TMI Blog2018 (10) TMI 1634X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of capital gains was bogus or not. The question of payment of any commission on the transactions and whether it was unexplained expenditure will arise only after this determination - set aside the orders of the lower authorities and remit the issue back to the file of the AO for consideration afresh - decided partly in favour of assessee for statistical purposes. - I.T.A. No.1539/CHNY/2018 - - - Dated:- 29-10-2018 - SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For the Appellant : Shri. T. PramodKumar Chopda, Adv For the Respondent : Shri. B. Sagadevan, IRS, JCIT ORDER In this appeal filed by the assessee, which is directed against an order dated 01.03.2018 of ld. Commissioner of Income Tax (Appeals)-5, Chennai, it is aggrieved on denial of exemption of long term capital gains of ₹ 9,40,339/-, arising on transfer of shares claimed u/s.10(38) of the Income Tax Act, 1961 (in short the Act ) and treating a sum of ₹ 9,72,000/- as unexplained income u/s.68 of the Act. Assessee is also aggrieved on an addition of ₹ 29,160/- as unexplained expenditure being commission paid on the share transactions. 2. Ld. Counsel for the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were sufficient and more reasons for lower authorities to disbelieve the transactions claimed by the assessee in the equity shares of M/s. Kailash Auto Finance Ltd. As per the ld. Departmental Representative, assessee could not produce any evidence to show how he indentified the shares of the said company for making an off market purchase. Ld. Departmental Representative also placed reliance on a decision of Co-ordinate Bench in the case 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. Kailash Auto Finance Ltd. It is also not disputed that the assessee had initially acquired the shares of one of the said company through off market deals. 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 of M/s. Kailash Auto Finance Ltd, this Tribunal had held as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads they might have had, reports of which were used against the assessee, would not ipso facto mean that the assessment was pursuant to any search. There is nothing whatsoever on record to suggest that the assessment was based on materials unearthed during a search. 15. However, 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 rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the Assessment Order at Para No.7.1 shows that in the Written Submissions, the assessee states that he has purchased 15000 shares of M/s.BPL from M/s.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 transactionRs. From whom did the assessee actually purchase the sharesRs. Did the assessee take possession of the shares in its physical formRs. 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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