Income Tax Appellate Tribunal - Amritsar
Asger Ali, Karkitchu Kargil vs Ito , Ward on 3 June, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
(VIRTUAL COURT)
BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER
AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER
I.T.A. No. 358/Asr/2023
Assessment Year: 2017-18
Asger Ali, Vs. Income Tax Officer,
Karkitchu Kargil, Ward, Srinagar
Kargil 194103,
Jammu & Kashmir
[PAN: BXNPA 4612H]
(Appellant)
(Respondent)
Appellant by : Sh. Varun Soni, C.A.
Respondent by : Smt. Priyanka Patel, Sr. DR
Date of Hearing : 06.05.2024
Date of Pronouncement : 03.06.2024
ORDER
Per Dr. M. L. Meena, AM:
The captioned appeal has been filed by the assessee against the order of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 29.11.2023 in respect of Assessment Year: 2017-18 challenging 2 ITA No. 358/Asr/2023 Asger Ali v. ITO therein the order passed exparte qua the assessee by both the authorities below.
2. At the time of hearing, the ld AR submitted that the assessees income is exempted as per the provision of section 10(26), but the Ld. Assessing Officer (In short "the AO") and CIT(A) has ignored the provision of law by not allowing the exemption as provided by the Income Tax Act to the assessee. Further, the Ld AR. Argued that the CIT(A) has not appreciated the facts while confirming the action of the AO in completing the assessment under section 144 of the act by applying too high 8% profit rate on the bank deposits during the period from 01/04/2016 to 08/11/2016 and from 31/12/2016 to 31/03/2017 where as the cash deposits between 09/11/2016 to 30/12/2016 have been treated as unexplained investment under section 69A of the Income Tax Act for period of 52 days out of 365 days without any basis and without rebutting the explanation of the assessee by the AO/CIT(A). He pleaded that the matter may be send back to the file of the AO for de novo assessment as per Law.
3. The Ld. DR stands by the impugned order but he failed to rebut the contention of the Ld. AR. of the assessee.
3ITA No. 358/Asr/2023
4. We have heard both the sides, perused the material available on record, impugned order and written submission filed by the assessee. Admittedly, both the AO/Ld. CIT appeal has passed the order exparte qua the assessee without appreciating the fact on merits of the case.
5. That the appellant is an individual carrying on the business as a trader by the name and style M/s Kargil Hardware Store at New Bus Stand, Chanchik Link Road Kargil, Ladakh. The appellant has been carrying on this business for so many years as a retailer. Further the appellant belongs to Balti Tribe which is specified as Schedule Tribe under the Jammu and Kashmir Schedule Tribe Act, 1989 and as per the provisions of the section 10(26) of the income tax act, income of the resident of Ladakh is exempt. The extract of the section is produced below for reference here under: -
"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) (b) by way of dividend or interest on securities;4 ITA No. 358/Asr/2023
6. The Ld. AR argued that the aforesaid status could have been easily confirmed by independent sources such as the concerned bank where the appellant was maintaining his bank account. There have been frequent regular bank deposits both in cash as well as account to account transfers throughout the year. It was not only the case where cash deposits were made during a particular period for the whole financial year. The AO has targeted a particular period of demonetization without any basis and disproving the contention of the assessee.
7. From the record, it is seen that the AO has accepted the fact, in the assessment order itself vide para 7 that the bank accounts were maintained by the appellant for his business purpose and he also acknowledged that the bank account statement is showing frequent cash/non-cash deposits and outward payments made to various persons/parties which indicate that the appellant was running a business and deposits amounting to Rs. 2,23,51,376/- out of the sale proceeds and used for business purposes during the year under consideration.
8. In our view, the AO/CIT(A) has passed the orders in haste, on presumptions without application of mind by giving the finding in applying profit rate of 8 percent on major portion of the bank deposits ignoring the business history and statement of bank accounts without rebutting the fact 5 ITA No. 358/Asr/2023 Asger Ali v. ITO that source of bank deposits was explained out of sale proceeds from the business.
9. Considering the factual matrix, we consider it deem fit to restore the matter back to the file of the AO to adjudicate the assessment order de novo after granting adequate opportunity of being heard to the assessee. The AO is directed to consider the reply filed by the appellant and to be filed during de novo assessment proceeding in support of source of cash deposit in the bank and the provision of law in respect of exemption claimed u/s 10(26) of the Act. The assesse undertakes to cooperate in the flesh de novo proceedings before the AO in furnishing the requisite information in compliance to the notices issued on the email ID's/postal addres. Accordingly, the matter is restored to the AO.
10. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 03.06.2024
Sd/- Sd/-
(Udayan Dasgupta) (Dr. M. L. Meena)
Judicial Member Accountant Member
*GP/Sr.PS*
6
ITA No. 358/Asr/2023
Asger Ali v. ITO
Copy of the order forwarded to:
(1)The Appellant:
(2) The Respondent:
(3) The CIT concerned
(4) The Sr. DR, I.T.A.T.
True Copy
By Order