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Income Tax Appellate Tribunal, ‘ A’ BENCH : CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
आदेश / O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER Assessee, Shri Ashwin Kumar Davey against the order of the Commissioner of Income Tax (Appeals)-13, Chennai, in dated 14.07.2017 for assessment years 2014-15, ITA No.2300 /CHNY/2017 is the appeal filed by the Assessee, Smt. Aati Davey against the order of the Commissioner of Income Tax (Appeals)-13, Chennai, in ITA No.89/CIT(A)- 13/2014-15 dated 14.07.2017 for assessment years 2014-15, and Assessee, Shri Dharmesh Davey(HUF) against the order of the Commissioner of Income Tax (Appeals)-13, Chennai, in ITA No.90/CIT(A)-13/2014- 15 dated 14.07.2017 for assessment years 2014-15. Since the to 2301/Chny/2017 :- 3 -:
issues raised in all these apples are interlinked, all the appeals filed by different assessees are disposed of by this common order.
Shri D.Anand represented on behalf of the Assessee and Shri AR.V.Sreenivasan represented on behalf of the Revenue.
It was submitted by ld.A.R that the assessees had purchased shares of M/s.NCL Research Limited and M/s.RISA International during April and June, 2012. The assessee’s share purchase was made through one Mr.Vijay vishal Shah, Member BSE and purchase of shares were done through online medium by payment of Security Transaction Tax (STT). These shares were sold by the assessees between October,2013 and January,2014 through M/s.Global Capital Market ,Member BSE and STT was paid on this transaction also. The assessees had made about `10 lakhs to `14 lakhs profits in the transaction and each had claimed long term capital gains. The ld. Assessing Officer on the ground that he had received certain report from the Directorate of Investigation, Kolkata wherein organized racket of generating bogus entries of long term capital gains exempt from tax had been found, treated the transaction done by the assessee as bogus and non-genuine and consequently disallowed the claim of exemption u/s.10(38) of the Act and treated the same as undisclosed to 2301/Chny/2017 :- 4 -:
income u/s.68 of the Act. It was a submission that the transactions had been done by the assessee between 2012 and 2014 and the assessee’s transactions were done through online transactions through the BSE on which STT had already been paid neither the assessee’s name nor the assessee’s broker name appeared in any of the investigation reports in respect of the racket for generating bogus entries. It was a submission that M/s.NCL Research Limited and M/s.RISA International, both the companies had come under scrutiny.
Admittedly, it was a submission that the assessees herein had no connection either with the directors or Managing Directors, or anybody in the two companies. It was a submission that subsequently the two companies have been removed from the so called investigation list, and their shares are even now traded in the Stock Exchange as no adverse inference has been drawn in respect of the transactions. Only on pure suspicion, the assessee’s transaction had been treated as bogus transaction. It was a submission that this is not a case of penny stock. It was a further submission that the claim of assessee may be allowed.
In reply, the ld.D.R submitted that the assessee had made substantial profits on purchase and sale of shares in a very short period and it is nothing, but penny stock. The ld.D.R submitted that the issue in this appeal was now squarely covered by the decision of to 2301/Chny/2017 :- 5 -:
Co-ordinate Bench of this Tribunal in the case of Shri Heerachand Kanunga for assessment years 2010-11 & 2011-12 in & 2787/Mds/2017 vide order dated 03.05.2018. It was a prayer that on identical directions, the issue in these appeals can also be restored to the file of ld. Assessing Officer.
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 to 2301/Chny/2017 :- 6 -: 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 the result, all the appeals of the assessee in the case of Shri Ashwin Kumar Davey, Smt. Aarti Davey, and Shri Dharmesh Davey (HUF) are allowed.
Order pronounced in the open court after conclusion of hearing on 18th December, 2018, at Chennai.