SHEELA DEVI, CHENNAI V. ITO, NCW-6(3), CHENNAI

ITA 3452/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6340 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 19-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJVANSH
• Keywords: Set aside; Capital Gains

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !', $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.3452/CHNY/2018 ' (' / ASSESSMENT YEAR : 2015-16 SMT. SHEELA DEVI, NO.97, NARAYANA MUDALI STREET, CHENNAI - 600 079 PAN : ABCPS 7140 L V. THE INCOME TAX OFFICER, NON CORPORATE WARD 6(3), CHENNAI. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI N. VIJAY KUMAR, CA ,-*+ . / / RESPONDENT BY : SHRI HOMI RAJVANSH, CIT 0 . 1$ / DATE OF HEARING : 08.04.2019 23( . 1$ / DATE OF PRONOUNCEMENT : 26.04.2019 / 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, CHENNAI, D ATED 28.09.2018 AND PERTAINS TO ASSESSMENT YEAR 2015-16. 2. SHRI N. VIJAY KUMAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN RE SPECT OF LONG TERM CAPITAL GAINS ARISING OUT OF SALE OF SHARES, TO THE EXTENT OF 61,25,550/-. IN FACT, 2 I.T.A. NO.3452/CHNY/18 ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE I NVESTED IN SHARES OF M/S GCM SECURITIES LTD. THE LD. REPRESENTATIVE FUR THER SUBMITTED THAT THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REPORT OF INVESTIGATION WING OF THE DEPARTMENTJJ AT KOLKATA. ACCORDING TO THE LD. REPRESENTATIVE, A COPY OF THE SAID INVESTIG ATION REPORT WAS NOT FURNISHED TO THE ASSESSEE. THEREFORE, THE LD. REPR ESENTATIVE SUBMITTED THAT AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE BY REMITTING BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI HOMI RAJVANSH, THE LD. DEP ARTMENTAL 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 MADE INVESTMENTS IN THE SHARES OF M/S GCM SECURITIES LTD . FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THE ASSESSEE PURCHASED 12,000 SHARES OF M/S JACKSON INVESTMENTS LTD. AT THE RATE OF 1/- PER SHARE. THE ASSESSEE SOLD THE SAME FOR A TOTAL CONSIDERATION OF 61,25,550/-. AFTER REDUCING THE PURCHASE PRICE, THE ASSESSEE DECLARED THE CAPITAL GAIN OF 58,85,550/-. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE COMPANY IN WHICH THE ASSESSEE INVES TED IS A PENNY STOCK COMPANY. HOWEVER, IT IS NOT BROUGHT ON RECOR D HOW THE ASSESSEE IS INVOLVED IN PROMOTING THE PENNY STOCK COMPANY AN D HOW THE ASSESSEE 3 I.T.A. NO.3452/CHNY/18 INVOLVED IN INFLATING THE SHARES OF THE COMPANY. M OREOVER, THE COPY OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM I NVESTIGATION WING OF THE DEPARTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSE SSEE. ON IDENTICAL CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF KANHAIY ALAL & SONS (HUF) (SUPRA) HAS REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. IN FACT, THIS TRIBUNAL HAS OB SERVED AT PARA 4 OF ITS ORDER 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. 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 4 I.T.A. NO.3452/CHNY/18 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 ASSE SSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ISSUE RAISED BY THE ASSESSEE WITH REGARD TO DEDUCTI ON UNDER SECTION 10(38) OF THE ACT IS REMITTED BACK TO THE FILE OF T HE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE MATTER AS DIREC TED BY THIS TRIBUNAL IN THE CASE OF KANHAIYALAL & SONS (HUF) (SUPRA) AND TH EREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 26 TH APRIL, 2019 AT CHENNAI. SD/- SD/- (. !') ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 26 TH APRIL, 2019. KRI. 5 I.T.A. NO.3452/CHNY/18 . ,167 87(1 /COPY TO: 1. *+/ APPELLANT 2. ,-*+/ RESPONDENT 3. 0 91 () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT-9, CHENNAI 5. 7: ,1 /DR 6. ;' < /GF.