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2019 (9) TMI 769 - AT - Income TaxExemption income u/s.10(38) - denial of natural justice - AO on the basis of investigations done by the Revenue held that the purchase and sale of those shares as penny stock, the assessees have manipulated the transactions with the brokers to convert their unaccounted income etc and hence treated the entire sale consideration as an unexplained credit and refused each of the assessee’s exemption claim under section 10(38) - HELD THAT:- Assessee has not been given a fair opportunity to prove the genuineness but the assessment has been made primarily, based on the evidences collected by the Revenue in the course of the investigation conducted by them on the brokers / share broking entities etc. This is not permissible. This being so, in the interests of natural justice, the issue of the genuineness of the transactions require re-adjudication. Since, the right to exemption must be established by those who seek it, the onus therefore lies on the assessee. In order to claim the exemption from payment of income tax, the assessee had to put before the Income Tax authorities proper materials which would enable them to come to a conclusion.Thus, the AO must keep in mind that the onus of proving the exemption rests on the assessee. If the AO does have any evidence to the contrary, it is to be put to the assessee for his rebuttal. The internal communications of the Revenue are evidences for drawing an opinion on possible wrong claims but they are not the final evidence. Further, perusal of assessee’s case shows that it is similar to the facts in the case of Shri Heerachand Kanunga [2018 (6) TMI 1329 - ITAT CHENNAI] Respectfully following the above order, on the facts and circumstances of these cases, we deem it fit to remit the issue of exemption in these appeals back to the file of the respective Assessing Officer for re-adjudication on the lines indicated above. AO concerned shall require the assessees; to establish who, with whom, how and in what circumstances the impugned transactions were carried out etc., to prove that the impugned transactions are actual, genuine etc. The assessee shall comply to the concerned Assessing Officer’s requirements as per law. - Assessee’s appeal is treated as partly allowed for statistical purposes.
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