IN INCOME TAX APPELLATE TRIBUNAL C SMC BENCH, CHENNAI BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ITA Nos.604 & 605/Chny/2019 Assessment Years : 2010-11 & 2011-12 Shri Praveen Kumar Surana, Income Tax Officer, No.16, Trust Square Street, v. Non Corporate Ward 10(3), Ramalingapuram, Chennai - 600 034. Chennai - 600012. PAN : AAGPP9842D (Appellant) (Respondent) Appellant by : Shri R. Padmanabhan, CA () ' Respondent by : Shri Sanath Kumar Raha, JCIT Date of Hearing :02.07.2019 Date of Pronouncement : 01.10.2019 ORDER Both appeals of assessee are directed against respective orders of Commissioner of Income Tax (Appeals)-12, Chennai, dated 28.01.2019 and pertain to assessment years 2010- 11 and 2011-12. Since common issue arises for consideration in both these appeals, I heard these appeals together and disposing same by this common order. 2 I.T.A. Nos.604 & 605/Chny/19 2. Shri R. Padmanabhan, Ld. representative for assessee, submitted that assessee claimed exemption under Section 10(38) of Income-tax Act, 1961 (in short 'the Act') in respect of long term capital gains arising out of sale of shares to extent of 13,23,820/- and 3,30,995/- for assessment year 2010- 11 and 2011-12 respectively. In fact, according to Ld. representative, assessee invested in shares of M/s Bakra Pratisthan Ltd. Ld. representative further submitted that Assessing Officer mainly placed his reliance on investigation report of Directorate of Investigation, Kolkata. According to Ld. representative, copy of said investigation report was not furnished to assessee. Therefore, Ld. representative submitted that opportunity may be given to assessee by remitting back matter to file of Assessing Officer. 3. On contrary, Shri Sanath Kumar Raha, Ld. Departmental Representative, submitted that he is placing reliance on orders of Assessing Officer as well as CIT(Appeals). 4. I heard Ld. representative for assessee and Ld. D.R. and perused relevant material available on record. assessee made investments in shares of M/s Bakra Pratisthan 3 I.T.A. Nos.604 & 605/Chny/19 Ltd. From order of Assessing Officer it appears that assessee purchased 5,000 shares of M/s Bakra Pratisthan Ltd. for 1,00,000/- for each assessment year and on sale of these shares, assessee disclosed long term capital gains to extent of 13,23,820/- and 3,30,995/- for assessment year 2010-11 and 2011-12 respectively. This was disallowed by Assessing Officer on ground that company in which assessee invested is penny stock company. However, it is not brought on record how assessee is involved in promoting penny stock company and how assessee involved in inflating shares of company. Moreover, copy of investigation report said to be received from Investigation Wing of Department at Kolkata was not furnished to assessee. On identical circumstances, this Tribunal in case of Kanhaiyalal & Sons (HUF) v. ITO in I.T.A. No.1849/Chny/2018, has remitted back matter to file of Assessing Officer for reconsideration. In fact, this Tribunal has observed at para 4 of its order dated 06.02.2019 as follows:- 4. We heard Shri AR.V. Sreenivasan, Ld. Departmental Representative also. Admittedly, Assessing Officer disallowed claim of assessees on basis of information said to be received from Investigation Wing of Department at Kolkata with regard to investment made 4 I.T.A. Nos.604 & 605/Chny/19 by assessees in penny stock company. It is not in dispute that copy of investigation report said to be received from Kolkata was not furnished to assessee. Moreover, details of enquiries said to be made by Assessing Officer were also not furnished to assessees. In those circumstances, this Tribunal is of considered opinion that Assessing Officer has to reconsider issue afresh after furnishing material relied upon by Assessing Officer. Accordingly, orders of both authorities below are set aside and entire issue is remitted back to file of Assessing Officer. Assessing Officer shall bring on record role of assessees in promoting company and relationship of assessees, if any with promoters, role of assessees in inflating price of shares, etc. Assessing Officer shall also furnish copy of investigation report said to be received from Investigation Wing of Department at Kolkata and other materials if anything in his possession and thereafter decide issue afresh in accordance with law, after giving reasonable opportunity to assessees. 5. In view of above, this Tribunal is of considered opinion that matter needs to be re-examined by Assessing Officer. Accordingly, orders of both authorities below are set aside and issue raised by assessee with regard to deduction under Section 10(38) of Act for both assessment years is remitted back to file of Assessing Officer. Assessing Officer shall examine matter as directed by this Tribunal in case of Kanhaiyalal & Sons (HUF) (supra) and thereafter decide 5 I.T.A. Nos.604 & 605/Chny/19 issue afresh in accordance with law, after giving reasonable opportunity to assessee. 6. In result, both appeals filed by assessee are allowed for statistical purposes. Order pronounced in court on 1st October, 2019 at Chennai. Sd/- (N.R.S. Ganesan) Judicial Member Chennai, st 2 /Dated, 1 October, 2019 Kri. ( 3 4 5 4 Copy to: 1. Appellant 2. Respondent 3. 6 ( )CIT(A)-12, Chennai 4. Principal CIT-3, Chennai 5. 4 (DR 6.GF. Praveen Kumar Surana v. Income-tax Officer, Non Corporate Ward- 10(3), Chennai