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TMI Blog2018 (7) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... nue has to furnish to the assessee all the statements relied on by them. Appeal of the assessee is allowed for statistical purpose. - I.T.A. No. 3076/CHNY/2017 - - - Dated:- 4-7-2018 - SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Appellant : Mrs. B.Jaisheila, C.A. For The Respondent : Mr. B. Sagadevan, IRS, JCIT ORDER 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. 2. Ld. Counsel for the assessee submitted that assessee had earned ₹ 25,52,680/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements and records were given to the assessee nor such persons made available for a cross examination. Contention of the ld. Authorised Representative was that statements recorded behind the back of the assessee could not have been relied on by the Revenue for fastening a tax liability on the assessee. As per the ld. Authorised Representative, ld. Commissioner of Income Tax (Appeals) had confirmed the order of the ld. Assessing Officer treating the transactions to be that of penny stock companies relying on the reports of Investigation Wing of Income Tax Department, Kolkata. 3. Per contra, ld. Departmental Representative placing reliance on a decision of a Co-ordinate Bench in the case of Heerachand Kanunga vs. ITO, (ITA Nos.2786 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. In a similar case of Heerachand Kaunga (supra) decided by a Co-ordinate Bench, where also sale of shares in what is called as penny stock companies were disbelieved by the Revenue for almost similar reasons, this Tribunal had held as under at para 9 to 12 of its order dated 03.05.2018. 9. A perusal of the facts in the present case admittedly given room for suspicion. However, assessments are not to be done on the basis of mere suspicion. It has to be supported by facts and the facts are unfortunately not forthcoming in the Assessment Order, in the order of the Ld.CIT(A) nor from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shares? Did th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts are not coming out of the Assessment Order nor the order of the Ld.CIT(A) nor from the side of the assessee, we are of the view that the issues in this appeal must be restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity to substantiate its case and we do so. 12. The statement recorded by the Revenue from Shri Ashok Kumar Kayan cannot be used as an evidence against the assessee in so far as the statement has not been given to the assessee nor has Shri Ashok Kumar Kayan been provided to the assessee for crossexamination. However, the assessee shall prove the transaction of the Long Term Capital Gains in respect of which the assessee has claimed the exemption u/s.10(38) by providing all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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