Income Tax Appellate Tribunal - Gauhati
Income Tax Officer, Ward-1, Shillong, ... vs Achula Darneichong Sailo, Shillong on 22 January, 2025
आयकर अपीलीय अधिकरण
गुवाहाटी पीठ, कोलकाता में
IN THE INCOME TAX APPELLATE TRIBUNAL
GUWAHATI BENCH AT KOLKATA
[वर्ुअल कोटु]
[Virtual Court]
श्री मनमोहन दास, न्याधयक सदस्य
एवं
श्री राकेश धमश्रा, लेखा सदस्य
के समक्ष
Before
SRI MANOMOHAN DAS, JUDICIAL MEMBER
&
SRI RAKESH MISHRA, ACCOUNTANT MEMBER
I.T.A. No.: 119/GTY/2023
Assessment Year: 2013-14
Income Tax Officer, Ward-1, Achula Darneichong Sailo
Shillong Vs.
(Appellant) (Respondent)
PAN: BDNPS1297L
Appearances:
Department represented by : Kausik Ray, JCIT.
Assessee represented by : None.
Date of concluding the hearing : December 19th, 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 2013-14 dated 25.08.2023, which has been passed against the assessment order u/s Page | 2 I.T.A. No.: 119/GTY/2023 Assessment Year: 2013-14 Achula Darneichong Sailo.
147/144/144B of the Act, dated 29.03.2022. None appeared on behalf of the assessee and the appeal was heard with the assistance of 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 (hat 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. Brief facts of the case are that the assessee is non-filer and had earned professional/technical fees of Rs. 1,70,000/- from Novartis Healthcare Private Limited on which was TDS deducted of Rs. 17,000/- and had also deposited cash to the tune of Rs. 2,28,95,200/- & Rs. 14,50,000/- totalling to Rs. 2,43,45,200/- during the year under consideration. The assessee also had high value banking transactions amounting to Rs. 47,29,500/- as per the details at page 2 of the assessment order. Since no return of income was filed, the case of the assessee was re-opened u/s 147 of the Act by issuing notice u/s 148 of the Act and the return was filed on 24.04.2021 showing income of Rs. 'Nil'. Subsequent notice issued u/s 142(1) of the Act and along with a Questionnaire was not complied with nor the assessee availed the opportunity of being heard which was granted. Hence, the assessment was made at total income of Rs. 2,43,45,200/- and the cash deposit, technical fees and bank transactions were all added in the absence of any reply received from the assessee. Aggrieved with the assessment Page 2 of 8 Page | 3 I.T.A. No.: 119/GTY/2023 Assessment Year: 2013-14 Achula Darneichong Sailo.
order, the assessee filed an appeal before the Ld. CIT(A) who allowed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before the Tribunal.
4. 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. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A).
5. Ground no. 1 relates to the order of the Ld. CIT(A) being erroneous as the source of cash deposit and bank transaction have not been verified while ground no. 2 relates to the Ld. CIT(A)'s being erroneous as he has held that the income of the assessee accrues or arises within the specified area mentioned in the provision of section 10(26) of the Act without any verification. Ground no. 3 is regarding the Ld. CIT(A) not taking into consideration the accounts of the assessee being not audited u/s 44AB of the Act. Before the Ld. CIT(A), the assessee made the Page 3 of 8 Page | 4 I.T.A. No.: 119/GTY/2023 Assessment Year: 2013-14 Achula Darneichong Sailo.
submission that the assessment order has been passed in her name since she is the legal heir. However, during the relevant previous year, her husband was alive. The cash deposited in the bank account amounting to Rs. 2,43,45,200/-was stated to be the collection from the hospital, the proprietor of which was John Lalremsiama Sailo Ryntathiang (her late husband), and also his professional fees. The Ld. CIT(A) while allowing the appeal of the assessee has held as under:
"5.1 The assessment order has been passed in my name, since I am the legal heir. However, during the relevant previous year my husband was alive. The cash deposited in the bank accounts amounting to Rs. 2,43,45,200/- are the collection from the Bethany hospital, and Bethany hospital outreach, the proprietor of which was John Lalremsiama Sailo Ryntathiang (my late husband), and also his professional fees. He was a doctor by profession. The assessment order for assessment year 2017-18 also clearly mentions the same. The technical fees of Rs. 170000/- are also a part of the hospital collections. The banking transactions mentioned by the learned AO, also relates to the hospital professional and allied incomes. The income shown was nil as the income is earned in the state of Meghalaya, and my late husband was a tribal. Hence his income was exempt under section 10(26). He had been claiming this exemption since all the various years and were also allowed. Orders and intimations have already been submitted earlier. I have elucidated the facts and reasons vide my submission dated 21/03/2023, the reasons for not being able to respond to the various notices. Your honour will appreciate from the said letter, that i tried my best to cooperate and ran from pillar to post, to respond. Letters were written to the various officials and finally to the honourable prime minister and the finance minister. As would be obvious to your honour that the change in the portal and the various glitches therein, prevented me from responding. There was no willful negligence or malafide intentions. When I was intimated of the resolution of the matter, I checked and filed the appeal, since the order was already passed. I also attach herewith approval order under section 17(2) issued by the office of the chief commissioner of income tax, Shillong, in respect of the hospital for your record. Please let me know what other information, records I can produce to enable you to do justice. The same shall be duly furnished as and when called for. I would request your kind honour to determine the income as nil, since it is exempt under section 10(26).
