Khret Kharkongor, Byrnihat V. Income Tax Officer, ward-Byrnihat, Byrnihat

ITA 131/GTY/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8367 (ITAT-GUWAHATI)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 05-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Earning of tax free income; Corroborative evidences
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, GUWAHATI E-COURT AT KOLKATA BEFORE SRI SANJAY GARG, JUDICIAL MEMBER I.T.A. NO.131/GAU/2017 ASSESSMENT YEAR: 2013-14 KHRET KHARKONGOR..... ..APPELLANT C/O K K FURNITURE AND MOULDING, 16 TH MILE, G S ROAD, BYRNIHAT-793101, MEGHALAYA. [PAN :AVNPK4379A] VS. ITO, WARD-BYRNIHAT.........RESPONDENT APPEARANCES BY: SHRI A. K. AGARWALA, AR, APPEARED ON BEHALF OF THE APPELLANT. SHRI AMITAVA SEN, JCIT, SR. DR, APPEARED ON BEHALF OF THE RESPONDENT. DATE OF CONCLUDING THE HEARING : MARCH 17, 2021 DATE OF PRONOUNCING THE ORDER : MARCH 17, 2021 ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 28.04.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS), SHILLONG [HEREINAFTER AS CIT(A)]. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED TO UPHOLD THE ORDER OF THE A.O ASSESSING THE INCOME OF THE APPELLANT AT RS. NIL INSTEAD OF THE DECLARED INCOME OF RS.1,50,000/- AND ALSO NOT ACCEPTING THE EXEMPT INCOME U/S 10(26) AMOUNTING TO RS.39,32,446/- EARNED BY THE ASSESSEE, BASED MERELY ON THE STATEMENT RECORDED U/S 131 CONTENTS OF WHICH WERE NOT PROPERLY EXPLAINED TO THE ASSESSEE WHO IS AN ILLITERATE PERSON. 2. AS IS COMMONLY KNOWN, THE INCOME TAX ACT HAS BEEN ENACTED FOR THE PURPOSE OF LEVY OF INCOME TAX, HOWEVER THE PECULIAR AND INTERESTING FACTS OF THIS CASE ARE THAT THE ASSESSEE HEREIN BEFORE THE TRIBUNAL HAS CLAIMED THAT HE HAS SUBSTANTIAL INCOME WHEREAS THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE DOES NOT OWN THAT INCOME AND THE VERY INTERESTING FACT IS THAT EVEN AFTER HOLDING THAT THE ASSESSEE DOES NOT OWN THAT INCOME, THE ASSESSING OFFICER HAS NOT HELD AS TO WHOM THAT INCOME BELONGS. EVEN THE ASSESSING OFFICER DESPITE A CLAIM OF THE ASSESSEE, HAS NOT ASSESSED THE CLAIMED INCOME 2 I.T.A. NO.131/GAU/2017 ASSESSMENT YEAR: 2013-14 KHRET KHARKONGOR AS UNEXPLAINED INCOME OF THE ASSESSEE. WITH THESE OBSERVATIONS, I PROCEED TO NARRATE THE FACTS OF THE CASE. THE ASSESSEE IS A RESIDENT OF MEGHALAYA AND A MEMBER OF SCHEDULED TRIBE. AS PER THE PROVISIONS OF SECTION 10(26) OF THE INCOME TAX ACT, A MEMBER OF THE SCHEDULED TRIBE AS DEFINED UNDER ARTICLE 336 OF THE CONSTITUTION AND RESIDING IN A SPECIFIED AREA AS MENTIONED U/S 10(26) OF THE INCOME TAX ACT IS EXEMPTED FROM TAXATION, SUBJECT TO THE CONDITIONS THAT SUCH INCOME ACCRUES OR ARISE TO HIM FROM ANY SOURCE IN THAT AREA OR BY WAY OF DIVIDEND AND INTEREST ON SECURITIES. NOW THE CASE OF THE ASSESSEE IS THAT HE HAS EARNED TAXABLE INCOME OF RS.1,50,000/-, AGRICULTURE INCOME OF RS.26,95,900/- AND ANOTHER BUSINESS INCOME OF RS.38,75,650/- WHICH HE HAS CLAIMED AS EXEMPT INCOME BEING A MEMBER OF THE SCHEDULED