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TMI Blog2018 (7) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had earned Rs. 25,52,680/- on sale of 25,000 equity shares of M/s.Cresanda Commercial Solutions Ltd and 40,000 equity shares of M/s. Surabhi Chem & Investment Ltd. As per the ld. Authorised Representative, assessee had purchased these shares in 2007, 2009, 2010 and 2012 and held such shares as investment. Ld. Authorised Representative, submitted that the gains arising from sale of these shares which were held for more than twelve months, were not allowed exemption u/s.10(38) of the Act. According to him, whole of the consideration received on sale was treated as income under the head ''income from other sources''. As per the ld. Authorised Representative, lower authorities disbelieved the purchase and sale of the shares of M/s.Cresanda C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ITO, (ITA Nos.2786 & 2787/CHNY/2017, dated 03.05.2018) submitted that the issue might be required to be remitted back to the ld. Assessing Officer, so that due process of law is followed. 4. I have considered the rival contentions and perused the orders of the authorities below. Claim of the assessee for exemption u/s.10(38) of the Act, on alleged long term capital gains arising on sale of shares of M/s.Cresanda Commercial Solutions Ltd and M/s. Surabhi Chem & Investment Ltd were disallowed by the ld. Assessing Officer considering these to be penny stock companies and alleging assessee's failure to bring evidence with regard to the genuineness of the transactions. It is not disputed by the ld. Departmental Representative that Revenue h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld.CIT(A) nor from the side of the assessee. The main foundation of the assessment in the present case is the statement of one Shri Ashok Kumar Kayan who has admitted to have provided bogus Long Term Capital Gains to his clients. The said Shri Ashok Kumar Kayan also allegedly seems to have provided the assessee's name and PAN as one of the beneficiaries. However, this statement given by Shri Ashok Kumar Kayan cannot be the foundation for the purpose of assessment in so far as Shri Ashok Kumar Kayan has not been provided to the assessee for cross-examination. In the absence of opportunity of cross-examination, the statement remains mere information and such information cannot be foundation for assessment. 10. Admittedly, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? Did the assessee take possession of the shares in its physical form? In Para No.8.1 of the Assessment Order, it is mentioned that the assessee is an investor and has been regularly trading in shares. If this is so, does the demat account show such transactions being done by the assessee or is this the only one of transaction. Thus, clearly the facts required for adjudicating the appeals are not forthcoming. There is no evidence whatsoever to show that the assessee has held the shares for more than 12 months. This is because assuming that the demat has been done and the shares of M/s.BPL has come into the assessee's demat account and has immediately flown out. Then the factum of the possession of the shares for more than 12 months have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h evidences as required by the AO to substantiate the claim as also by producing the persons through whom the assessee has undertaken the transaction of the purchase and sale of the shares which would include the sub-broker, friend and the broker through whom the transaction has been done, before the AO for examination''. In line with the above, I am of the opinion that question regarding genuineness of the claim of long term capital gains requires to be restored to the ld. Assessing Officer for reconsideration after granting assessee adequate opportunity to substantiate its case. Revenue has to furnish to the assessee all the statements relied on by them. Useful reference may be made to the law laid down by Hon'ble Apex Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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