present appeal arises from the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 21.03.2024, passed under Section 250 of the Income Tax Act, 1961 (hereafter ‘the Act’).
2.1 In this case, the Ld. AO has largely passed an exparte order by making the following additions:
(a) Rs. 1,32,20,000/- as unexplained cash deposit. (b) Rs. 26,50,000/- as unexplained time deposits. (c) Rs. 91,000/- as unadmitted professional income
It is pertinent to mention that the assessee had submitted that he was exempted from paying income tax under Section 10(26) of the Act, as a member of the Scheduled Tribes living in the state of Meghalaya. However, since no other supporting documents for the impugned amounts were submitted, hence the Ld. AO took an adverse view in the matter.
2.2 Aggrieved with this action, the assessee approached the Ld. CIT(A) where also the assessee could not succeed mainly on the ground that he could not allegedly prove that the source of the impugned additions were located in the specified territories, as per the terms of section 10(26) of the Act.
On the last date of hearing, the Ld. DR reiterated the stand taken before the authorities below and extensively relied on arguments submitted in tabular form for the present hearing. The Ld. AR argued that Themis T Diengdoh firstly there was no liability to file any return of income since the assessee’s income was exempt under section 10(26) of the Act. Secondly, the action of the authorities below has been assailed on the ground that documents submitted in justification of the impugned additions have been totally disregarded.
3.1 The Ld. DR relied on the orders of authorities below and stated that as per section 10(26) of the Act, it is the duty of the assessee to show that the income attributed to him had been earned from within the specified territories. The Ld. DR averred that the assessee had not been able to establish the source of the additions, due to which the same were justified.
4. We have carefully considered the arguments from both the sides and also gone through the record before us. It is clear that the fact of the assessee being covered under provision of section 10(26) of the Act is something that can be easily proven. Once, this is done then the only thing to be considered is whether the income attributable to him was earned from specified geographical territory or not. It is felt that once the impugned amounts are a part of the controversy surrounding the taxability of assessee’s income, then the issues whether he is covered under the provisions of section 10(26) of the Act, not only from the point of view of meeting the test of residency, but also to show that the impugned amounts have been earned from within the specified territory only, are extremely relevant. For this purpose, we remand this matter back to the file of Ld. AO to examine the documents concerning this case afresh and thereafter arrive at a fair conclusion, within the framework of law. Needless to say, the assessee would do well to present all necessary documents before the Ld. AO would thereafter, pass a reasoned order after affording adequate opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.