6. Decision on Ground of Appeal No.1&2:Page 4 of 8
Page | 5 I.T.A. No.: 119/GTY/2023 Assessment Year: 2013-14 Achula Darneichong Sailo.
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. 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 (ScheduledTribes) 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 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 claim of being a member of the Schedule Tribe community which was exempt from income tax and had provided clarifications and explanations related with the business. Accordingly, the A.O was satisfied that the assessee's income accrues or arises from the 6th Schedule area and hence qualified for exemption under section 10(26) of the Income-tax Act.
Page 5 of 8Page | 6 I.T.A. No.: 119/GTY/2023 Assessment Year: 2013-14 Achula Darneichong Sailo.
Further, as seen from the submissions the assessee had died on 15/04/2020, being the first victim of Covid in Shillong. It was further submitted that during the proceedings for the relevant A.Y 2013-14 the deceased assessee's representative/legal heir was unable to comply to the notices in view of technical glitches in the e-filing the portal and problems faced with PAN deactivation and in registering the legal heir. In view of the above, the assessee was unable to comply during the proceedings u/s 147 for AY 2013-14 as a result of which the income was assessed as above.
In the conspectus of facts and law as discussed above, it is clear that the assessee was not liable to be taxed on the income arising to him from sources that clearly fall within the ambit of Section 10(26) of the Income Tax Act. Accordingly, the additions made by the A.O are deleted and the appellant's grounds are allowed.
Accordingly, in the result, the appeal filed by the appellant is allowed."
6. The Ld. DR in the course of the appeal submitted that the facts of the case in this year are same to the facts of the case for AY 2014-15 decided on 25.08.2023 by the Ld. CIT(A) and requested that since the Ld. CIT(A) had not verified the source of deposit in the bank account and the exemption u/s 10(26) of the Act is confined to any income to a member of scheduled tribe as defined therein which accrues or arises to him from any source in the areas or States mentioned therein or by way of dividend or interest on securities, the order of Ld. CIT(A) may be set aside to be done de novo to examine the source of income which has not been done.
7. We examined the facts of the case and also gone through the orders of the Ld. CIT(A) and the Ld. AO. There was no representation by the assessee before the Ld. AO relating to the cash deposit of Rs. 2,43,45,200/- in the bank account and even in respect of technical fee of Rs. 1,70,000/- on which was TDS deducted nor the source of bank transactions of Rs. 47,29,500/-was explained. There is no discussion in the order of the Ld. CIT(A) nor any reason has been given regarding the exemption being allowed to the assessee nor any finding has been Page 6 of 8 Page | 7 I.T.A. No.: 119/GTY/2023 Assessment Year: 2013-14 Achula Darneichong Sailo.
given that the cash deposited in the bank account related to the professional income earned in the states specified in section 10(26) of the Act. Hence, since the provisions of section 250(6) of the Act have not been followed and neither a reasoned order has been passed nor the Ld. AO was granted any opportunity of being heard. Merely because the assessee is a member of the scheduled tribe, the finding of the Ld. CIT(A) that the Ld. AO was satisfied on the basis of the finding in the assessment order in the assessee's own for A.Y. 2017-18 dated 28/08/2019 that the assessee's income accrues or arises from the Sixth Schedule area and is qualified for exemption u/s 10(26) of the Act is apparently incorrect as res judicata does not apply to the proceedings, and each year's findings can be different. Hence, the order of the Ld. CIT(A) is set aside and the appeal is restored to be done de novo. The assessee shall be at liberty to make all submissions in support of the claim that the income was exempt u/s 10(26) of the Act as per the provisions thereof and the Ld. CIT(A) shall decide the appeal in accordance with Rule 46A of the Income Tax Rules, 1962. Hence, the grounds of appeal are allowed for statistical purposes.
7. In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced on 22nd January, 2025 under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963.
Sd/- Sd/-
[Manomohan Das] [Rakesh Mishra]
Judicial Member Accountant Member
Dated: 22.01.2025
Bidhan (P.S.)
Page 7 of 8
Page | 8
I.T.A. No.: 119/GTY/2023
Assessment Year: 2013-14
Achula Darneichong Sailo.
Copy of the order forwarded to:
1. Income Tax Officer, Ward-1, Shillong.
2. Achula Darneichong Sailo, Bethany Hospital, Nongrim Hills, Laitumkhrah, Shillong, Meghalaya, 793003.
3. CIT(A)-NFAC, Delhi.
4. CIT-
5. CIT(DR), Guwahati Benches, Guwahati.
6. Guard File.
//True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Page 8 of 8 17.01.2025 डिक्टे शन की तिथि................................... Date of Dictation....................................
डिक्टे शन दे ने वाले सदस्य व अन्य सदस्य के सामन Date on which the typed order is placed टं ककि आदे श प्रस्िुि करने की before the dictating Member and other 17.01.2025 तिथि................................................... Member.................................................
वररष्ठ तनजी सथिव के पास आदे श वापस आने की Date on which the order came back to Sr. तिथि.................................................. 22.01.2025 P.S........................................................
न्यायपीठ ललपपक के पास फाइल आने की Date on which file(s) go(es) to the Bench तिथि.................................................. 22.01.2025 Clerk.....................................................
कायाालय अधीक्षक के पास फाइल आने की Date on which file(s) go(es) to the तिथि................................................... O.S........................................................ आदे श प्रेषक की तिथि............................... Date of dispatch of the order...................