Anuj Shyam Duseja, CHENNAI V. ITO International Taxation Ward 1(1), CHENNAI

ITA 1001/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1055 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C YAMUNA
• Keywords: Penny stocks
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1001/CHNY/2018 ( )( / ASSESSMENT YEAR : 2014-15 SHRI ANUJ SHYAM DUSEJA, NO.7, 2 ND STREET, KASTURI RANGA ROAD, GOPALAPURAM, CHENNAI - 600 086. PAN : AAEPA 5035 B V. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD 1(1), CHENNAI - 600 006. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : NONE -.+, / 0 / RESPONDENT BY : MS. C. YAMUNA, JCIT 1 / 2% / DATE OF HEARING : 04.09.2018 3') / 2% / DATE OF PRONOUNCEMENT : 12.09.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -16, CHENN AI, DATED 31.01.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. NO ONE APPEARED FOR THE ASSESSEE INSPITE OF SERV ICE OF NOTICE OF HEARING BY RPAD. THE REGISTRY HAS PLACED ON RECORD THE 2 I.T.A. NO.1001/CHNY/18 POSTAL ACKNOWLEDGEMENT AS PROOF OF SERVICE OF NOTIC E ON THE ASSESSEE. THEREFORE, WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PROCEEDED TO DISPOSE THE APPEAL ON MERIT. 3. MS. C. YAMUNA, THE LD. DEPARTMENTAL REPRESENTATI VE SUBMITTED THAT THE ASSESSEE IS A NON-RESIDENT INDIA N AND DISCLOSED THE LONG TERM CAPITAL GAIN OF 36,99,500/- ON SALE OF ONE LAKH SHARES OF M/S KAILASH AUTO FINANCE LIMITED. THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE INCOME-TAX AC T, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. D.R., THE I NVESTIGATION WING OF THE DEPARTMENT AT KOLKATA UNEARTHED BOGUS ENTRIES O F LONG TERM CAPITAL GAIN. THE CALCUTTA STOCK EXCHANGE LIMITED AS A BROKER, HAS TRADED IN PENNY STOCKS. THE INVESTIGATION WING OF THE DEPARTMENT HAS FOUND THAT M/S KAILASH AUTO FINANCE LIMITED ALS O INVOLVED IN BOGUS TRANSACTIONS OF SHARES. ACCORDING TO THE LD. D.R., THE INVESTIGATION MADE BY THE DEPARTMENT SHOWS THAT A S CHEME WAS HATCHED BY VARIOUS PLAYERS TO OBTAIN / PROVIDE ACCO MMODATION ENTRIES OF BOGUS LONG TERM CAPITAL GAINS. ON THE B ASIS OF INVESTIGATION REPORT, ACCORDING TO THE LD. D.R., TH E ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS ACTUALLY PURCHASED THE SHARES ON 10.02.2012 WHEN THE COMPANY WAS IN FORMATIVE STAGE. THE 3 I.T.A. NO.1001/CHNY/18 ASSESSEE PURCHASED ONE LAKH SHARES OFFLINE FROM M/S TRUMP TRADERS (P.) LTD., KOLKATA. ACCORDING TO THE LD. D .R., THE ASSESSING OFFICER FOUND THAT ONE LAKH SHARES OF M/S CAREFUL P ROJECTS ADVISORY LTD. HAVE BEEN SOLD TO THE ASSESSEE FOR 1 PER SHARE. SINCE THE ASSESSING OFFICER FOUND THAT THE ENTIRE TRANSACTION S WERE BOGUS AND IT IS A PENNY STOCK TRANSACTION ON THE BASIS OF THE INVESTIGATION REPORT OF THE DEPARTMENT, ACCORDING TO THE LD. D.R. , HE DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 10(38) OF T HE ACT. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT THE ASSESSING OFFICER MADE ADDITION OF 1,10,985/- BEING THE COMMISSION UNDER SECTION 69 OF THE ACT. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRME D THE ORDER OF THE ASSESSING OFFICER. 5. WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM TH E ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THE ASSESSEE IS A NON-RESIDENT INDIAN. THEREFORE, IT HAS TO BE EXAMINED HOW THE A SSESSEE WAS ABLE TO INVEST BLACK MONEY IN SHARE TRANSACTIONS. THE ASSESSING OFFICER HAS SIMPLY PLACED RELIANCE ON THE SO-CALLED REPORT OF INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA. T HERE WAS NO 4 I.T.A. NO.1001/CHNY/18 REFERENCE ABOUT THE ASSESSEES TRANSACTIONS IN THE INVESTIGATION REPORT OF THE DEPARTMENT. MOREOVER, THE COPY OF RE PORT WAS NOT FILED BEFORE THIS TRIBUNAL AND ALSO NOT FURNISHED TO THE ASSESSEE. THEREFORE, THIS TRIBUNAL HAS NO OCCASION TO GO THRO UGH THE INVESTIGATION REPORT OF THE DEPARTMENT. THE ASSESS ING OFFICER AT PARA 2.9 OF HIS ORDER OBSERVED THAT CONSIDERING THE CIRCUMSTANTIAL AND DIRECT EVIDENCES, THE LONG TERM CAPITAL GAIN OF 36,99,500/- DISCLOSED BY THE ASSESSEE WAS NOT GENUINE ONE. THE REFORE, IT WAS TREATED AS CASH CREDIT UNDER SECTION 69 OF THE ACT. 6. IT IS NOT KNOWN WHAT IS THE EVIDENCE INVOLVING T HE ASSESSEE IS AVAILABLE BEFORE THE ASSESSING OFFICER. IN THE ABS ENCE OF ANY EVIDENCE BEFORE THIS TRIBUNAL AND NO EVIDENCE OF FU RNISHING COPIES OF THE MATERIAL TO THE ASSESSEE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITI ES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO FURN ISH COPIES OF ENTIRE MATERIAL, INCLUDING THE REPORT OF THE INVEST IGATION WING OF THE DEPARTMENT AT KOLKATA, AND THEREAFTER DECIDE THE IS SUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 5 I.T.A. NO.1001/CHNY/18 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12 TH SEPTEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 12 TH SEPTEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-16, CHENNAI-34 4. CIT (INTERNATIONAL TAXATION), CHENNAI. 5. 7: -2 /DR 6. ;( < /GF.