Vinod Kumar Kundanmal, CHENNAI V. ITO NCW 6(4), CHENNAI

ITA 3526/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1525 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 27-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R. PADMANABHAN
• Keywords: Set aside; Capital Gains
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , , , , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.3526/CHNY/2018 ( / ASSESSMENT YEAR: 2015-16) SHRI VINOD KUMAR KUNDANMAL, 44/40, EKAMBARESWAR AGRAHARAM STREET, SOWCARPET, CHENNAI 600 079. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD 4(1), CHENNAI - 34 PAN: A A HPJ1249H ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI R. PADMANABHAN, CA / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 20.11.2019 /DATE OF PRONOUNCEMENT : 12.12.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 5, CHENNAI DATED 28.09.2018 AND PERTAINS TO THE ASSESSMENT YEA R 2015-16. 2. SHRI R. PADMANABHAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 10(38) 2 I.T.A. NO. 3526/CHNY/2018 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN RESPECT OF LONG TERM CAPITAL GAINS ARISING OUT OF SALE OF SHARES TO THE EXTENT OF 29,62,534/-. IN FACT, ACCORDING TO THE LD.AR, THE ASSESSEE INVES TED IN SHARES OF M/S. ESAAR (INDIA) LTD. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGA TION REPORT OF DIRECTORATE OF INVESTIGATION, KOLKATA. ACCORDING T O THE LD. AR, A COPY OF THE SAID INVESTIGATION REPORT WAS NOT FURNISHED TO THE ASSESSEE. THEREFORE, THE LD. AR SUBMITTED THAT AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE BY REMITTING BACK THE MATTER TO THE FI LE OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL 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. ESAAR (INDIA ) LTD. FROM THE ORDER OF THE CIT(APPEALS) IT APPEARS THAT THE ASSES SEE SOLD 19000 SHARES OF M/S. ESAAR (INDIA) LTD., AND ON SALE OF T HESE SHARES, THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAINS TO THE E XTENT OF 29,62,534/-. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE 3 I.T.A. NO. 3526/CHNY/2018 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 C OMPANY AND HOW THE ASSESSEE INVOLVED IN INFLATING THE SHARES OF TH E COMPANY. MOREOVER, THE COPY OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSESSEE. ON IDENTICAL CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF KANHAIYALAL & SONS (HUF) V. ITO IN I.T.A. NO.184 9/CHNY/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. DEPARTME NTAL REPRESENTATIVE ALSO. ADMITTEDLY, THE ASSESSING OFFICE R DISALLOWED THE CLAIM OF THE ASSESSEES ON THE BASIS OF THE INFORMAT ION SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT AT KOLKATA WITH REGARD TO INVESTMENT MADE BY THE ASSESSEES IN THE PENNY STOCK COMPANY. IT IS NOT IN DISPUTE THAT A COPY OF THE I NVESTIGATION REPORT SAID TO BE RECEIVED FROM KOLKATA WAS NOT FURNISHED TO THE ASSESSEE. MOREOVER, DETAILS OF 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 ISSUE 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 ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICE R. THE ASSESSING OFFICER SHALL BRING ON RECORD THE ROLE OF THE ASSES SEES IN PROMOTING THE COMPANY AND THE RELATIONSHIP OF THE ASSESSEES, IF ANY WITH THE PROMOTERS, ROLE OF THE ASSESSEES IN INFLATING THE P RICE OF SHARES, ETC. THE ASSESSING OFFICER SHALL ALSO FURNISH A COPY OF T HE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION W ING OF THE DEPARTMENT AT KOLKATA AND OTHER MATERIALS IF ANYTHI NG IN HIS 4 I.T.A. NO. 3526/CHNY/2018 POSSESSION AND THEREAFTER DECIDE THE ISSUE AFRESH I N ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE A SSESSEES. 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 DED UCTION UNDER SECTION 10(38) OF THE ACT IS REMITTED BACK TO THE F ILE 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. ORDER PRONOUNCED IN THE COURT ON 12 TH DECEMBER, 2019 AT CHENNAI. SD/- SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER (... ) (N.R.S. GANESAN) / JUDICIAL MEMBER /CHENNAI, /DATED, THE 12 TH DECEMBER, 2019. RSR %& '& /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. &+, - /DR 6. ,. /GF