RAJENDRA KUMAR HIRAWAT (HUF),CHENNAI vs. ITO NON CORPORATE CIRCLE 9(5), CHENNAI

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ITA 2509/CHNY/2018Status: DisposedITAT Chennai02 January 2019AY 2009-104 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Assessing Officer should have provided the investigation report and other relevant materials to the assessee. The orders of the lower authorities were set aside, and the issue was remitted back to the Assessing Officer for fresh consideration.

What were the facts?

The assessee claimed exemption under Section 10(38) for long-term capital gains. The Assessing Officer disallowed this claim based on information from the Investigation Wing regarding penny stock companies, without furnishing the report to the assessee.

What were the issues?

Whether the disallowance of exemption under Section 10(38) was valid without providing the investigation report to the assessee. The need for the Assessing Officer to furnish evidence and allow the assessee an opportunity to be heard.

Which sections of the Income-tax Act were involved?

Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

For Appellant: Shri D. Anand, Advocate
For Respondent: Shri AR.V. Sreenivasan, JCIT
Hearing: 01.01.2019Pronounced: 02.01.2019

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER: Both the appeals of the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals)-10, Chennai, both dated 19.06.2018 and pertain to assessment years 2009- 10 and 2014-15. Since common issue arises for consideration in both the appeals, we heard both the appeals together and disposing the same by this common order.

2.

The only issue arises for consideration is rejection of claim of the assessee under Section 10(38) of the Income-tax Act, 1961 (in short 'the Act').

3.

Shri D. Anand, the Ld.counsel for the assessee, submitted that the Assessing Officer disallowed the claim of the assessee under Section 10(38) of the Act on the basis of the information said to be received from the Investigation Wing of the Department at Kolkata. According to the Ld. counsel, the copies of the investigation report said to be received from Kolkata and other enquiries said to be conducted by the Assessing Officer were not furnished to the assessee. According to the Ld. counsel, the Assessing Officer claims that one Shri Ashok Kumar Kalyan and Sunil Kumar Kalyan are providing bogus long term capital gains entries through penny stock companies. It is not known how the companies in which the assessee invested are considered to be penny stock companies? Therefore, the Ld.counsel submitted that the matter may be remitted back to the file of the Assessing Officer with a direction to furnish a copy of the investigation report said to be received from the Investigation Wing of the Department at Kolkata and to decide the issue afresh thereafter in accordance with law. The Ld.counsel has also placed his reliance on the order of this Tribunal in Shri Aravind Nandlal Khatri in dated 03.12.2018.

4.

We heard Shri AR.V. Sreenivasan, the Ld. Departmental Representative also. Admittedly, the Assessing Officer disallowed the claim of the assessee on the basis of the information said to be received from the Investigation Wing of the Department at Kolkata with regard to investment made by the assessee in the penny stock companies. It is not in dispute that a copy of the investigation report said to be received from Kolkata was not furnished to the assessee. Moreover, details of the enquiries said to be made by the Assessing Officer were also not furnished to the assessee. In those circumstances, this Tribunal is of the considered opinion that the Assessing Officer has to reconsider the issue afresh after furnishing the material relied upon by the Assessing Officer.

1.

Accordingly, the 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 bring on record the role of the assessee in promoting the company and the relationship of the assessee, if any with the promoters, role of the assessee in inflating the price of shares, etc.

The 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 with law, after giving a reasonable opportunity to the assessee.

5.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in the court on 2nd January, 2019 at Chennai.

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