TRIBE AND SUCH INCOME BEING EARNED FROM HIS AGRICULTURAL AND OTHER BUSINESS ACTIVITIES IN THE AREA OR STATE OF MEGHALAYA WHICH HAS BEEN NOTIFIED FOR THE PURPOSE OF EXEMPTION FROM TAXATION U/S 10(26) OF THE INCOME TAX ACT. HOWEVER, THE ASSESSING OFFICER HELD THAT THE ASSESSEE COULD NOT PROVE THAT THE ASSESSEE HAS EARNED SUCH A HUGE INCOME FROM ANY OF HIS BUSINESS OR AGRICULTURAL ACTIVITIES CARRIED OUT IN THE NOTIFIED AREA. THE ASSESSING OFFICER ACCORDINGLY TREATED THE TOTAL INCOME OF THE ASSESSEE FROM KNOWN SOURCES AT RS.90,000/- AND FURTHER TREATING THE SAME AS EXEMPT AND ASSESSED THE ASSESSEE AT NIL INCOME. THOUGH THE ASSESSEE HAS NOT BEEN BURDENED WITH ANY TAX, BUT THE ASSESSEE IS NOT SATISFIED AT THIS. THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT THOUGH IN THE INCOME TAX ASSESSMENT PROCEEDINGS, WHICH ARE DONE FOR TAXATION OF THE INCOME, NO TAX HAS BEEN LEVIED ON THE ASSESSEE, BUT THE SAME DOES HAVE REPERCUSSION UPON THE ASSESSEE AS THE PROCEEDINGS UNDER BENAMI LAW HAVE BEEN INITIATED AGAINST THE ASSESSEE. THAT IF THE ASSESSEE WOULD BE ABLE TO PROVE THAT THE INCOME CLAIMED IN THE RETURN OF INCOME WAS FROM THE KNOWN AND ACTUAL SOURCE AS CLAIMED BY ASSESSEE, THEN, THAT FACT WILL BE VERY MUCH RELEVANT IN THE PROCEEDINGS INITIATED UNDER BENAMI LAW. 3. AFTER HEARING BOTH THE LD. REPRESENTATIVES OF THE PARTIES, I AM OF THE VIEW THAT THIS TRIBUNAL IN THE APPELLATE PROCEEDINGS RELATING TO THE TAXATION OF INCOME IS NOT SUPPOSED TO GIVE A FINDING, WHICH OTHERWISE MAY NOT BE RELEVANT FOR DETERMINATION OF INCOME TAX DISPUTE, MERELY BECAUSE THAT WILL BE RELEVANT IN THE PROCEEDINGS AGAINST THE ASSESSEE UNDER BENAMI LAW. HOWEVER, BOTH THE LD. REPRESENTATIVES HAVE SUBMITTED 3 I.T.A. NO.131/GAU/2017 ASSESSMENT YEAR: 2013-14 KHRET KHARKONGOR THAT THE FACTS OF THE CASE NEED TO BE DETERMINED SO AS TO ASSESS THE STATUS OF INCOME CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. THOUGH THE ASSESSING OFFICER HAS NOT TREATED THE INCOME CLAIMED BY THE ASSESSEE OF ABOUT RS.67,00,000/- AS INCOME FROM THE KNOWN SOURCE/ACTIVITIES DONE BY THE ASSESSEE, YET THE ASSESSING OFFICER UNDER ANY CIRCUMSTANCES WAS SUPPOSED TO DETERMINE THE CHARACTER OF THE INCOME AND FURTHER THAT UNDER WHOSE HANDS SUCH INCOME IS REQUIRED TO BE ASSESSED. 4. THE NEXT CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE ASSESSING OFFICER IGNORED THE EVIDENCES FURNISHED BY THE ASSESSEE TO EXPLAIN THE SOURCE OF INCOME AND REGARDING ACTIVITIES FROM WHICH THAT INCOME HAS BEEN EARNED. THAT THE ASSESSING OFFICER HAS MERELY PLACED RELIANCE ON AN ALLEGED STATEMENT RECORDED BY THE ASSESSING OFFICER U/S 131 OF THE ACT WHICH, IN FACT, HAS BEEN RECORDED BY THE ASSESSING OFFICER IN ENGLISH, WHEREAS, THE ASSESSEE IS AN ILLITERATE PERSON. THE LD. COUNSEL HAS SUBMITTED THAT SUCH STATEMENT WAS NOT EXPLAINED TO THE ASSESSEE IN VERNACULAR. HE, THEREFORE, HAS SUBMITTED THAT NO RELIANCE CAN BE PLACED ON SUCH A STATEMENT RECORDED OF THE ASSESSEE. 5. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THAT THE CONTENTS OF THE STATEMENT ITSELF SHOW THAT THE SAME HAS BEEN DULY RECORDED BY THE ASSESSEE AFTER UNDERSTANDING THE QUESTIONS PUT TO HIM BY THE ASSESSING OFFICER. THAT EVEN OTHERWISE, THE ASSESSEE IS A PERSON OF A MEAGRE SOURCE. THAT THE FACTS ON THE FILE SHOW THAT SOME OTHER PERSON HAS INTRODUCED HIS UNACCOUNTED INCOME IN THE NAME OF THE ASSESSEE AND THAT THE ASSESSEE SEEMS TO BE A PUPPET IN THE HANDS OF SOME OTHER PERSON WHO IS DOING BUSINESS IN THE NOTIFIED AREA IN THE NAME OF THE ASSESSEE WITHOUT PAYING ANY TAXES. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAVE ALSO GONE THROUGH THE RECORDS. IN MY VIEW, FOR THE PURPOSE OF LEVY OF TAXES, THE NATURE OF THE INCOME CLAIMED BY THE ASSESSEE IS REQUIRED TO BE DETERMINED BY THE ASSESSING OFFICER. BOTH THE LD. REPRESENTATIVES OF THE PARTIES ARE IN AGREEMENT ON THE POINT THAT WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER HAS SOLELY RELIED UPON THE STATEMENT MADE BY THE ASSESSEE U/S 131 OF THE ACT. NO OTHER CORROBORATIVE EVIDENCES HAVE BEEN TAKEN INTO CONSIDERATION. 4 I.T.A. NO.131/GAU/2017 ASSESSMENT YEAR: 2013-14 KHRET KHARKONGOR THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY CONTENDED THAT THE STATEMENT RECORDED IN ENGLISH LANGUAGE WHICH THE ASSESSEE COULD NOT UNDERSTAND, CANNOT BE MADE SOLE BASIS FOR DETERMINING AS TO WHETHER THE INCOME CLAIMED BY THE ASSESSEE HAD BEEN ACTUALLY EARNED BY THE ASSESSEE FROM ITS ACTIVITIES IN THE NOTIFIED AREA. BOTH THE LD. REPRESENTATIVES OF THE PARTIES HAVE SUBMITTED THAT THE MATTER IS REQUIRED TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ASSESSMENT AFRESH ON THIS ISSUE AFTER TAKING INTO CONSIDERATION THE RELEVANT EVIDENCES AVAILABLE OR THAT MAY BE FURNISHED BY THE ASSESSEE IN THIS RESPECT OR AS MAY BE ASKED BY THE ASSESSING OFFICER. SO FAR AS THE STATEMENT RECORDED BY THE ASSESSING OFFICER U/S 131 OF THE INCOME TAX ACT IS CONCERNED, SINCE THE ASSESSEE IS DISPUTING HIS KNOWLEDGE AND CONSENT TO SUCH A STATEMENT, IN MY VIEW, THE ASSESSEE IS REQUIRED TO BE GIVEN AN OPPORTUNITY TO EXPLAIN ABOUT HIS SOURCE AND ACTIVITY AND THE ASSESSING OFFICER MAY ALSO RECORD HIS FRESH STATEMENT IN VERNACULAR WHICH MAY BE CORRELATED WITH THE STATEMENT RECORDED EARLIER OF THE ASSESSEE AND TO TAKE INTO CONSIDERATION THE NECESSARY EVIDENCES THAT WILL BE AVAILABLE WITH HIM AND THEREAFTER TO DECIDE THE ISSUE BY WAY OF A SPEAKING AND REASONED ORDER. WITH THE ABOVE OBSERVATIONS/DIRECTIONS, THE IMPUGNED ORDER OF THE CIT(A) IS QUASHED AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH. THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. KOLKATA, THE 17 TH MARCH, 2021. SD/- [ SANJAY GARG ] JUDICIAL MEMBER DATED : 17.03.2021 RS COPY OF THE ORDER FORWARDED TO: 1. KHRET KHARKONGOR 2. ITO, WARD-BYRNIHAT 3. CIT(A)- 5 I.T.A. NO.131/GAU/2017 ASSESSMENT YEAR: 2013-14 KHRET KHARKONGOR 4. CIT- , 5. CIT(DR), //TRUE COPY// BY ORDER SR. PS, H.O/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA .