Income Tax Appellate Tribunal - Chennai
Aravind Nandlal Khatri, Chennai vs Ito Non Corporate Ward 4(1), Chennai on 3 December, 2018
आयकर अपील
य अ धकरण, 'डी' / एस एम सी यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
D / SMC BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी ए. मोहन अलंकामणी, लेखा सद य केसम&
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.2035/Chny/2018
नधा(रण वष( /Assessment Year : 2011-12
Shri Aravind Nandlal Khatri, The Income Tax Officer,
Old No.6, New No.7, 3rd floor, v. Non Corporate Ward - 4(1),
Venkatrayan Street, Park Town, Chennai - 600 006.
Chennai - 600 003.
PAN : ASSPK 9312 P
(अपीलाथ,/Appellant) (-.यथ,/Respondent)
अपीलाथ, क/ ओर से / Appellant by : Shri T. Vasudevan, Advocate
-.यथ, क/ ओर से / Respondent by : Shri B. Sagadevan, JCIT
सन
ु वाई क/ तार
ख/Date of Hearing : 29.11.2018
घोषणा क/ तार
ख/Date of Pronouncement : 03.12.2018
आदे श /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)-5, Chennai, dated 09.05.2018 and pertains to assessment year 2011-12.
2. Shri T. Vasudevan, the Ld.counsel for the assessee, submitted that the Assessing Officer, after reopening the 2 I.T.A. No.2035/Chny/18 assessment under Section 147 of the Income-tax Act, 1961 (in short 'the Act'), disallowed the claim of exemption under Section 10(38) of the Act. According to the Ld. counsel, the investments in the shares were made during the financial year 2008-09, therefore, it cannot be reopened for the year under consideration. On a query from the Bench when the shares were sold for the purpose of claiming exemption under Section 10(38) of the Act? The Ld.counsel very fairly submitted that the shares were admittedly sold during the year under consideration and rightly claimed exemption under Section 10(38) of the Act.
3. Referring to the assessment order, the Ld.counsel for the assessee submitted that profit on sale of shares has to be assessed as short term capital gain. However, the Assessing Officer reopened the assessment on the ground that the assessee has not properly disclosed the long term capital gains. Therefore, according to the Ld. counsel, the Assessing Officer found that reassessment is invalid. Since the assessee has invested in the shares of M/s Concrete Credit Limited through a share broker, according to the Ld. counsel, the assessee has rightly claimed exemption under Section 10(38) of the Act.
3 I.T.A. No.2035/Chny/18
4. We heard Shri B. Sagadevan, the Ld. Departmental Representative. According to the Ld. D.R., the Assessing Officer received information from the Investigation Wing of the Department at Kolkata regarding the investment of the assessee in the penny stock company. The Assessing Officer has not disputed the investment. According to the Ld. D.R., the Assessing Officer disallowed the claim of exemption under Section 10(38) of the Act on the ground that the capital gain arose during the year under consideration on the sale of shares, therefore, the Assessing Officer has rightly reopened the assessment for the year under consideration. Since the physical shares of the company were available with the assessee from 09.02.2010, according to the Ld. D.R., the Assessing Officer has rightly treated the same as short term capital gain from the date of conversion of shares into Demat.
5. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the Assessing Officer received information from Investigation Wing of the Department at Kolkata with regard to investment of the assessee in penny stock company, namely, M/s Concrete Credit Limited. The assessee also admittedly sold the said shares and 4 I.T.A. No.2035/Chny/18 claimed exemption under Section 10(38) of the Act during the year under consideration. Therefore, the Assessing Officer has not disputed the source for investment. The Assessing Officer disallowed the claim of exemption on the ground that the investment was in a penny stock company. From the material available on record it appears that a copy of information said to be received from the Investigation Wing of the Department at Kolkata was not furnished to the assessee. It is not brought on record the relationship of the assessee with the promoters of M/s Concrete Credit Limited. It is also not brought on record the role of the assessee in promoting the company, namely, M/s Concrete Credit Limited, issue of public shares, inflation of price of shares, etc. In those circumstances, this Tribunal is of the considered opinion that the matter needs to be re-examined 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 relationship of the assessee with other promoters, role of the assessee in inflating the price of shares, etc. The Assessing Officer shall also furnish a copy of the report said to be received from the Investigation Wing of the 5 I.T.A. No.2035/Chny/18 Department at Kolkata to the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
6. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 3rd December, 2018 at Chennai.
sd/- sd/-
(ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन)
(A. Mohan Alankamony) (N.R.S. Ganesan)
लेखा सद य/Accountant Member या यक सद य/Judicial Member
चे नई/Chennai,
rd
5दनांक/Dated, the 3 December, 2018.
Kri.
आदे श क/ - त6ल7प अ8े7षत/Copy to:
1. अपीलाथ,/Appellant
2. -.यथ,/Respondent
3. आयकर आयु9त (अपील)/CIT(A)-5, Chennai
4. Principal CIT-9, Chennai
5. 7वभागीय - त न ध/DR
6. गाड( फाईल/GF.