RIKHABCHAND VINOD KUMAR, CHENNAI V. ITO, NCW - 2, CHENNAI

ITA 2146/CHNY/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9633 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 19-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Capital Gains
• Section: 20

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.2146/CHNY/2019 & '& / ASSESSMENT YEAR : 2015-16 SHRI RIKHABCHAND VINOD KUMAR, NO.12 (OLD NO.26), BALA MUDALI STREET, T. NAGAR, CHENNAI - 600 017. PAN : ABSPV 6919 Q V. THE INCOME TAX OFFICER, NON CORPORATE CIRCLE - 2(2), CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI D. ANAND, ADVOCATE +,)* - . / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / - 0# / DATE OF HEARING : 16.10.2019 12' - 0# / DATE OF PRONOUNCEMENT : 20.11.2019 / 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) -2, CHENNA I, DATED 24.05.2019 AND PERTAINS TO ASSESSMENT YEAR 2015-16. 2. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 1 0(38) OF THE 2 I.T.A. NO.2146/CHNY/19 INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN RESPEC T OF LONG TERM CAPITAL GAINS ARISING OUT OF SALE OF SHARES TO THE EXTENT OF 50,45,800/-. IN FACT, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE INVESTED IN SHARES OF M/S GCM SECURITIES LTD. THE L D. COUNSEL FURTHER SUBMITTED THAT THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REPORT OF DIRECTORATE OF INVESTIGATION, KOLKATA. ACCORDING TO THE LD. COUNSEL, A COPY OF T HE SAID INVESTIGATION REPORT WAS NOT FURNISHED TO THE ASSES SEE. THEREFORE, THE LD. COUNSEL SUBMITTED THAT AN OPPORTUNITY MAY B E GIVEN TO THE ASSESSEE BY REMITTING BACK THE MATTER TO THE FILE O F THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT SHE IS PLACING RELIANCE ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS T HE CIT(APPEALS). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE MADE INVESTMENTS IN THE SHARES OF M/S GCM SECURITIE S LTD. FROM THE ORDER OF THE CIT(APPEALS) IT APPEARS THAT THE A SSESSEE SOLD 6000 SHARES OF M/S GCM SECURITIES LTD. AND ON SALE OF THESE 3 I.T.A. NO.2146/CHNY/19 SHARES, THE ASSESSEE DISCLOSED LONG TERM CAPITAL G AINS TO THE EXTENT OF 50,45,800/-. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE COMPANY IN WHICH THE ASSESSEE INVESTED IS A PENNY STOCK COMPANY. HOWEVER, IT IS NOT BROUGHT ON RECORD HOW THE ASSESSEE IS INVOLVED IN PROMOTING TH E PENNY STOCK COMPANY AND HOW THE ASSESSEE INVOLVED IN INFLATING THE SHARES OF THE COMPANY. MOREOVER, THE COPY OF THE INVESTIGATI ON REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPA RTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSESSEE. ON IDEN TICAL CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF KANHAIY ALAL & SONS (HUF) V. ITO IN I.T.A. NO.1849/CHNY/2018, HAS REMIT TED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR REC ONSIDERATION. IN FACT, THIS TRIBUNAL HAS OBSERVED AT PARA 4 OF ITS O RDER 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 4 I.T.A. NO.2146/CHNY/19 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 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 ASSESSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITI ES BELOW ARE SET ASIDE AND THE ISSUE RAISED BY THE ASSESSEE WITH REG ARD TO DEDUCTION UNDER SECTION 10(38) OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXA MINE THE MATTER AS DIRECTED BY THIS TRIBUNAL IN THE CASE OF KANHAIY ALAL & SONS (HUF) (SUPRA) AND THEREAFTER DECIDE THE ISSUE AFRESH IN A CCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE A SSESSEE. 5 I.T.A. NO.2146/CHNY/19 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 20 TH NOVEMBER, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 20 TH NOVEMBER, 2019. KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-2, CHENNAI 4. PRINCIPAL CIT-1, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.