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These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.

05-09-2019, Narendra Kumar Jain, Section 10(38), Tribunal Chennai

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2 days 9 hours ago #10779 by amit
Section - 10(38)
Order Date - 05-09-2019
Favouring - Partly allowed for statistical purposes
Court - Tribunal Chennai
Appellant - Narendra Kumar Jain
Respondent - ITO
Justice - GEORGE MATHAN JM & S. JAYARAMAN AM
Citation - 919Taxpundit95
Appeal No. - I.T.A.No. 876/CHNY/2019
Asstt. Year - 2013-14

Order

PER : GEORGE MATHAN

These appeals filed by independent assessees are directed against the respective orders of the concerned Commissioner of Income Tax (Appeals), Chennai. Since common issue arises for consideration in all these appeals, we heard these appeals together and disposing of the same by this common order.

2. The above assessees have purchased shares of M/s. Blue Print Securities Ltd., / M/s Essar India Ltd., / M/s. Octant Technologies / M/s. Bakra Prathishtan Ltd., / M/s. Jackson Investment Limited / M/s. Kappac Pharma, as the case may be, by cash, for a nominal price, off market, from certain brokers. Subsequently, each of them sold shares on huge price, earned a huge profit of LTCG and claimed it as an exempt income U/s.10(38). The respective Assessing Officer, on the basis of the report of investigations done by the Revenue in Kolkatta in which one of the brokers named the respective assessee as a beneficiary of bogus LTCG or named the shares held by the company as a paper/shell/bogus company and on the basis of suspicious sale transaction in shares and exempt LTCG shown in return (Penny Stock) report, etc, reopened the assessments and scrutinized / scrutinized the respective assessment. During the course, the respective Assessing Officer after considering the respective assessee’s explanation, material etc., on the basis of investigations done by the Revenue and after analyzing these transactions in detail, treated, inter alia, that the purchase and sale of those shares as penny stock, the assessees have manipulated the transactions with the brokers to convert their unaccounted income etc and hence treated the entire sale consideration as an unexplained credit and refused each of the
assessee’s exemption claim under section 10(38). Aggrieved, the assessee carried the matter on appeal before the respective CIT(A).

The respective 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) dismissed the appeal of assessee. Aggrieved against those orders, the assessees filed these appeals before the Tribunal.

3. It was submitted by Ld. AR that the issue in this appeal in each of the above assessee’s case was against the action of the Ld. CIT(A) in confirming the addition made by the respective Ld. Assessing Officer in treating the purchase and sale of shares by the respective 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 of Shri Heerachand Kanunga for assessment years 2010-11 & 2011-12 in ITA Nos. 2786 & 2787/Mds/2017 dated 03.05.2018. Per Contra, the Ld.DR submitted that the assessee has claimed deduction u/s 10 (38) but the assessee has not proved the genuineness, therefore, reiterating the facts and circumstances of this case from the orders of the lower authorities the Ld. DR
supported the orders of the lower authorities.

4. We have considered the rival submissions. It is noticed that each of the above the assessee has not been given a fair opportunity to prove the genuineness but the assessment has been made primarily, based on the evidences collected by the Revenue in the course of the

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