TaxTMI 
TaxTMI 
2025 (6) TMI 565
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....rders were communicated verbally, not issued in writing. From the payments received, I deposited the funds into my bank account and subsequently opened a time deposit account with an amount of Rs. 68,00,000/-. I request the Honourable ITAT to kindly delete the addition made by the Assessing Officer and confirmed by the Learned CIT(A) and relieve me from being penalized, as the time deposit was made in a bank situated in Meghalaya." 2.1. The additional grounds of appeal raised by the assessee are as under: "Ground No. 2: The appellant assessee is a member of Scheduled Tribe of Meghalaya (Form of Cast Certificate being a member of Scheduled Tribe attached at Page No. 210 of the Paper Book filed), resides (Residential Certificate attached at Page No. 205 of the Paper Book filed) and has earned income within VI Schedule Area of the Constitution of India, the Learned Commissioner of Income Tax (Appeals) has accepted in Para 6.4 that "In the return filed in response to notice u/s 148, the appellant admitted business income of Rs. 10,87,999. In the return filed there is no claim u/s 10(26). However according to the appellant tax liability is NIL. Since during assessment proceedings the....
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....urn of Income for the Assessment Year 2017-18 vide E-filing Acknowledgement Number 340751811130421 dated 13.04.2021 showing my Total Income of Rs. 10,88,000/- (Rupees Ten lakh eighty eight thousand only) as Income is exempted under Section 10 (26) of the Income Tax Act, 1961. During the course of the assessment proceedings, I admit that there were no compliances from me, Sir, this is due that I am unaware of the procedure about filing income tax return or how to upload the documents which were available with me. Sir, I am not that educate to know all the procedure and methods of income tax. However, in the assessment made the AO do not consider the fact that I am a member of Scheduled Tribe, thereby treating the bank transaction as my taxable income. Brief particulars relating to such additions are stated herein below: Business Income from the Contract Works and Cash Expenditure Rs. 1,15,80,781/- I am a contractor who engaged in the civil works of the state of Meghalaya, I admit that no submission were uploaded during the assessment proceedings which is a fault on my part. However, Sir, I would like to humbly beg you to consider my documents relating to my work which I am engag....
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....ing Notice under section 148 of the Act I did filed return of income. However, to my utter surprise, the Assessing Officer, had passed the Assessment Order under Section 147 read with Section 144B of the Income Tax Act, 1961 vide. DIN: ITBA/AST/S/147/2021-22/1041824050(1) on the 28.03.2022 by adding back an amount of Rs. 1,84,60,860/- to the total income during the Assessment Year 2017-18. That the Assessing Officer has also admittedly appreciated the same and furthermore, bank transactions had occurred and arises within the Sixth Schedule Areas i.e., within the State of Meghalaya. However, he had indiscriminately passed the Impugned Assessment Order dated 28.03.2022 by concluding the Assessment Proceeding u/s 147 read with Section 144B of the Act, which is, in the eye of law is null and void, as he had not applied his judicial mind as per the Income Tax Act, 1961 that specifically provides special exemption to the Tribal Communities residing and carrying out their callings/business within the Sixth Schedule Areas. As such, the Assessment Order dated 28.03.2022 is not at all in consonant with Section 10(26) of the Income Tax Act, 1961. That it is furthermore pertinent to state,....
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....edule Areas i.e. within the State of Meghalaya. However, the Ld. AO made the addition of Rs. 1,15,80,781/- by adding the business income from contract, cash expenditure of Rs. 65,69,700/- which is stated to be the reasons for reopening of assessment as no source was explained and as the assessee failed to justify the allowability of the said expenses in view of the provisions of section 40A(3), 40(i)(ia) and 37(1) of the Act and a sum of Rs. 68,80,079/- was also added as income from other sources. The Ld. CIT(A) allowed some relief to the assessee and the total income has been revised to Rs. 80,13,345/-. It is submitted before us as under: "a. Based on the order u/s 251 of the Income Tax, 1961 and in light of the above appellate order of Ld. CIT (A), NFAC, Delhi, dated 18-04-2024, the Total income determined in the assessment order passed on 28-09-2021 in the case is revised under section 251 of the IT Act, 1961 as under: Sl. No. Particulars Amount in Rs. 1. Income as per Return of Income Rs. 10,88,000/- 2. Addition as per appellate order under Section 250 of CIT(A) NFAC Time Deposit u/s 68 of the Act Tax to be Charged as special Rate u/s 115BBE of the Act as Incom....
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....mediately before the commencement of the North Eastern Areas (Reorganisation) Act, 1971, * any income which accrues or arises to him, * from any source in the areas 9 or States] aforesaid, or * by way of dividend or interest on securities; ii. As per the official website of the Income Tax North East https://incometaxnortheast.gov.in/orders/awareness-campaign/as per link indicated above it was stated in the last paragraph that, If the three limbs of the section 10(26) of the Income Tax Act, 1961 are fulfilled namely 1. Individual belonging to scheduled tribe in specified area 2. if source of income is accruing and arising from schedule area 3. If the individual is residing in the schedule area." 7. We have considered the submission made. The assessee claims that his income is exempt u/s 10(26) of the Act. In this context it is relevant to refer to Section 10 under Chapter III of the Act which deals with incomes which do not form a part of total income. As per the provisions of clause (26) of Section 10 of the Act, in computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (26) in the ....
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.... 6.10 The AO added to the total income of the appellant Rs. 80,079 being interest received on bank deposit. The appellant has explained that interest was received from his deposit with HDFC Bank, Nongpoh Branch (A/c No. 2266615300002291). Since this income is derived from a source in the specified area, the same is eligible for exemption u/s 10(26). This addition may be deleted. 6.11 As per information with the AO, the appellant had incurred cash expenditure of Rs. 65,69,700. This was held to be in violation of sections 40A(3), 40(i)(ia) and 37(1). This amount was added to the total income. 6.12 This amount is reported in AIR as withdrawal from current account in cash. There is no specific claim of expenditure by the appellant. In any case, the AO estimated the income of appellant from business. I have upheld the addition to the extent of Rs. 1,25,345. Once income is estimated, there is no scope for making any addition u/s 40A(3) or 40(a)(ia). This addition is deleted. 7. In the result appeal is partly allowed." 9. As regards the claim of exemption u/s 10(26) of the Act, the income arising from scheduled areas specified in the Act is to be treated as exempt u/s 10(26) of the....
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....essee hereby humbly requests to your kind honour that kindly refer Page No. 52 of Paper Book filed at Sl. 36 in which the Business Income determined Rs. 10,87,999 and the Learned Assessing Officer did not give any adverse comments in response to Remand Report furnished by him before the Learned Commissioner of Income Tax (Appeals) as mentioned at Page 11 in forth line from starting of said page regarding the appellant assessee is a Member of Scheduled Tribe of belonging to Bhoi Tribe, residing in Ri-Bhoi District of Meghalaya has earned income within this Scheduled Area is exempted under section 10(26) of the Income Tax Act, 1961. It is therefore humbly requested to your kind honour to kindly consider the facts of the case most sympathetically and grant natural justice to a Member of Scheduled Tribe resides and has earned income within VI Schedule Area of the Constitution of India and kindly allow exemption for the said Business Income earned in the Schedule Area of Rs. 10,87,999 and oblige. For which act of kindness, the appellant assessee, as in duty bound, shall ever pray. Ground no.-3 In this regard, the documentary evidences of income earned Rs. 1,09,749 determined by the ....