Aravind Nandlal Khatri, CHENNAI V. ITO Non Corporate Ward 4(1), CHENNAI

ITA 2035/CHNY/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9725 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 25-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: T VASUDEVAN
• Keywords: Date of conversion
• Section: 147

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL D / SMC BENCH, CHENNAI . . . , . '# , % & BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2035/CHNY/2018 ( )( / ASSESSMENT YEAR : 2011-12 SHRI ARAVIND NANDLAL KHATRI, OLD NO.6, NEW NO.7, 3 RD FLOOR, VENKATRAYAN STREET, PARK TOWN, CHENNAI - 600 003. PAN : ASSPK 9312 P V. THE INCOME TAX OFFICER, NON CORPORATE WARD - 4(1), CHENNAI - 600 006. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT 1 / 2% / DATE OF HEARING : 29.11.2018 3') / 2% / DATE OF PRONOUNCEMENT : 03.12.2018 / 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 09.05.2018 AND PERTAINS TO ASSESSMENT YEAR 2011-12. 2. SHRI T. VASUDEVAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ASSESSING OFFICER, AFTER REOPENI NG THE 2 I.T.A. NO.2035/CHNY/18 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 INVEST MENTS IN THE SHARES WERE MADE DURING THE FINANCIAL YEAR 2008-09, THEREFORE, IT CANNOT BE REOPENED FOR THE YEAR UNDER CONSIDERATION . ON A QUERY FROM THE BENCH WHEN THE SHARES WERE SOLD FOR THE PU RPOSE OF CLAIMING EXEMPTION UNDER SECTION 10(38) OF THE ACT? THE LD.COUNSEL VERY FAIRLY SUBMITTED THAT THE SHARES WE RE ADMITTEDLY SOLD DURING THE YEAR UNDER CONSIDERATION AND RIGHTL Y 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 SHORT TERM CAPITAL GAIN. HOWEVER, THE ASSESSING OFFICER 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 ASSESSING OFFICER FOUND THAT REASS ESSMENT IS INVALID. SINCE THE ASSESSEE HAS INVESTED IN THE SH ARES OF M/S CONCRETE CREDIT LIMITED THROUGH A SHARE BROKER, ACC ORDING TO THE LD. COUNSEL, THE ASSESSEE HAS RIGHTLY CLAIMED EXEMP TION UNDER SECTION 10(38) OF THE ACT. 3 I.T.A. NO.2035/CHNY/18 4. WE HEARD SHRI B. SAGADEVAN, THE LD. DEPARTMENTAL REPRESENTATIVE. ACCORDING TO THE LD. D.R., THE ASS ESSING OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA REGARDING THE INVESTMENT OF THE ASSESSEE IN THE PENNY STOCK COMPANY. THE ASSESSING OFFICER HAS NOT DISPU TED THE INVESTMENT. ACCORDING TO THE LD. D.R., THE ASSESSI NG OFFICER DISALLOWED THE CLAIM OF EXEMPTION UNDER SECTION 10( 38) OF THE ACT ON THE GROUND THAT THE CAPITAL GAIN AROSE DURING TH E YEAR UNDER CONSIDERATION ON THE SALE OF SHARES, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT FOR THE YEAR UN DER CONSIDERATION. SINCE THE PHYSICAL SHARES OF THE CO MPANY WERE AVAILABLE WITH THE ASSESSEE FROM 09.02.2010, ACCORD ING TO THE LD. D.R., THE ASSESSING OFFICER HAS RIGHTLY TREATED THE SAME AS SHORT TERM CAPITAL GAIN FROM THE DATE OF CONVERSION OF SH ARES INTO DEMAT. 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 INVESTI GATION WING OF THE DEPARTMENT AT KOLKATA WITH REGARD TO INVESTMENT OF THE ASSESSEE IN PENNY STOCK COMPANY, NAMELY, M/S CONCRE TE CREDIT LIMITED. THE ASSESSEE ALSO ADMITTEDLY SOLD THE SAI D SHARES AND 4 I.T.A. NO.2035/CHNY/18 CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE ACT D URING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSING OFFI CER HAS NOT DISPUTED THE SOURCE FOR INVESTMENT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION ON THE GROUND THA T THE INVESTMENT WAS IN A PENNY STOCK COMPANY. FROM THE MATERIAL AV AILABLE ON RECORD IT APPEARS THAT A COPY OF INFORMATION SAID T O BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSESSEE. IT IS NOT BROUGHT ON RE CORD THE RELATIONSHIP OF THE ASSESSEE WITH THE PROMOTERS OF M/S CONCRETE CREDIT LIMITED. IT IS ALSO NOT BROUGHT ON RECORD T HE ROLE OF THE ASSESSEE IN PROMOTING THE COMPANY, NAMELY, M/S CONC RETE CREDIT LIMITED, ISSUE OF PUBLIC SHARES, INFLATION OF PRICE OF SHARES, ETC. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED 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 O F THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL BRING ON RECO RD THE ROLE OF THE ASSESSEE IN PROMOTING THE COMPANY AND RELATIONSHIP OF THE ASSESSEE WITH OTHER PROMOTERS, ROLE OF THE ASSESSEE IN INFLATING THE PRICE OF SHARES, ETC. THE ASSESSING OFFICER SHALL ALSO FURNISH A COPY OF THE REPORT SAID TO BE RECEIVED FROM THE INVESTIG ATION WING OF THE 5 I.T.A. NO.2035/CHNY/18 DEPARTMENT AT KOLKATA TO THE ASSESSEE AND THEREAFTE R 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 3 RD DECEMBER, 2018 AT CHENNAI. SD/- SD/- (. '# ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 3 RD DECEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-5, CHENNAI 4. PRINCIPAL CIT-9, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.