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Income Tax Appellate Tribunal, B / SMC BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -7, Chennai, dated 28.03.2018 and pertains to assessment year 2014-15.
The only issue arises for consideration is with regard to claim of the assessee for exemption under Section 10(38) of the Income-tax Act, 1961 (in short 'the Act').
Shri N. Vijaykumar, the Ld. representative for the assessee, submitted that the assessee claimed long term capital gain in sale of shares under Section 10(38) of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. representative, the Assessing Officer disallowed the claim of the assessee on the ground that it is a penny stock. According to the Ld. representative, the material referred in the assessment order and order of the CIT(Appeals) and the so-called report of the Investigation Wing of the Department at Kolkata were not furnished to the assessee. Therefore, according to the Ld. representative, the assessee could not understand what is the actual reason for disallowance. Moreover, the statement said to be recorded from one Shri Divyesh Upadyaya, was also not furnished to the assessee. Therefore, according to the Ld. representative, the matter may be remitted back to the file of the Assessing Officer.
On the contrary, Shri B. Sagadevan, the Ld. Departmental Representative, submitted that it is a penny stock transaction. According to the Ld. D.R., the equity shares of shell companies were transacted and the price of each share was artificially increased. According to the Ld. D.R., the Investigation Wing of the Department at Kolkata found that there was cartel among the brokers who are all involved in penny stocks of shell companies. Therefore, according to the Ld. D.R., the Assessing Officer has rightly disallowed the claim of the assessee under Section 10(38) of the Act.
We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer, on the basis of generalised allegation, disallowed the claim of the assessee under Section 10(38) of the Act. There was no specific reference about the assessee’s transactions in the assessment order.
Moreover, the so-called investigation report said to be submitted by the Investigation Wing of the Department at Kolkata and the statement said to be recorded from one Shri Divyesh Upadyay awere 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.
Accordingly, orders of both the authorities below are set aside and the Assessing Officer is directed to furnish the investigation report of the Department at Kolkata and the statement said to be recorded from Shri Divyesh Upadyaya to the assessee 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.