SHOBANABAI DILIPKUMAR, CHENNAI V. ITO NON CORPORATE WARD 6(2), CHENNAI

ITA 2974/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6019 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 29-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANATH KUMAR RAHA
• Assessee Lawyers: T C NARAYANAN ITP
• Keywords: Set aside

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL C SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.2974/CHNY/2018 ' #$' / ASSESSMENT YEAR : 2013-14 SMT. SHOBANABAI DILLIPKUMAR, 4/77/93, 4 TH FLOOR, SHIVASAKTHI APARTMENTS, SYDENHAMS ROAD, CHENNAI - 600 003. PAN : AAVPS 7137 D V. THE INCOME TAX OFFICER, NON CORPORATE WARD - 6(2), CHENNAI - 600 006. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI T.C. NARAYANAN, ITP ()&' * + / RESPONDENT BY : SHRI SANATH KUMAR RAHA, JCIT , # * -. / DATE OF HEARING : 02.07.2019 /0$ * -. / 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 31.08.2018 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2. SHRI T.C. NARAYANAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMP TION UNDER 2 I.T.A. NO.2974/CHNY/18 SECTION 10(38) OF THE INCOME-TAX ACT, 1961 (IN SHOR T 'THE ACT') IN RESPECT OF LONG TERM CAPITAL GAINS ARISING OUT OF S ALE OF SHARES TO THE EXTENT OF 33,76,497/-. IN FACT, ACCORDING TO THE LD. REPRESEN TATIVE, THE ASSESSEE INVESTED IN SHARES OF M/S GFL FINANCE LTD. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REPORT OF DIRECTORATE OF INVESTIGATION, KOLKATA. ACCORDING TO THE LD. REPRE SENTATIVE, A COPY OF THE SAID INVESTIGATION REPORT WAS NOT FURNISHED TO THE ASSESSEE. THEREFORE, THE LD. REPRESENTATIVE SUBMITTED THAT AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE BY REMITTING BACK THE MATT ER 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. REPRESENTATIVE FOR THE ASSESSEE AND THE LD. D.R. AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE MADE INVESTMENTS IN THE SHARES OF M/S GFL FINANCE LTD. FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THE ASSESSEE PURCHASED 24000 SHARES OF M/S GFL FINANCE LTD. AT 10/- PER SHARE. THE ASSESSEE DISCLOSED LONG TERM CAPITA L GAINS ON THE 3 I.T.A. NO.2974/CHNY/18 SALE OF THESE SHARES TO THE EXTENT OF 33,76,497/-. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE COMPANY IN WHICH THE ASSESSEE INVESTED IS A PENNY STOCK COM PANY. HOWEVER, IT IS NOT BROUGHT ON RECORD HOW THE ASSESS EE IS INVOLVED IN PROMOTING THE PENNY STOCK COMPANY AND HOW THE ASSES SEE INVOLVED IN INFLATING THE SHARES OF THE COMPANY. M OREOVER, THE COPY OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FRO M THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSESSEE. ON IDENTICAL CIRCUMSTANCES, THIS TRIBUNA L IN THE CASE OF KANHAIYALAL & SONS (HUF) V. ITO IN I.T.A. NO.1849/C HNY/2018, HAS REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER FOR RECONSIDERATION. IN FACT, THIS TRIBUNAL HAS OBSERV ED 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 4 I.T.A. NO.2974/CHNY/18 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. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5 I.T.A. NO.2974/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.