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

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').

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.

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.

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.

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