INCOME TAX OFFICER, WARD-1, SHILLONG, SHILLONG V. ACHULA DARNEICHONG SAILO, SHILLONG

ITA 120/GTY/2023

AI Insights

The case involves an appeal by the Revenue against the order of the Ld. Commissioner of Income Tax-NFAC, Delhi, which had allowed the appeal of Achula Darneichong Sailo, a medical doctor and member of a scheduled tribe, exempting his income from tax under section 10(26) of the Income Tax Act, 1961. The Revenue contested that the Ld. CIT(A) erred by not verifying the sources of cash deposits and bank transactions and incorrectly held that the income accrued from a specified area without proper verification. The Tribunal found that the Ld. CIT(A) had not adequately examined the deposits in relation to the claimed sources of income, leading to the decision to restore the appeal for a de novo hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46720 (ITAT-GUWAHATI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 147; 148; 143(3); 250; 10; 44AB; 20

Judgement Text

"आयकर अपीलीय अधिकरण गुवाहाटी पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH AT KOLKATA [वर्ुुअल कोटु] [Virtual Court] श्री मनमोहन दास, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SRI MANOMOHAN DAS, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 120/GTY/2023 Assessment Year: 2014-15 Income Tax Officer, Ward-1, Shillong Vs. Achula Darneichong Sailo (Appellant) (Respondent) PAN: BDNPS1297L Appearances: Department represented by : Kausik Ray, JCIT. Assessee represented by : None. Date of concluding the hearing : December 17th, 2024 Date of pronouncing the order : January 22nd, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of the Ld. Commissioner of Income Tax-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2014-15 dated 25.08.2023, which has been passed against the assessment order u/s Page | 2 I.T.A. No.: 120/GTY/2023 Assessment Year: 2014-15 Achula Darneichong Sailo. Page 2 of 7 147/144/144B of the Act, dated 30.03.2022. None appeared on behalf of the assessee and the appeal was heard with the assistance of the Ld. DR. 2. The Revenue has taken the following grounds of appeal: “1. That the order of the Ld. CIT (A) NFAC Delhi is erroneous as he had not verified the source of cash deposits and Bank Transaction. 2. That the order of the Ld. CIT (A) NFAC Delhi is erroneous as he had held that the income of the assessee accrues or arises within the specified area mentioned in the provision of section 10(26) of the Income Tax Act, 1961 without verification. 3. That the order of the Ld. CIT (A) NFAC Delhi is erroneous as he had not taken into consideration that the accounts of the assessee were not audited u/s 44AB of the I.T. Act, 1961. 4. The appellant craves the leave to amend or alter any ground or add a new ground which may be necessary.” 3. The statement of facts as filed before the Ld. CIT(A) mentions that the assessee was a member of a scheduled tribe and was a medical doctor, owning Bethany Hospital in Shillong, with income exempt u/s 10(26) of the Act due to his status and location. He passed away due to COVID-19 on April 15, 2020, and his wife became the legal heir. Despite having filed returns claiming the income as exempt and being assessed accordingly in previous years, the family encountered issues with the deactivation of the assessee’s PAN in the new income tax portal. Notices for non-filing of returns were issued by the Department, but responses could not be provided due to the complications faced. After escalating the matter to various authorities, the issues were resolved on October 7, 2022 allowing the family to view and respond to various notices and orders. Since no response could be made due to the issues related to the income tax portal and the glitches therein, the assessment was made suo moto without understanding the entire matter. Page | 3 I.T.A. No.: 120/GTY/2023 Assessment Year: 2014-15 Achula Darneichong Sailo. Page 3 of 7 3.1 the Ld. AO noted that the assessee is a non-filer and during the year had earned Professional/Technical Fees of Rs. 1,24,182/- from M/s HDFC Ergo General Insurance Company Limited, contractual payments of Rs. 1,60,000/- from M/s Roche Products (India) Private Limited & M/s Sun Pharma Laboratories Limited, had paid credit card bill of HDFC Bank of Rs. 4,52,870/-, had high value Banking Transactions on 15.06.2013 in State Bank of India in which deposits of Rs 6,32,87,778/- including cash deposit of Rs. 2,83,06,500/ and Rs. 23,91,400/- were made. Despite these financial transactions the assessee had not filed the return of income. Therefore, the assessment was re-opened u/s 147 of the Act and notice u/s 148 was issued to the assessee; in response to which the assessee filed the return of income on 24.04.2021 showing income of Rs. Nil. Since the notices were not complied with, therefore the Ld. AO made the addition of Rs. 6,40,24,830/- by adding the cash deposits and income in the other transactions noticed by him to the income of the assessee. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who has allowed the appeal by observing as under: “6. Decision on Ground of Appeal No.1&2: I have carefully considered the submissions made by the appellant, the facts on record and the applicable law in this regard. In this context it is relevant to refer to Section 10 under Chapter III of the I.T Act which deals with incomes which do not form a part of total income. As per the provisions of clause (26) of Section 10 the Income Tax Act, in computing the total income of any previous year of any person, any income falling within this clause shall not be included: in the case of a member of a Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura or in the areas covered by notification No. Page | 4 I.T.A. No.: 120/GTY/2023 Assessment Year: 2014-15 Achula Darneichong Sailo. Page 4 of 7 TAD/R/35/50/109, dated the 23rd February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20 as it stood immediately before the commencement of the North Eastern Areas (Reorganisation) Act, 1971 (81 of 1971) or in the Ladakh region of the State of Jammu and Kashmir, any income which accrues or arises to him,— (a) from any source in the areas or States aforesaid, or (b) by way of dividend or interest on securities; In the present instance, the late assessee was a medical doctor running a hospital at Shillong. As seen from the documentary evidence submitted in the form of caste certificate, he was a member of the Khasi tribe which is a duly recognized Scheduled Tribe under the Constitution (Scheduled Tribes) Order 1950 and as specified in Section 10(26) of the Income Tax Act, he was a resident of notified area as per the Sixth Schedule to the Constitution. It is also evident that the income derived by him during the relevant A.Y was from sources in the specified areas, being receipts from the hospital run by him, technical/professional fees etc. It is also pertinent to note that as seen from the assessment order u/s 143(3) in the assessee’s own case for A.Y 2017-18 dated 28.08.2019 that during scrutiny proceedings, the A.O had made necessary enquiries and verifications and concluded that the assessee had substantiated his