Tribunal Orders Reassessment Due to Procedural Lapses in Exemption Claim Disallowance Under Income-tax Act.

The ITAT remitted the case back to the Assessing Officer, setting aside prior orders, due to procedural lapses in disallowing the assessee's claim for exemption under Section 10(38) of the Income-tax Act, 1961. The tribunal mandated that the assessee be provided with the investigation report and relevant materials, ensuring a fair reassessment.

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Issues:
Appeal against order of Commissioner of Income Tax - Exemption claimed under Section 10(38) - Disallowance of long term capital gains - Reliance on investigation report - Opportunity to assessee - Remand to Assessing Officer.

Analysis:
The appeal pertains to the assessment year 2015-16 where the assessee claimed exemption under Section 10(38) of the Income-tax Act, 1961 for long term capital gains from the sale of shares. The Assessing Officer disallowed the claim based on the investigation report of Directorate of Investigation, Kolkata, which was not provided to the assessee. The counsel for the assessee requested an opportunity for the assessee to be heard by remitting the matter back to the Assessing Officer. On the other hand, the Departmental Representative relied on the orders of the Assessing Officer and CIT(Appeals.

The tribunal considered the submissions and found that the Assessing Officer disallowed the claim without establishing how the assessee was involved in promoting or inflating the shares of the penny stock company in which the investment was made. Citing a similar case, the tribunal decided to remit the issue back to the Assessing Officer for reconsideration. The tribunal emphasized the importance of providing the assessee with the investigation report and other relevant materials before deciding on the matter again. Therefore, the orders of both authorities were set aside, and the issue was remitted back to the Assessing Officer for a fresh decision after due consideration.

In conclusion, the tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to re-examine the matter following the guidelines set in the previous case. The decision was pronounced in court on 20th November 2019 in Chennai.

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