Niraj Kumar Premchand, Chennai V. ITO, Non Corp Ward 23(4), Chennai

ITA 632/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6027 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 13-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANATH KUMAR RAHA
• 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.632/CHNY/2019 ' #$' / ASSESSMENT YEAR : 2014-15 SHRI NIRAJ KUMAR PREMCHAND, NEW NO.83, OLD NO.39, BIG STREET, THIRUKAZHUKUNDRAM, TAMIL NADU 603 109. PAN : AAGPK 8595 G V. THE INCOME TAX OFFICER, NON CORPORATE WARD - 23(4), TAMBARAM, CHENNAI - 600 045. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI UTTAMCHAND JAIN, CA ()&' * + / RESPONDENT BY : SHRI SANATH KUMAR RAHA, JCIT , # * -. / DATE OF HEARING : 03.07.2019 /0$ * -. / 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)-10, CHENNA I, DATED 21.12.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. SHRI UTTAMCHAND JAIN, 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 2 I.T.A. NO.632/CHNY/19 RESPECT OF LONG TERM CAPITAL GAINS ARISING OUT OF S ALE OF SHARES TO THE EXTENT OF 24,34,272/-. IN FACT, ACCORDING TO THE LD. REPRESEN TATIVE, THE ASSESSEE INVESTED IN SHARES OF M/S SMART CAMP I T & INFRA LTD. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE A SSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE INVESTIGATION REP ORT OF DIRECTORATE OF INVESTIGATION, KOLKATA. ACCORDING TO THE LD. RE PRESENTATIVE, A COPY OF THE SAID INVESTIGATION REPORT WAS NOT FURNI SHED TO THE ASSESSEE. THEREFORE, THE LD. REPRESENTATIVE SUBMIT TED THAT AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE BY REMITTI NG BACK THE MATTER 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 SMAR T CAMP IT & INFRA LTD. FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THE ASSESSEE PURCHASED 5000 SHARES OF M/S SMART CAM P IT & INFRA LTD. AT THE RATE OF 10/- PER SHARE AND ON SALE OF THESE SHARES, THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAINS ON THE SALE OF THESE 3 I.T.A. NO.632/CHNY/19 SHARES TO THE EXTENT OF 24,34,272/-. THIS WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE COMPANY IN WHICH THE ASSESSEE INVESTED IS A PENNY STOCK COMPANY. HOWEVE R, IT IS NOT BROUGHT ON RECORD HOW THE ASSESSEE IS INVOLVED IN P ROMOTING THE PENNY STOCK COMPANY AND HOW THE ASSESSEE INVOLVED I N INFLATING THE SHARES OF THE COMPANY. MOREOVER, THE COPY OF T HE INVESTIGATION REPORT SAID TO BE RECEIVED FROM THE INVESTIGATION W ING OF THE DEPARTMENT AT KOLKATA WAS NOT FURNISHED TO THE ASSE SSEE. ON IDENTICAL CIRCUMSTANCES, 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, THIS TRIBUNAL HAS OBSERVED AT PARA 4 OF ITS O RDER 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.632/CHNY/19 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.632/CHNY/19 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)-10, CHENNAI-34 4. PRINCIPAL CIT-7, CHENNAI 5. 4#7 (- /DR 6. 8' 9 /GF.