SMT. VANDANA SURESH BHANDARI, CHENNAI V. ITO, NCW - 6 (4), CHENNAI

ITA 2854/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1389 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 14-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: SURESH KUMAR
• Keywords: Wrong claim; Penny stocks; Capital Gains
• Section: 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH: CHENNAI , BEFORE S HRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO. 2854 /CHNY/ 20 1 9 / ASSESSMENT YEAR: 20 11 - 12 SMT. VANDANA SURESH BHANDARI , NO.44/3, NARAYANA MUDALI STREET, SOWCARPET, CHENN A I 600 079. [PAN: A A DPV 2137L ] VS. THE INCOME TAX OFFIC ER, NON - CORPORATE WARD 6 (4), BSNL BUILDING, 4 TH FLOOR, GREAMS ROAD, CHENNAI 600 006. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SURESH KUMAR, C.A. /RESPONDENT BY : M S . R. ANITHA, J CIT / DATE OF HEARING : 1 9 .03.2020 / DATE OF PRONOUNCEMENT : 1 9 .03 .20 20 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) - 5 , CHENNAI IN I.T.A NO. 198/CIT(A) - 5/2018 - 19 DATED 31.07.2019 FOR THE ASSESSMENT YEAR 20 11 - 12 . 2. MR. SURESH KUMAR, CHARTERED ACCOUNTANT REPRESENTED ON BEHALF OF THE ASSESSEE AND MS. R. ANITHA, JCIT REPRE SENTED ON BEHALF OF THE R EVENUE . ITA NO. 2854 / CHNY / 201 9 : - 2 - : 3. IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE ISSUES IN THE APPEAL WAS IN RESPECT OF THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR EXEMPTION U/S.10(38) OF THE INCOME TAX ACT, 1961. IT WAS A SUBMISSION THAT THE ASSESSEE HAS MADE PURC HASES OF SHARES OF M/S. REGENCY TRUST LIMITED. IT WAS A SUBMISSION THAT 2400 SH ARES WERE PURCHASED AS EARLY AS IN THE ASSESSMENT YEAR 2005 - 2006 AND 1200 SHARES WERE PURCHASED BEFORE MARCH 2010. THE SHARES HAD BEEN HELD FOR MORE THAN FIVE YEARS. THE SHAR ES WERE PURCHASED THROUGH THE BOMBAY STOCK EXCHANGE [BSE] FOR A TOTAL CONSIDERATION OF RS.15,149/ - AND THE PAYMENTS WERE ALL MADE THROUGH CHEQUES. THE SHARE BROKER WAS M/S. NETWORTH STOCK BROKING LIMITED. IT WAS A SUBMISSION THAT AFTER FIVE YEARS, THE AS SESSEE HAD SOLD 3600 SHARES DURING THE ASSESSMENT YEAR 2011 - 12 FOR A TOTAL CONSIDERATION OF RS.3,14,768/ - . IT WAS A SUBMISSION THAT SECURITY TRANSACTION TAX HAD ALSO BEEN PAID ON THE SAME. THE SHARES WERE HELD IN THE DEMAT ACCOUNT OF THE ASSESSEE FOR MOR E THAN FIVE YEARS. IT WAS A SUBMISSION THAT JUST BECAUSE THE SAID COMPANY WAS CONSIDERED AS PENNY STOCKS , THE ASSESSEES TRANSACTIONS COULD NOT BE TREATED AS BOGUS. IT WAS A FURTHER SUBMISSION THAT EVEN THE SALES HAD BEEN DONE THROUGH THE BSE AND BY US ING THE SAME BROKER ITSELF AND THE TRANSACTIONS WERE ROUTED THROUGH THE DEMAT ACCOUNT AND PAYMENTS THROUGH THE BANK ACCOUNT. IT WAS A SUBMISSION THAT THE ITA NO. 2854 / CHNY / 201 9 : - 3 - : ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TREATED THE TRANSACTIONS AS PE NNY STOCK TRANSACTIONS AND DISALLOWED THE ASSESSEES CLAIM U/S.10(38) OF THE INCOME TAX ACT, 1961. IT WAS A SUBMISSION THAT THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN RESPECT OF SIMILAR TRANSACTIONS W H ER E THE PURCHASES AND SALES HAD BEEN DONE THROUGH THE RECOGNIZED STOCK EXCHANGE, THROUGH DEMAT ACCOUNT AND THE PAYMENTS PROCESSED THROUGH BANKS ALONE. IT WAS FURTHER A SUBMISSION THAT IN THE ASSESSEES CASE, THE SITUATION WAS BETTER IN SO FAR AS THE ASSESSE E HAS BEEN HOLDING THE SHARES FOR MORE THAN FIVE YEARS. HE RELIED