2022 (11) TMI 987 - AT - Income Tax

Revision u/s 263 - Capital carried forward and the introduction of capital as income exempt u/s.10(26) - due opportunity was provided to the assessee by the AO before passing the order u/s. 144 - CIT(Appeals) was of the view that income from the State of Tripura earned by the assessee would also qualify for exemption under section 10(26 and whatever may be the brought forward capital, it will be treated at par with the regular income unless it is demonstrated by the Revenue that such income has been sourced outside of the specified area - Whether CIT(A) failed to appreciate the fact that the onus to prove otherwise by the AO does not hold good in the instant case since the assessee had failed to discharge his onus properly? - HELD THAT - As far as the capital introduced in earlier years are concerned, the assessee has explained his position. Now the Department is unable to bring on record any material, which can demonstrate that such capital was introduced from an income earned outside of this specified area. The ld. 1st Appellate Authority has discussed both these issues in the concluding paragraph and after going through the last paragraph of the ld. CIT(Appeals)'s order, we do not find any error in it and accordingly we do not find any merit in the appeal of the Revenue. Jurisdiction of ACIT, Tezpur Circle - Whether CIT(Appeals) is wrong in observing that jurisdiction of the case was with the ACIT, Circle-Tezpur ? - Though with the assistance of ld. D.R., we have gone through the record carefully. The assessee has not placed on record the Notification vide which jurisdictions are being given. What we could gather from the record available before us is that there was certain classification of cases and for better management of the assessments, it was decided that cases of the assessee where income exceeded Rs. 5,00,000/- will be assessed by ACIT, Ward-Tezpur and below this monetary limit would remain with concerned ITO at Lakhimpur. The assessee is trying to demonstrate that last return available in that Notification is to be construed filed later on. He is relying upon the returned income filed in A.Y. 2007-08, which was NIL income. To our mind, it is misleading argument. The return of income ought to be considered either A.Y. 2003-04 or 2005-06, not A.Y. 2007-08. Hence, the jurisdiction over the assessee has rightly been taken by ACIT, Tezpur Circle. This finding is given on the basis of limited incomplete information and accordingly this ground of appeal is rejected.

Summary

Issues:
1. Appeal against order of ld. Commissioner of Income Tax (Appeals) for Assessment Year 2004-05.
2. Exemption under section 10(26) of the Income Tax Act.
3. Conduct of the assessee towards the Department.
4. Jurisdiction of the case.
5. Opportunity of hearing given to the assessee.

Analysis:

Issue 1:
The Revenue appealed against the order of the ld. Commissioner of Income Tax (Appeals) for Assessment Year 2004-05. The appeal was presented before the Tribunal on 30.12.2010 and subsequently taken on the Board on 16.12.2015. Despite multiple adjournments, the Tribunal proceeded to hear the appeal ex-parte due to the prolonged duration of the case.

Issue 2:
The main ground of appeal raised by the Revenue was related to the exemption under section 10(26) of the Income Tax Act. The ld. CIT(Appeals) held that the assessee, being a member of a Scheduled Tribe residing in Arunachal Pradesh, was entitled to exemption under section 10(26) for income earned from Tripura. The Full Bench of Gauhati High Court's judgment supported this exemption, and the Tribunal upheld the decision, finding no error in the ld. CIT(Appeals)'s order.

Issue 3:
The Tribunal noted the hostile and contemptuous conduct of the assessee towards the Department, leading to delays and disruptions in the proceedings. Despite the assessee's apology and subsequent adjournments, the Tribunal proceeded with the hearing and decision on the merits due to the extended duration of the case.

Issue 4:
Regarding the jurisdiction of the case, the assessee challenged the observation that the jurisdiction was with the ACIT, Circle-Tezpur. The Tribunal reviewed the available information and determined that the jurisdiction over the assessee was rightly taken by ACIT, Tezpur Circle, based on the classification of cases and income thresholds.

Issue 5:
The assessee raised a Cross Objection challenging the observation that due opportunity of hearing was given. The Tribunal dismissed this ground as an academic issue since the order of the ld. CIT(Appeals) was upheld, leading to the dismissal of both the appeal and Cross Objection.

In conclusion, the Tribunal dismissed the appeal and Cross Objection, upholding the decision of the ld. CIT(Appeals) regarding the exemption under section 10(26) and jurisdiction of the case. The Tribunal's decision was pronounced in open court on November 03, 2022.