Praveen Kumar Surana, Chennai V. ITO, NCW-10(3), Chennai

ITA 604/CHNY/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5727 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 08-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANATH KUMAR RAHA
• Assessee Lawyers: R PADMANABHAN
• Keywords: Set aside; Capital Gains

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL C SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NOS.604 & 605/CHNY/2019 ' #$' / ASSESSMENT YEARS : 2010-11 & 2011-12 SHRI PRAVEEN KUMAR SURANA, NO.16, TRUST SQUARE STREET, RAMALINGAPURAM, CHENNAI - 600 012. PAN : AAGPP 9842 D V. THE INCOME TAX OFFICER, NON CORPORATE WARD 10(3), CHENNAI - 600 034. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI R. PADMANABHAN, CA ()&' * + / RESPONDENT BY : SHRI SANATH KUMAR RAHA, JCIT , # * -. / DATE OF HEARING :02.07.2019 /0$ * -. / DATE OF PRONOUNCEMENT : 01.10.2019 / O R D E R BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-12, CHENNAI, DATED 28.01.2019 AND PERTAIN TO ASSESSMENT YEARS 2010- 11 AND 2011-12. SINCE COMMON ISSUE ARISES FOR CON SIDERATION IN BOTH THESE APPEALS, I HEARD THESE APPEALS TOGETHER AND DISPOSING THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.604 & 605/CHNY/19 2. SHRI R. PADMANABHAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMP TION UNDER 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 13,23,820/- AND 3,30,995/- FOR ASSESSMENT YEAR 2010- 11 AND 2011-12 RESPECTIVELY. IN FACT, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE INVESTED IN SHARES OF M/S BAKRA PRATISTHAN LTD. THE LD. REPRESENTATIVE FURTHER SUB MITTED THAT THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REPORT OF DIRECTORATE OF INVESTIGATION, KOLKATA. A CCORDING TO THE LD. REPRESENTATIVE, A COPY OF THE SAID INVESTIGATION RE PORT WAS NOT FURNISHED TO THE ASSESSEE. THEREFORE, THE LD. REPR ESENTATIVE SUBMITTED THAT AN OPPORTUNITY MAY BE GIVEN TO THE A SSESSEE BY REMITTING BACK THE MATTER TO THE FILE OF THE ASSESS ING 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 BAKR A PRATISTHAN 3 I.T.A. NOS.604 & 605/CHNY/19 LTD. FROM THE ORDER OF THE ASSESSING OFFICER IT AP PEARS THAT THE ASSESSEE PURCHASED 5,000 SHARES OF M/S BAKRA PRATIS THAN LTD. FOR 1,00,000/- FOR EACH ASSESSMENT YEAR AND ON SALE OF THESE SHARES, THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAINS TO THE EXTENT OF 13,23,820/- AND 3,30,995/- FOR ASSESSMENT YEAR 2010-11 AND 2011-12 RESPECTIVELY. THIS WAS DISALLOWED BY THE A SSESSING OFFICER ON THE GROUND THAT THE COMPANY IN WHICH THE ASSESSE E INVESTED IS A PENNY STOCK COMPANY. HOWEVER, IT IS NOT BROUGHT ON RECORD HOW THE ASSESSEE IS INVOLVED IN PROMOTING THE PENNY STOCK C OMPANY AND HOW THE ASSESSEE INVOLVED IN INFLATING THE SHARES O F THE COMPANY. MOREOVER, THE COPY OF THE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT KO LKATA WAS NOT FURNISHED TO THE ASSESSEE. ON IDENTICAL CIRCUMSTAN CES, 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, TH IS TRIBUNAL HAS OBSERVED 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 4 I.T.A. NOS.604 & 605/CHNY/19 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 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 FOR BOTH THE ASSESS MENT YEARS IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE MATTER AS DIRECTED BY THI S TRIBUNAL IN THE CASE OF KANHAIYALAL & SONS (HUF) (SUPRA) AND THEREA FTER DECIDE THE 5 I.T.A. NOS.604 & 605/CHNY/19 ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 1 ST OCTOBER, 2019 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 1 ST OCTOBER, 2019 KRI. * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A)-12, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI 5. 4#7 (- /DR 6. 8' 9 /GF.