SNEHALATHA BOHRA, CHENNAI V. ITO NON CORPORATE WARD 6(3), CHENNAI

ITA 2931/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6032 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 17-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANATH KUMAR RAHA
• Assessee Lawyers: D ANAND
• Keywords: Set aside

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL A SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.2931/CHNY/2018 ' #$' / ASSESSMENT YEAR : 2014-15 SMT. SNEHALATHA BOHRA, NO.376, MINT STREET, CHENNAI - 600 079. PAN : AADPB 9306 K V. THE INCOME TAX OFFICER, NON CORPORATE WARD 6(3), CHENNAI. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI D. ANAND, ADVOCATE ()&' * + / RESPONDENT BY : SHRI SANATH KUMAR RAHA, JCIT , # * -. / DATE OF HEARING :04.07.2019 /0$ * -. / DATE OF PRONOUNCEMENT : 01.08.2019 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI , DATED 10.07.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 1 0(38) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN RESPEC T OF LONG TERM 2 I.T.A. NO.2931/CHNY/18 CAPITAL GAINS ARISING OUT OF SALE OF SHARES TO THE EXTENT OF 12,51,374/-. IN FACT, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE INVESTED IN SHARES OF M/S KAILASH AUTO FINANCE LTD. THE LD. COUNSEL, FURTHER SUBMITTED THAT THE ASSESSING OFFIC ER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REPORT OF DIRECTO RATE OF INVESTIGATION, KOLKATA. ACCORDING TO THE LD. COUNS EL, A COPY OF THE SAID INVESTIGATION REPORT WAS NOT FURNISHED TO THE ASSESSEE. THEREFORE, THE LD. COUNSEL SUBMITTED THAT AN OPPORT UNITY MAY BE GIVEN TO THE ASSESSEE BY REMITTING BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI SANATH KUMAR RAHA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT HE IS P LACING RELIANCE ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS T HE CIT(APPEALS). 4. I HEARD THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. D.R. AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECO RD. THE ASSESSEE MADE INVESTMENTS IN THE SHARES OF M/S KAIL ASH AUTO FINANCE LTD. FROM THE ORDER OF THE ASSESSING OFFIC ER IT APPEARS THAT THE ASSESSEE PURCHASED 34000 SHARES OF M/S KAILASH AUTO FINANCE LTD. AND ON SALE OF THESE SHARES, THE ASSESSEE DIS CLOSED LONG TERM CAPITAL GAINS TO THE EXTENT OF 12,51,374/-. THIS WAS DISALLOWED BY 3 I.T.A. NO.2931/CHNY/18 THE ASSESSING OFFICER ON THE GROUND THAT THE COMPAN Y IN WHICH THE ASSESSEE INVESTED IS A PENNY STOCK COMPANY. HOWEVE R, IT IS NOT BROUGHT ON RECORD HOW THE ASSESSEE IS INVOLVED IN P ROMOTING THE PENNY STOCK COMPANY AND HOW THE ASSESSEE INVOLVED I N INFLATING THE SHARES OF THE COMPANY. MOREOVER, THE COPY OF T HE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION W ING OF THE DEPARTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSE SSEE. ON IDENTICAL CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF KANHAIYALAL & SONS (HUF) 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, 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 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. 4 I.T.A. NO.2931/CHNY/18 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. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5 I.T.A. NO.2931/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2019 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 1 ST AUGUST, 2019 KRI. * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT-9, CHENNAI 5. 4#7 (- /DR 6. 8' 9 /GF.