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Income Tax Appellate Tribunal, BANGALORE BENCHES “ C ” BENCH: BANGALORE
Before: SHRI B.R. BASKARAN & SMT. BEENA PILLAI
O R D E R PER SHRI B.R. BASKARAN, A.M. : The assessee has filed this appeal challenging the order dated 31-01- 2019 passed by Ld Commissioner of Income Tax (Appeals)-2, Bangalore for the Asst. Year 2015-16. The assessee is aggrieved by the decision of learned CIT (Appeals) in confirming the addition of sale consideration received on sale of shares as income of the assessee under Section 68 of the Income Tax Act, 1961 (‘the Act’).
The learned counsel appearing for the assessee submitted that the assessee has sold 9,000 shares held by him in M/s. Conark Traders Limited for a sum of Rs.43.77 lakhs and realized Long Term Capital Gains (LTCG). The assessee claimed exemption under Section 10(38) of the Act. The Assessing Officer was of the view that the shares sold by the assessee falls under category of Penny Stocks. The revenue has studied the modus operandi of rigging the prices of penny stocks and generation of capital gain there from. Accordingly the Assessing Officer took the view that the transactions of purchase and sale of shares entered by the assessee in the shares of above said company were arranged transactions. Accordingly the AO assessed the sale consideration of Rs.43.77 lakhs as income of the assessee under Section 68 of the Act. The learned CIT (Appeals) also confirmed the same.
The learned Authorised Representative submitted that an identical issue was considered by the SMC bench of Bangalore Tribunal in assessee's brother case named Sri Vinod Kothari (HUF) in and the Tribunal, vide its order dt.03.7.2019, has restored the issue to the file of Assessing Officer for examining it afresh as per directions issued by Hon'ble Karnataka High Court in the case of Chandra Devi Kothari Vs. ITO (Writ Petition No.39370/2014 Dt.2.2.2015). Accordingly, the learned Authorised Representative prayed that the issue contested in this appeal may also be restored to the file of Assessing Officer with similar directions. 4. The learned Departmental Representative did not object to the prayer put forth by the learned A.R. 5. We heard the parties and perused the record. We notice that the SMC Bench of Bangalore Tribunal has considered an identical issue in the case of Shri Vinod Kothari (HUF) (supra) and the matter has been restored to the file of Assessing Officer with the following observation :
“ 4.3.1 I have considered the rival submissions and first of all, I reproduce Para No.8 of the judgment of Hon’ble Karnataka High Court rendered in the case of M/s. Chandra Devi Kothari (Supra) and this is as under: “8. In the light of the facts and circumstances as adverted to above and as the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details regarding the alleged share amount, I am of the view that the matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner and by furnishing the details / copy of the statement based on which the impugned assessment order has been passed.” 4.3.2 From the above Para 8 of the judgment of Hon’ble Karnataka High Court in the case of Chandra Devi Kothari (supra) it is seen that matter was restored back to the file of the AO for fresh decision after providing copy of the statement and other related details relied upon by the AO; in this case copy of the Report of Kolkata Investigation Directorate and other attendant details. As per the facts noted by the High Court in the earlier paras of judgment (supra) and as per the facts of the case on hand, there appears to be no difference in facts and therefore by respectfully following this judgment in the case of Chandra Devi Kothari (Supra), I set aside the impugned order of learned CIT(A) for Assessment Year 2014-15 and restore the matters to the file of the AO for fresh decision with the same directions as were issued by the Hon’ble Karnataka High Court in the case as per Para No.8 of the judgment reproduced above. In view of this decision, no adjudication is called for at this stage regarding the merits of the addition.”