UPON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI NARENDRA HARLALKA, CHENNAI VS. THE INCOME TAX OFFICER, CHENNAI IN I.T.A. NO.1134/CHNY/2019 DATED 05.08.2019, A S ALSO THE DECISION IN THE CASE OF VIJAY KUMAR BAID [HUF] VS. THE INCOME TAX OFFICER, CHENNAI IN I.T.A. NO.2300/ CHNY/201 8 DATED 24.01.2019 AND THE DECISION IN THE CASE OF SMT. NAINIMAL JAIN ANITHA, CHENNAI IN I.T.A. NO.384/CHNY/2019 DATED 18.06.2019 , WHER EIN IT HAS BEEN HELD IN PARA - 5 AS FOLLOWS: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THIS IS NOT A CASE WHERE THE AO HAS BEEN ABLE TO POINT OUT WHERE THE ASSESSEE HAS MADE A BOGUS CLAIM OF LONG TERM CAPITAL GAINS EXEMPT U/S.10(38) OF THE ACT. FURTHER, PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT FROM PAGE - 2, PARA - 4 TO PARA 34, THE AO HAS ONLY MADE ALLEGATION IN RESPECT OF THE COMPANY AND THE MODUS OPERANDI OF THE BOGUS CLAIM U/S.10(38) OF THE A CT. THE EVIDENCES CLEARLY SHOW THAT THE TRANSACTIONS OF PURCHASE AND SALE OF THE SHARES BY THE ASSESSEE HEREIN ARE THROUGH BSE BY PAYING STT. THIS IS NOT A CASE FOR OFFLINE PURCHASE, NOR IS THE ITA NO. 2854 / CHNY / 201 9 : - 4 - : CASE OF DIRECT PURCHASE. NEITHER IS THE ASSESSEES NAME COMING OUT IN THE INVESTIGATION REPORT, WHICH HAS BEEN RECEIVED BY THE AO FROM DIRECTORATE OF INVESTIGATION, KOLKATA. THIS BEING SO, THE CLAIM OF ASSESSEE CANNOT BE DISALLOWED MERELY ON PRESUMPTIONS AND THE AO IS DIRECTED TO GRANT THE ASSESSEE BENEFIT OF EXEMPTI ON U/S.10(38) OF THE ACT AS CLAIMED IN RESPECT OF LONG TERM CAPITAL GAINS GENERATED BY PURCHASE AND SALE OF SHARES OF M/S.SULABH ENGINEERS AND SERVICES LTD., AS CLAIMED BY THE ASSESSEE. 4. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPP ORTED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 5 . I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 6. A PERUSAL OF THE FACTS IN THE PRESENT CASE SHOWS THAT THE DISALLO WANCE OF THE ASSESSEES CLAIM OF DEDUCTION U/S.10(38) OF THE INCOME TAX ACT, 1961 HAS BEEN MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ONLY O N PRESUMPTION. CLEARLY THE FACTS IN THE PRESENT CASE SHOWS THAT T HE TRANSACTIONS IN THE CASE OF THE ASSESSEE IS THROUGH RECOGNIZED STOCK EXCHANGE AND THROUGH A BROKER WHO IS NOT IN THE TAINTED LIST. THE TRANSACTIONS HAVE BEEN MADE THROUGH DEMAT ACCOUNT AND THE PAYMENTS AND RECEIPTS THROUGH THE BANKING CHANNELS ONLY. M ORE THAN ANYTHING ELSE , IN THE ASSESSEES CASE, THE TRANSACTIONS ARE NOT TRANSACTIONS WHICH ARE OF TWELVE MONTHS OR OF AROUND TWELVE MONTHS , T HESE A RE TRANSACTIONS ITA NO. 2854 / CHNY / 201 9 : - 5 - : HAVING MORE THAN FIVE YEAR HOLDINGS. JUST BECAUSE THE COMPANY WHOSE SHARES THE ASSESSEE HA S DEALT IN HAS BEEN IDENTIFIED AS A PENNY STOCK , CANNOT MAKE THE TRANSACTIONS OF THE ASSESSEE INELIGIBLE FOR THE DEDUCTION U/S.10(38) OF THE INCOME TAX ACT, 1961. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION S OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL REFERRED TO SUPRA, THE ASSESSING OFFICER IS DIRECTED TO GRANT THE ASSESSEE THE BENEFIT OF DEDUCTION U/S.10(38) AS CLAIMED. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 2 854 /CHNY/20 1 9 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 TH MARCH , 20 20 IN CHENNAI. SD/ - ( ) (GEORGE MATHAN) /JUDICIAL MEMBER / CHENNAI, / DATED: 1 9 TH MARCH , 2020 IA, SR. PS / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF