2025 (7) TMI 1051

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....ng the assessment order wherein the Assessing Officer assessed the income by applying @ 8% on the total turnover by rejecting the claim of the assessee u/s. 10(26AAA) of the Act. 3. The facts in brief are that the assessee is a sole proprietor under the name and style of M/s. Chandra Sales Agency with Mrs. Menuka Devi Agarwal who is resident of Sikkim and is engaged in the business of operating a petrol pump. Mrs Agarwal is a bona fide resident of Sikkim and is entitled to exemption u/s. 10(26AAA) of the Act in respect of her income which accrued to the assessee in the state of Sikkim. The case of the assessee was selected for scrutiny on the ground that the assessee has deposited substantial cash in banks during the demonetization period ....

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....tween the total turnover and contra entries which aggregated to Rs. 16,36,23,070/- and total credit entry in the bank account of Rs. 23,60,94,580/- which comes to Rs. 7,24,71,510/- and added the same to the income of the assessee in the assessment framed u/s. 144 of the Act dated 21.12.2019. 4. The Ld. CIT(A) also confirmed the said order of the AO by even ignoring the decision of the Hon'ble Apex Court in the case of Association of Old Settlers of Sikkim Vs. Union of India [2023] 146 taxmann.com 271 (SC). 4. After hearing the rival contentions and perusing the material available on record, we find that the assessee is a bona fide resident of Sikkim and is settled in Sikkim prior to 01.04.1975 as is apparent from the certificate issued by....

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....not consider the issue of assessee being bona fide Sikkim of resident and upheld the order rejecting the claim to exemption u/s. 10(26AAA). In our opinion the order of Ld. CIT(A) has been passed without considering the decision of the Hon'ble Apex Court in the case of Association of Old Settlers of Sikkim (supra) wherein it has been held as under: "the Taxpayers challenged the constitutional validity of S.10(26AAA) on the ground that it created discrimination between two categories of similarly placed individuals without any intelligible criteria which has a rational nexus to the object of exemption. The Taxpayers sought extension of exemption to individuals who were settled in Sikkim prior to 1 April 1975 but whose names were not include....