ITO Vs Achula Darneichong Sailo (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT) in Kolkata addressed an appeal filed by the Income Tax Officer (ITO) against an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The dispute centered on the tax exemption claim under Section 10(26) of the Income Tax Act, 1961, by Achula Darneichong Sailo, a scheduled tribe member and medical doctor operating Bethany Hospital in Shillong. The Assessing Officer (AO) had reopened the assessment due to unexplained high-value bank transactions, including significant cash deposits, and professional income reported. Despite the assesses claim of exemption under Section 10(26), the AO added Rs. 6,40,24,830/- to the assesses income. The CIT(A) allowed the assesses appeal, accepting the exemption claim based on the assesses scheduled tribe status and the location of income generation within a specified area under the Sixth Schedule of the Constitution.
The ITAT, however, found the CIT(A)’s order inadequate, noting the lack of verification regarding the source of the substantial cash deposits and bank transactions. The ITAT pointed out that while the CIT(A) relied on a prior assessment year’s findings to support the exemption, the current assessment required independent verification of the income sources against the bank deposits. The ITAT emphasized that the CIT(A) had not adhered to Section 250(6) of the Income Tax Act, which mandates a thorough examination of the evidence. Consequently, the ITAT set aside the CIT(A)’s order and restored the appeal for a de novo examination. The ITAT directed the CIT(A) to re-evaluate the case, allowing the assessee to present evidence supporting the exemption claim under Section 10(26) and to examine the bank account deposits in relation to the income sources. The ITAT also specified that the CIT(A) should conduct the re-examination in accordance with Rule 46A of the Income Tax Rules, 1962.
