Ashok Kumar Jain, CHENNAI V. ITO Business Ward X(1), CHENNAI

ITA 1426/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2973 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P J SRI GANESH
• Keywords: Set aside; Capital Gains
• Section: 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1426/CHNY/2018 ' (' / ASSESSMENT YEAR : 2006-07 SHRI ASHOK KUMAR JAIN, 14, NARAYANA MUDALI STREET, SOWCARPET, CHENNAI - 600 079. PAN : AAHPJ 0478 L V. THE INCOME TAX OFFICER, BUSINESS WARD - X(1), CHENNAI. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI P.J. SRI GANESH, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 0 . 1$ / DATE OF HEARING : 29.01.2019 2!( . 1$ / DATE OF PRONOUNCEMENT : 04.03.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI , DATED 26.10.2016 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2 I.T.A. NO.1426/CHNY/18 2. SHRI P.J. SRI GANESH, THE LD.COUNSEL FOR THE ASS ESSEE, SUBMITTED THAT THE ASSESSING OFFICER, AFTER REOPENI NG THE ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), DISALLOWED THE CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESS EE CLAIMED LONG TERM CAPITAL GAINS OF 15,39,444/- ON THE SALE OF 17000 SHARES OF TALENT INFOWAYS. THE LD.COUNSEL FURTHER SUBMITTED THAT THE SHARES WERE ADMITTEDLY SOLD DURING THE YEAR UNDER CONSIDER ATION AND RIGHTLY CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE ACT. 3. REFERRING TO THE ASSESSMENT ORDER, THE LD.COUNSE L FOR THE ASSESSEE SUBMITTED THAT PROFIT ON SALE OF SHARES HA S TO BE ASSESSED AS LONG TERM CAPITAL GAIN. HOWEVER, THE ASSESSING O FFICER REOPENED THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE HAS NOT PROPERLY DISCLOSED THE LONG TERM CAPITAL GAINS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE REASSESSMENT IS INVALID. SINCE TH E ASSESSEE HAS INVESTED IN THE SHARES OF M/S TALENT INFOWAYS THROU GH A SHARE BROKER, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS RIGHTLY CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE ACT. 4. WE HEARD SHRI AR.V. SREENIVASAN, THE LD. DEPARTM ENTAL REPRESENTATIVE. ACCORDING TO THE LD. D.R., THE ASS ESSING OFFICER 3 I.T.A. NO.1426/CHNY/18 RECEIVED INFORMATION FROM DIT (I&CI), NEW DELHI REG ARDING THE INVESTMENT OF THE ASSESSEE IN THE PENNY STOCK COMPA NY. THE ASSESSING OFFICER HAS NOT DISPUTED THE INVESTMENT. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT ON THE GR OUND THAT THE CAPITAL GAIN AROSE DURING THE YEAR UNDER CONSIDERAT ION ON THE SALE OF SHARES, THEREFORE, THE ASSESSING OFFICER HAS RIGHTL Y REOPENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM DIT (I& CI), NEW DELHI WITH REGARD TO INVESTMENT OF THE ASSESSEE IN PENNY STOCK COMPANY, NAMELY, M/S TALENT INFOWAYS. THE ASSESSEE ALSO ADM ITTEDLY SOLD THE SAID SHARES AND CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE ACT DURING THE YEAR UNDER CONSIDERATION. THEREFORE , THE ASSESSING OFFICER HAS NOT DISPUTED THE SOURCE FOR INVESTMENT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION ON THE GR OUND THAT THE INVESTMENT WAS IN A PENNY STOCK COMPANY. FROM THE MATERIAL AVAILABLE ON RECORD IT APPEARS THAT A COPY OF INFOR MATION SAID TO BE RECEIVED FROM DIT (I&CI), NEW DELHI WAS NOT FURNISH ED TO THE 4 I.T.A. NO.1426/CHNY/18 ASSESSEE. IT IS NOT BROUGHT ON RECORD THE RELATION SHIP OF THE ASSESSEE WITH THE PROMOTERS OF M/S TALENT INFOWAYS. IT IS ALSO NOT BROUGHT ON RECORD THE ROLE OF THE ASSESSEE IN PROMO TING THE COMPANY, NAMELY, M/STALENT INFOWAYS, ISSUE OF PUBLI C SHARES, INFLATION OF PRICE OF SHARES, ETC. IN THOSE CIRCUM STANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, TH E ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL BRING ON RECORD THE ROLE OF THE ASSESSEE IN P ROMOTING THE COMPANY AND RELATIONSHIP OF THE ASSESSEE WITH OTHER PROMOTERS, ROLE OF THE ASSESSEE IN INFLATING THE PRICE OF SHAR ES, ETC. THE ASSESSING OFFICER SHALL ALSO FURNISH A COPY OF THE REPORT SAID TO BE RECEIVED FROM DIT (I&CI), NEW DELHI TO THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFT ER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5 I.T.A. NO.1426/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 4 TH MARCH, 2019 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 4 TH MARCH, 2019. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT-9, CHENNAI. 5. 69 ,1 /DR 6. :' ; /GF.