TMI Blog2019 (11) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... not the final evidence. We deem it fit to remit the issue of exemption in this appeal back to the file of the Assessing Officer for re-adjudication. Therefore, the Assessing Officer concerned shall require the assessee; 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 with the Assessing Officer s requirements as per law. AO is also free to conduct appropriate enquiry as deemed fit. The Assessing Officer shall also 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. as had been held by the Co-ordinate Bench of this Tribunal in the case of Kanhaiyalal Sons (HUF) v. ITO [ 2019 (2) TMI 1640 - ITAT CHENNAI] . AO shall furnish adequate opportunity to the assessee on the material etc to be used against him and on appreciation of all the aspects, the Assessing Officer would decide the matter in accordance with law. Thus, the issue of exemption claim u/s 10(38) is restored to the file of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, to such share transactions. In view of that, the Assessing Officer added the entire sale proceeds at ₹ 1,80,83,866/- to the returned income. Aggrieved against that order, the assessee filed an appeal before the CIT(A). The Ld. CIT(A), inter alia, relying on the decisions in the cases of ITO, 19(3) (4) Mumbai Vs Shamim M Bharwani, reported in 69 taxmann.com 65 (Mumbai Trib) and Sanjay Bimalchand Jain v PCIT-1, Nagpur reported in 89 taxmann.com 196 (Bomb HC) etc dismissed the appeal of the assessee. Aggrieved against that order, the assessee filed this appeal. 3. It was submitted by Ld. AR that the issue in this appeal was against the action of the Ld. CIT(A) in confirming the addition made by the Ld. Assessing Officer in treating the purchase and sale of shares by the assessee, as penny stock transactions. The Ld.AR submitted on the lines of grounds of appeal and relied on the order of this Tribunal in the case Mr Sunil Kumar Lalwani Vs ITO others, Non Corporate Circle 9(4), Chennai in ITA No 659 660/ CHNY/2018 dt. 09.01.2019. Per Contra, the Ld DR submitted that the assessee has claimed deduction U/s 10 (38) but he has not proved the genuineness, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd perused the relevant material available on record. Admittedly, the A.O 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 claimed exemption under Section 10(38) of the Act during the year wider 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 Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the share certificates and the share transfer forms? How did the assessee overcome the provisions of Sec.40A(3)? Was there adequate cash availability in the books of the assessee on 24.04.2008? Did the assessee travelled to Kolkata? How was the transaction done? Who applied for the demating of the shares? When were they demated? When were the shares transferred to the demat account of the assessee? To whom were the shares sold during the Assessment Years 2010-11 2011-12? When were the cheques received by the assessee? From whom did the assessee received the cheques? Was there any cash deposit immediately prior to the issuing of the cheque from the bank account of the purchaser of the shares of the assessee? 11. A perusal 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 transaction? From whom did the assessee actually purchase the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 13. In the result, the appeals filed by the assessee in ITA Nos.2786 2787/Chny/2017 are partly allowed for statistical purposes. 6. Respectfully following the above orders, on the facts and circumstances of this case, we deem it fit to remit the issue of exemption in this appeal back to the file of the Assessing Officer for re-adjudication on the lines indicated above. Therefore, the Assessing Officer concerned shall require the assessee; 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 with the Assessing Officer s requirements as per law. The Assessing Officer is also free to conduct appropriate enquiry as deemed fit. The Assessing Officer shall also bring on record the role of the assessee in promoting the company and relationship of the assessee with other promoters, role of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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