SHIYAL VIMAL KUMAR,CHENNAI vs. ITO NON CORPORATE WARD 6(4), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -5, Chennai, dated 29.06.2018 and pertains to assessment year 2014-15.

Shri M. Karunakaran, the Ld.counsel for the assessee, submitted that the assessee purchased 25000 shares of Kailash Auto Finance Ltd. On sale of said shares, according to the Ld. counsel, the assessee claimed long term capital gains of ₹9,14,416/-. The assessee has also claimed exemption under Section 10(38) of the Income-tax Act, 1961 (in short 'the Act'). However, according to the Ld. counsel, the Assessing Officer on the basis of information said to be received from the Directorate of Investigation at Kolkata, found that Kailash Auto Finance Ltd. is a penny stock company, hence, the assessee is not eligible for exemption under Section 10(38) of the Act. Placing reliance on the order of this Tribunal in Mr. Anil Kumar Shiyal v. ITO in dated 03.12.2018, the Ld.counsel submitted that on identical circumstance, this Tribunal remitted back the matter to the file of the Assessing Officer.

We heard Shri V.M. Mahidar, the Ld. Departmental Representative also. It is not in dispute that the investigation report of the Directorate of Investigation at Kolkata was relied upon by the Assessing Officer and the CIT(Appeals) to deny exemption under Section 10(38) of the Act. The said investigation report was not furnished to the assessee. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer after furnishing all the documents relied upon by the Assessing Officer and the CIT(Appeals). Accordingly, orders of both the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee. The Assessing Officer shall also furnish all the copies of the material including the investigation report said to be received from the Directorate of Investigation, Kolkata and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.