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TMI Blog2022 (4) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... ct'. Since there are common grounds involved in all the captioned six appeals, we dispose of them by this consolidated order for the sake of convenience and brevity. 3. Following common grounds are raised in ITA Nos. 1903 to 1907/Chny/2019 - 1. For that the order of the Commissioner of Income-tax (Appeals)2, Chennai is contrary to law, facts and circumstances of the case and is opposed to the principles of natural justice. 2. For that the Commissioner of Income Tax (Appeals) - 2 failed to appreciate that the order of the Assessing Officer is without jurisdiction. 3. For that the order passed u/s.143(3) is bad in law. For that the Assessing Officer erred in completing the assessment u/s.143(3). 4. For that the appellant had diligently declared the Capital Gains in the Statement of Account filed before the Ld. AO and is entitled for the exemption U/s. 10(38) of the Act. 5. For that the Appellant had submitted the details relevant to the assessment proceedings along with the evidences in support of the Long Term Capital Gains arose on sale of Shares as per the provisions of section 112 of the Income Tax Act, 1961. 6. For that the assumption of the Ld. AO as well the CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in law in not following the decision of the Jurisdiction Tribunal in the case of Nirav Kumar Mahendra Sapani and Kinner Prafulchand Sapani where in the facts are para material, in doing so the learned CIT(A) failed to uphold the principles of Judicial discipline. 7. The learned CIT(A)-5 and AO erred in law and facts in treating the transaction of purchase of shares as Off market despite providing salient evidences such as Purchase contract through recognized stock exchange vide contract note. The said uncontroverted evidences are overlooked by the assessing officer without any rhyme of reason. 8. The learned CIT(A)-5, erred in law and facts in not sending the notice of hearing to the appellant, thereby violating the principle of natural justice. 9. The learned assessing officer as well as the CIT(A) erred in relying on a certain pattern of bogus claim which is totally irrelevant to facts of the appellants. The learned lower authorities erred in relying on investigation in the case of third party which has no bearing on the appellants transaction to disallow the claim of the appellant under section 10(38). 10. The Assessing Officer added a sum of Rs. 1,20,000/- towards dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 24,82,748/- in the details of Exempt Income [LTCG on which STT is paid u/s 10(38) of the Act)]. Ld. AO disallowed the claim of exemption u/s 10(38) by holding that the assessee entered into an engineered transaction to generate artificial LTCG on sale of shares which fall under the category of penny stocks. Ld. AO based his decision of treating the impugned transaction of sale of shares as bogus transaction by relying on the report of Directorate of Income-tax (Investigation), Kolkata wherein the Investigation Wing of the Department has studied the modus operandi of rigging the prices of penny stocks and generation of capital gain there from. Before the Ld. AO, the assessee furnished the evidences for sale of 7500 shares of said company, M/s. Bakra Pratisthan Ltd sold for a consideration of Rs. 24,82,748/- through Shri Ashok Kumar Kayan, Kolkata. The AO found that the assessee purchased 7500 shares of said company from M/s. Akashgnaga Polyplast P. Ltd. for Rs. 1,50,000/- during FY 2008-09, which were sold during the year under consideration. Ld. AO noted in para 6 of the assessment order that the Investigation Wing recorded a statement of Shri Harshvardhan Kayan S/o of Ashok Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the relevant material to the assessee in the course of assessment proceedings for its cross verification and cross examination and urged before the Bench for liberty to file a written submission for his contentions along with relevant documentary evidences. In the light of this submission by the Ld. Sr. DR and provisions of section 142(3) of the Act, further specific query was raised by the Bench as to why this issue be not restored to the file of the Ld. AO for which the Ld. Sr. DR placed reliance on the decision of Hon'ble Jurisdictional High Court of Madras in the case of CIT, Chennai v. Mrs. Manish D. Jain (HUF) in TCA No. 223 of 2020, order dated 16.12.2020. Bench heard the matter and granted liberty to the Ld. Sr. DR for filing a written submission as requested along with providing a copy to the Ld. AR. 10. Ld. AR representing the matter before us in ITA No. 1970/Chny/2018 submitted that the Ld. AO had extensively relied upon the report of the Investigation Wing, Kolkata and certain statements recorded thereby on penny stocks, which sets out the modus operandi adopted in the alleged business of providing entries of bogus LTCG, without these being confronted to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law. The Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact." [emphasis supplied by us]. In the present case before us, it is an uncontroverted factual position accepted by the Ld. Sr. DR on the material made available to the assessee vis-à-vis requirements of provisions of section 142(3) of the Act. Furthermore, copy of investigation report of the Investigation Wing, Kolkata extensively relied upon by the Ld. AO is furnished before the Bench and made available to the Ld. AR now, for the first time. We note that compliance of provisions of section 142(3) is a mandatory statutory requirement in completing the assessment proceedings failing which may vitiate the entire assessment itself since this sub-section uses the word 'shall'. 13. Per contra, the Ld. Counsel referred to another decision of Co-ordinate Bench, ITAT Bangalore in ITA No. 650/Bang/2019 for A.Y. 2015-16 in the case of Shri Suresh J. Kothari (HUF) v. ITO, Ward 2(2)(1), Bengaluru, dated 31.07.2019 which in turn has followed the directions iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other attendant details. As per the facts noted by the High Court in the earlier paras of judgment (supra) and as per the facts of the case on hand, there appears to be no difference in facts and therefore by respectfully following this judgment in the case of Chandra Devi Kothari (Supra), I set aside the impugned order of learned CIT(A) for Assessment Year 2014-15 and restore the matters to the file of the AO for fresh decision with the same directions as were issued by the Hon'ble Karnataka High Court in the case as per Para No.8 of the judgment reproduced above. In view of this decision, no adjudication is called for at this stage regarding the merits of the addition." ITA No.650/Bang/2019 As the facts prevailing In the instant case is identical nature, following the aforesaid decision of the Tribunal, we set aside the order passed by the learned CIT (Appeals) and restore all the issues to the file of Assessing Officer with similar directions mentioned in ITAT Order (supra) for examining them afresh. 6. In the result, appeal of the assessee is treated as allowed for statistical purposes." 14. Considering the uncontroverted factual position accepted by the Ld. Sr. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1970/Chny/2018 in respect of other captioned assessee are allowed for statistical purpose. 16. In respect of Ground No. 8 in ITA Nos. 1906 & 1907/Chny/2019 relating to addition made by the Ld. AO towards alleged commission paid by the assessee on the sale transaction of shares, we find that it is consequential in nature to the above finding and observations on the issue of sale transaction of shares and is accordingly disposed of as allowed for statistical purpose. 17. Ground no. 10 in ITA No. 1970/Chny/2018 relates to addition made by Ld. AO of Rs. 1,20,000/- towards inadequacy of drawings and confirmed by the Ld. CIT(A). Total drawing of the family were Rs. 1,26,102/- which comes to approx. Rs. 10,000/- per month for the whole family. Before us, Ld. Counsel for the assessee could not explain how the drawing of Rs. 10,000/- per month would be sufficient for the whole family. We find no reason to interfere with the finding given by Ld. CIT(A) in this respect and accordingly, this ground of appeal is dismissed. 18. Ground No. 11 in ITA No. 1970/Chny/2018 relates to disallowance made by the Ld. AO u/s 14A of Rs. 1,10,580/- towards interest to loan creditor debited to Profit & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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