PAWANI DEVI, CHENNAI V. ITO, NCW -5(4), CHENNAI

ITA 3446/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9254 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 18-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. BHARATH
• Assessee Lawyers: R. PADMANABHAN
• Keywords: Set aside; Capital Gains

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.3446/CHNY/2018 & '& / ASSESSMENT YEAR : 2015-16 SMT. PAWANI DEVI, 41, WALL TAX ROAD, SOWCARPET, CHENNAI - 600 079. PAN : AHUPD 8120 D V. THE INCOME TAX OFFICER, NON CORPORATE WARD 5(4), CHENNAI. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI R. PADMANABHAN, CA +,)* - . / RESPONDENT BY : SHRI S. BHARATH, CIT / - 0# / DATE OF HEARING : 20.03.2019 12' - 0# / DATE OF PRONOUNCEMENT : 01.04.2019 / 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, CHENNA I, DATED 28.09.2018 AND PERTAINS TO ASSESSMENT YEAR 2015-16. 2. SHRI R. PADMANABHAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMP TION UNDER 2 I.T.A. NO.3446/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 29,96,369/-. IN FACT, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE INVESTED IN SHARES OF M/S JACKSON INVESTMENTS LTD. THE LD. REPRESENTATIVE FURTHER SU BMITTED THAT THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REPORT OF INVESTIGATION WING OF THE DEPARTMENT AT K OLKATA. ACCORDING TO THE LD. REPRESENTATIVE, A COPY OF THE SAID INVESTIGATION REPORT WAS NOT FURNISHED TO THE ASSESSEE. THEREFOR E, THE LD. REPRESENTATIVE SUBMITTED THAT AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE BY REMITTING BACK THE MATTER TO THE FILE O F THE ASSESSING OFFICER. THE LD. REPRESENTATIVE HAS ALSO PLACED HI S RELIANCE ON THE ORDER OF THIS TRIBUNAL IN KANHAIYALAL & SONS (HUF) V. ITO IN I.T.A. NO.1849/CHNY/2018 DATED 06.02.2019. 3. ON THE CONTRARY, SHRI S. BHARATH, THE LD. DEPART MENTAL REPRESENTATIVE, SUBMITTED THAT HE IS PLACING RELIAN CE ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS ). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE 3 I.T.A. NO.3446/CHNY/18 MADE INVESTMENTS IN THE SHARES OF M/S JACKSON INVES TMENTS LTD. FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THE ASSESSEE PURCHASED 10,000 SHARES OF M/S JACKSON INV ESTMENTS LTD. AT THE RATE OF 10/- PER SHARE. THE ASSESSEE SOLD THE SAME FOR A TOTAL CONSIDERATION OF 31,08,500/-. AFTER REDUCING THE PURCHASE PRICE, THE ASSESSEE DECLARED THE CAPITAL GAIN OF 29,96,369/-. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROU ND THAT THE COMPANY IN WHICH THE ASSESSEE INVESTED IS A PENNY S TOCK COMPANY. 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 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) (SUPRA) HAS REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATI ON. IN FACT, THIS TRIBUNAL HAS OBSERVED AT PARA 4 OF ITS ORDER AS FOL LOWS:- 4. WE HEARD SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. ADMITTEDLY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEES ON THE BASIS OF THE INFORMATION SAID TO BE RECEIVED FR OM THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA WIT H 4 I.T.A. NO.3446/CHNY/18 REGARD TO INVESTMENT MADE BY THE ASSESSEES IN THE P ENNY STOCK COMPANY. IT IS NOT IN DISPUTE THAT A COPY OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM KOLKA TA WAS NOT FURNISHED TO THE ASSESSEE. MOREOVER, DETAILS O F THE ENQUIRIES SAID TO BE MADE BY THE ASSESSING OFFICER WERE ALSO NOT FURNISHED TO THE ASSESSEES. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT THE ASSESSING OFFICER HAS TO RECONSIDER THE IS SUE AFRESH AFTER FURNISHING THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSU E IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL BRING ON RECORD THE ROLE OF THE ASSESSEES IN PROMOTING THE COMPANY AND THE RELATION SHIP OF THE ASSESSEES, IF ANY WITH THE PROMOTERS, ROLE OF T HE 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 THEREAF TER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFT ER 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) 5 I.T.A. NO.3446/CHNY/18 (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. ORDER PRONOUNCED IN THE COURT ON 1 ST APRIL, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 1 ST APRIL, 2019. KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT-9, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.