An individual possessing domicile in Sikkim prior to its merger on April 26, 1975, is entitled to the income tax exemption provided under Section 10(26AAA) of the Income Tax Act, 1961, regardless of the nature of the business or proprietary concern status.

ORDER

Per Pradip Kumar Choubey, Judicial Member:

This appeal filed by the assessee is directed against the order dated 17.12.2019 of the Office of the Assistant Commissioner of Income Tax passed under Section 143(3) of the Assessment Year 2017-18 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

2. The brief facts of the case of the assessee, assessee filed its return of income for the assessment year 2017-18 declaring total income of Rs. 21,87,070/- the case of the assessee was selected for complete scrutiny and subsequently the assessment was completed U/s 143(3) of the Act at the income of Rs. 8,77,92,80/- after making addition of Rs. 65,922,090/- unexplained money U/s 69A of the Act.

Aggrieved by the said order assessee preferred appeal before the CITA wherein appeal of the assessee has been dismissed.

Being aggrieved by and dissatisfied the assessee preferred appeal before us.

3. The LD AR challenges the very impugned order thereby submitting that CIT(A) erred both in law and on facts in sustaining the addition of Rs. 65,92,209/- ignoring the comprehensive documents submitted by the assessee including audit accounts, books of account, capital amounts, bank statement, cash deposit statement, confirmation and Vat audit report. The Ld. AR further submits that the Ld. CIT(A) failed to adjudicate upon and appreciate that assessee specific claim for exemption U/s (26AAA) of the Income Tax Act being an old settler of Sikkim prior to 26.04.1975. The further submission of the AR is that CIT(A) has erred in law and on facts in confining his consideration only to the issue of alleged advances of Rs. 47,00,000- completely ignoring other vital aspects specifically raised in the remand proceeding and gross reply filed by the assessee. The Ld. AR further submits that assessee had already raised and explain the claim for exemption U/s 10(26AAA) during the remand proceedings vide written reply but the Ld. CITA fail to consider the assessee’s claim despite the detailed submission and supporting documentary evidences. In support of his submission assessee have placed the residential domicile certificate, school report and the certificate of commencement of business issued by the Government of Sikkim. The Ld. AR submits that since the exemption U/s 10(26AAA) was duly raised and supported by evidences hence the prayer of the AR is that to pass an order in favour of the assessee allowing the benefit of exemptions 10(26AAA). The Ld. AR placed reliance of Supreme Court order in WP© No. 59/ 2013. The Ld. AR further submits that Assessing Officer erred in not considering that the advances recovered amounting to Rs. 47,00,000/- from four parties were reflected in the statement of affairs and these advances were made and recovered exclusively through bank cheques which are clearly documented in both the bank statement and the books of accounts provided to the AO and uploaded on the IT Portal.

Contrary to that Ld DR supports the impugned order.

4. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, we find that the assessee during the remand report vide its written reply has claim that assessee is old settler of the Sikkim eligible for exemption U/s 10(26AAA) as he domicile prior to 26.04.1975.In support of his contention assessee has filed domicile certificate which is as below:

OFFICE OF THE DISTRICT COLLECTOR EAST DISTRICT, GANGTOK

Sl.No. RC/E/LRMDD/16/000079 Date: 17/2/2017

RESIDENTIAL CERTIFICATE

(Issued under the provisions of Home Department's Notification No. 23/Home/2015 dated 15.05.2015 in respect of category 1 and 2)

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