SMT. PINKY DEVI, CHENNAI V. ITO NON CORPORATE WARD 5 (5), CHENNAI

ITA 1803/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1852 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Capital Gains

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1803/CHNY/2018 & '& / ASSESSMENT YEAR : 2010-11 SMT. PINKY DEVI, NO.97, NARAYANA MUDALI STREET, SOWCARPET, CHENNAI - 600 079. PAN : ALXPP 7284 K V. THE INCOME TAX OFFICER, NON CORPORATE WARD -5(1), CHENNAI - 600 006. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI I. DINESH, ADVOCATE +,)* - . / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / - 0# / DATE OF HEARING : 19.11.2019 12' - 0# / DATE OF PRONOUNCEMENT : 06.12.2019 / 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) -5, CHENNAI, D ATED 21.03.2018 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. SHRI I. DINESH, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN RESPECT OF LONG T ERM CAPITAL GAINS ARISING 2 I.T.A. NO.1803/CHNY/18 OUT OF SALE OF SHARES TO THE EXTENT OF 20,02,200/-. IN FACT, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE INVESTED IN SHARES OF M/S BAKRA PRATISTHAN LTD. THE LD. COUNSEL FURTHER SUBMITTED THAT THE AS SESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REPORT OF DIRECTORATE OF INVESTIGATION, KOLKATA. ACCORDING TO THE LD. COUNS EL, A COPY OF THE SAID INVESTIGATION REPORT WAS NOT FURNISHED TO THE ASSES SEE. THEREFORE, THE LD. COUNSEL SUBMITTED THAT AN OPPORTUNITY MAY BE GI VEN TO THE ASSESSEE BY REMITTING BACK THE MATTER TO THE FILE OF THE ASS ESSING OFFICER. 3. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT HE IS PLACING RELIAN CE ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE PURCHASED 5680 SHARES OF M/S BAKRA PRATISTHAN LTD. FROM THE ORDER OF THE CIT(APPEALS) IT APPEARS THAT THE ASSESSEE SOLD THE SHARES OF M/S BAKRA PRATISTHAN LTD. AND ON SALE OF THESE SHARES, THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAINS TO THE EXTENT OF 20,02,200/-. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE COMPANY IN WHICH THE ASSESSEE INVESTED IS A PENNY STOCK COMPAN Y. HOWEVER, IT IS NOT BROUGHT ON RECORD HOW THE ASSESSEE IS INVOLVED IN PROMOTING THE PENNY STOCK COMPANY AND HOW THE ASSESSEE INVOLVED I N INFLATING THE SHARES OF THE COMPANY. MOREOVER, THE COPY OF THE I NVESTIGATION REPORT 3 I.T.A. NO.1803/CHNY/18 SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSESSEE. ON IDEN TICAL CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF KANHAIYALAL & SONS (HU F) V. ITO IN I.T.A. NO.1849/CHNY/2018, HAS REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. IN FACT, TH IS TRIBUNAL HAS OBSERVED AT PARA 4 OF ITS ORDER DATED 06.02.2019 AS FOLLOWS: - 4. WE HEARD SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. ADMITTEDLY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEES ON THE BASIS OF THE INFORMATION SAID TO B E RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA WITH REGARD TO INVESTMENT MAD E BY THE ASSESSEES IN THE PENNY STOCK COMPANY. IT IS NOT IN DISPUTE THAT A COPY OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM KOLKATA WAS NOT FURNISHED TO TH E ASSESSEE. MOREOVER, DETAILS OF THE ENQUIRIES SAID TO BE MADE BY THE ASSESSING OFFICER WERE ALSO NOT FURNISH ED TO THE ASSESSEES. IN THOSE CIRCUMSTANCES, THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFF ICER HAS TO RECONSIDER THE ISSUE AFRESH AFTER FURNISHING THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL BRING ON RECORD THE ROLE OF THE ASSES SEES IN PROMOTING THE COMPANY AND THE RELATIONSHIP OF TH E ASSESSEES, IF ANY WITH THE PROMOTERS, ROLE OF THE ASSESSEES IN INFLATING THE PRICE OF SHARES, ETC. T HE ASSESSING OFFICER SHALL ALSO FURNISH A COPY OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA AND OTHER MATERIALS IF ANYTHING IN HIS POSSESSION AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH 4 I.T.A. NO.1803/CHNY/18 LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEES. 5. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSE SSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ISSUE RAISED BY THE ASSESSEE WITH REGARD TO DEDUCTI ON UNDER SECTION 10(38) OF THE ACT IS REMITTED BACK TO THE FILE OF T HE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE MATTER AS DIREC TED BY THIS TRIBUNAL IN THE CASE OF KANHAIYALAL & SONS (HUF) (SUPRA) AND TH EREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 6 TH DECEMBER, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 6 TH DECEMBER, 2019. KRI. 5 I.T.A. NO.1803/CHNY/18 - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-5, CHENNAI 4. PRINCIPAL CIT-9, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.