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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
: Mr. D.Anand, Adv. अपीलाथ) क, ओर से/ Appellant by : Mr. R.Clement Ramesh- *+यथ) क, ओर से /Respondent by Kumar, Addl.CIT : 05.08.2019 सुनवाई क, तार�ख/Date of Hearing : 05.08.2019 घोषणा क, तार�ख /Date of Pronouncement आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
This is an appeal filed by the assessee against the Order of the Commissioner of Income Tax (Appeals)-12, Chennai, in 12/2017-18 dated 22.03.2019 for the AY 2012-13.
Shri R.Clement Ramesh Kumar, Addl.CIT, represented on behalf of the Revenue and Shri D.Anand, Adv., represented on behalf of the assessee.
It was submitted by the Ld.AR that the AO has treated the transactions done by the assessee in respect of its purchase and sale of shares in the case of M/s.Tuni Textiles Mills Ltd., to be one of the penny stock. It was a submission that the purchase and sale of the shares were done through the Bombay Stock Exchange (in short “BSE”). It was a submission that the assessee had purchased 5000 shares on 07.12.2010 @ Rs.116.82/- per share. It was a submission that the said shares had been sub-divided on 09.04.2011 at the ratio of 1:10 and the same had been sold on 09.03.2012 @ Rs.93.50/-. It was a submission that the Securities Transaction Tax (in short “STT”) in respect of the transactions had also been paid. It was a prayer that under the similar circumstances the co-ordinate Bench of this Tribunal had in respect of the transactions done online held that that the same were liable to be held as genuine. It was a submission that this was not the case of penny stock but this was a regular transaction done by the assessee. The Ld.AR placed reliance on the decision of the co-ordinate Bench of this Tribunal in the case of Shri Ashwin Kumar Davey vs. ITO, Chennai, in dated 18.12.2018, wherein, it has been held as follows:
“…………5. We have considered the rival submissions. A perusal of the assessment order clearly shows that this is not a case where the ld. Assessing Officer has been able point out where the assessee has made a bogus claim of long term capital gains exempt u/s.10(38) of the Act. Further, perusal of the assessment order clearly shows that from page-1, para-3 to para 5.3, the ld. Assessing Officer has only made allegation in respect of these two companies and the modus operandi of the bogus claim u/s.10(38) of the Act. The evidences clearly show that the transactions of purchase and sale of the shares by the assessees herein are through online transaction by paying STT. This is not a case for off- line purchase, nor is the case of direct purchase. Neither is the assessee’s name coming out in the Investigation report, which has been received by the ld. Assessing Officer from Directorate of Investigation, Kolkata. This being so, the claim of assessee cannot be disallowed merely on presumptions and the ld. Assessing Officer is directed to grant the assessee benefit of exemption u/s.10(38) of the Act as claimed in respect of long term capital gains generated by purchase and sale of shares of M/s.NCL Research Limited and M/s.RISA International as claimed by the assessee”.
In reply, the Ld.DR submitted the fact that the assessee had made such huge profits showed that the transactions were suspected. It was a submission that the order of the AO and the Ld.CIT(A) was liable to be upheld.
We have considered the rival submissions.
It is noticed that the AO has made allegations in respect of the modus operandi in respect of the bogus claim u/s.10(38) of the Act. As it is noticed that the evidences clearly shows that the transactions of purchase and sale of shares by the assessee herein are through the BSE as also it is noticed that the assessee’s name is not coming out of the Investigation Report, which has been received by the AO from the Directorate of Investigation, Kolkatta, we are of the view that the disallowance made by the AO and as confirmed by the Ld.CIT(A) merely on presumptions is unsustainable. In these circumstances, following the decision of the decision of the co-ordinate Bench of this Tribunal in the case of Shri Ashwin Kumar Davey, the AO is directed to grant the assessee the benefit of deduction u/s.10(38) of the Act as claimed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on the 05th August, 2019 in Chennai.