Case Law Details
Rajesh Singhvi and Sons (HUF) Vs ITO (ITAT Chennai)
Claim of the assessee for exemption u/s.10(38) of the Act, on alleged long term capital gains arising on sale of shares of M/s.Cresanda Commercial Solutions Ltd and M/s. Surabhi Chem & Investment Ltd were disallowed by the ld. Assessing Officer considering these to be penny stock companies and alleging assessee’s failure to bring evidence with regard to the genuineness of the transactions. It is not disputed by the ld. Departmental Representative that Revenue had relied on statements recorded during a survey u/s.133A of the Act in one M/s. Sikaria Share & Stock Broking Services Pvt. Ltd. for disbelieving the sale of shares in M/s.Cresanda Commercial Solutions Ltd. The assessment order also refers to statements of Mr. Deepak Patwari and Mr. Anup Maheswari, at para 4.4.2, statements of Mr. Bikas Sureka, Mr. Anil Khemka, Mr. Amit Saraogi, Mr. Sauraj Jhunjhunwala, Mr. Sajendra Mookim at page 7 and that of Mr. Sanjeev Kumar Agarwal at page 8. These were all relied on by the ld. Assessing Officer for disbelieving the claim of sale in the shares of M/s. Surabhi Chemicals and Investments Ltd. It is also not disputed that statements recorded from these persons and records relied on by the Revenue for disbelieving the claim of the sale of shares, were not put to the assessee. Undisputedly, the sale of shares were through recognized stock exchange and through a recognized stock broker.
I am of the opinion that question regarding genuineness of the claim of long term capital gains requires to be restored to the ld. Assessing Officer for reconsideration after granting assessee adequate opportunity to substantiate its case. Revenue has to furnish to the assessee all the statements relied on by them. Useful reference may be made to the law laid down by Hon’ble Apex Court in the case of CIT vs. Sunita Dhadda, SLP (Civil ) No. 9432/2018, dated 28.03.2018, while affirming a judgment of Hon’ble Rajasthan High Court in the case of CIT vs.Smt. Sunita Dhadda, where the importance of providing an opportunity to cross examine the witness has been stressed. Their lordship held that this was an important constituent of natural justice. Only after all the steps required under law is complete, it can be ascertained whether claim of capital gains was bogus or not.
FULL TEXT OF THE ITAT JUDGMENT
In this appeal filed by the assessee directed against an order dated 03.10.2017 of ld. Commissioner of Income Tax (Appeals)-5, Chennai, it is aggrieved on denial of exemption claimed by it u/s.10(38) of the Income Tax Act, 1961 (in short “the Act”) for the long term capital gains on sale of certain shares.
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