M/S. SUNITHA DARLA,MYSORE vs. THE INCOME TAX OFFICER, WARD - 1(1), MYSORE

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ITA 1163/BANG/2019Status: DisposedITAT Bangalore29 November 2019AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that while the right to cross-examine is not absolute, if statements used against the assessee are not secondary or subordinate, cross-examination must be granted. The AO was directed to provide statements and re-examine the case after considering all evidence and granting an opportunity for cross-examination.

What were the facts?

The assessee claimed exemption under Section 10(38) for long-term capital gains on the sale of shares. The Assessing Officer (AO) suspected the transactions were part of a pre-conceived scheme to generate artificial gains and denied the exemption.

What were the issues?

Whether the assessee was denied natural justice by not being allowed to cross-examine individuals whose statements were used by the AO, and whether the share transactions were genuine and market-driven.

Which sections of the Income-tax Act were involved?

Section 10(38)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, BANGALORE BENCHES : “B”, BANGALORE

Before: SHRI A.K.GARODIA & SMT.BEENA PILLAI, JUDICAL MEMBER

For Appellant: Smt. Suman Lunkar, CA
For Respondent: Shri Kumar Ajeet, Addl. CIT

PER BEENA PILLAI, JUDICIAL MEMBER: Present appeal has been filed by assessee against order dated 25/03/19 passed by Ld. CIT (A), Mysore for assessment year 2015- 16.

ITA No.1163(B)/2019 2

2.

Brief facts of the case are as under: Assessee is an individual and filed his return of income for year under consideration declaring total income of Rs.13,56,130/-. Ld.AO observed that assessee has claimed exemption under section 10(38) amounting to Rs.,112,34,591/- towards sale of equity shares. The case was selected for scrutiny to verify the suspicions long term capital gains on shares in pursuance to the inputs from investigation wing. 2.1 Ld.AO observed that, during the year assessee sold 47,500 shares of M/s Lifeline Drugs and Pharma Ltd. for consideration of Rs.1,13,40,000/-. Assessee upon being varied by Ld.AO submitted that originally assessee bought 950 shares offline through private placement with broker M/s. Vishal Vijay Shah, Mumbai, at face value of R.10/-, and market value of Rs.45/- on 17-08-20112. Assessee received 3800 bonus shares against existing 950 shares and on 15-11-2013, the 4750 shares having face value of R.10/- was split into 1:10 ratio making it as 47500 shares of face value of Rs.1/-. The company was thereafter known as Arihant Multi Commercial Ltd. Assessee then sold all 47500 shares at BSE at average rate of Rs.238.64 approx. to various entities between 09-04-2014 and 12-05-2014 for sale consideration of Rs.1,13,40,000/-. 2.2 It has been submitted that Assessing Officer concluded assessment by holding that transaction in share price of M/s Lifeline Drugs and Pharma Ltd. is not owing to commercial principles and market factors and that assessee resorted to a pre- conceived scheme to procure long term capital gains by way of price difference in share transactions. Ld.AO also held that

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