TMI Blog2018 (9) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of capital gains was bogus or not. We therefore set aside the orders of the lower authorities and remit the issue back to the file of the ld. Assessing Officer for consideration afresh in accordance with law. Appeal of the assessee is partly allowed for statistical purposes. - I. T. A. No. 1430/CHNY/2018 - - - Dated:- 17-9-2018 - SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri. N. Vijayakumar, C. A. For The Respondent : Shri. Maruthu Pandian, Addl. CIT ORDER PER ABRAHAM P . GEORGE, ACCOUNTANT MEMBER In this appeal filed by the assessee, which is directed against an order dated 19. 02. 2018 of ld. Commissioner of Income Tax (Appeals)-12, Chennai, it is aggrieved on denial of exemption of long term capital gains of ₹ 25, 20, 625/-, arising on transfer of shares claimed u/s. 10(38) of the Income Tax Act, 1961 (in short the Act ) and treating such sum as unexplained income u/s. 68 of the Act. 2. Ld. Counsel for the assessee submitted that assessee had sold 5, 000 shares of one M/s. Kappac Pharm Ltd for a consideration of ₹ 12, 37, 296/- and earned long term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Shri Heerachand Kanunga vs. ITO (ITA Nos. 2786 2787/Chny/2017, datd 03. 05. 2018). 4. We have considered the rival contentions and perused the orders of the authorities below. It is not disputed that long term capital gains claimed by the assessee as exempt u/s. 10(38) of the Act arose on account of sale of equity shares of M/s. Kappac Pharm Ltd. It is also not disputed that the assessee had initially acquired these shares through an off-market transaction. In similar cases of Vimalchand Gulabchand, Praveen Chand, Gatraj Jain Sons (HUF) and Mahendra Kumar Bhandari (supra) where also assessees had claimed exemption u/s. 10(38) of the Act on sale of shares, this Tribunal had held as under at para 13 to 16 of its order dated 6. 04. 2018. 13 . I have considered the rival contentions and perused the orders of the authorities below . The ld . Assessing Officer as well as Ld . CIT(A) had relied on SEBI order dated 29 . 03 . 2016, in the case of M/s . Kailash Auto Finance Ltd . . It is true that in the above order, there is a detailed analysis of modus operandi adopted by about eleven numbers of companies, inter alia including M/s . Kailash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, as already mentioned by me, rules of justice do require that the reports of investigation wing, relied on bythe ld . Assessing Officer, as well as the statement recorded from Mr . Sunil Dokania are put to the assessee and its explanation sought, before deciding whether these are relevant in the assessment of the assessee . I also find the SEBI through its order dated 21 . 09 . 2017(supra) did vacate its interim exparte order dated 29th March, 2016 restraining 244 entities, inter alia including M/s . Kailash Auto Finance Ltd . , from buying, selling or dealing in securities . 16 . In the facts and circumstances of the case, I am of the opinion that the question whether the transactions claimed by the assessee, as giving rise to the long term capital gains exempt from tax u/s . 10(38) of the Act, were real or sham, requires a re-visit by the ld . Assessing Officer . I set aside the orders of the lower authorities and remit the issue back to the file of the ld . Assessing Officer for consideration afresh in accordance with . 5. In the case of Heerachand Kanunga (supra) relied on by the ld. Departmental Representative, Co-ordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ABPL, Kolkata . However, in Para No . 8 . 3, it is mentioned that the assessee in good faith has purchased the shares of M/s . BPL from a sub-broker in his friends circle . What is the true nature of the transaction? From whom did the assessee actually purchase the shares? 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 be proved by the assessee . This is also not forthcoming . In reply to a specific query, as the date of the demat of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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