| The Tax Publishers2019 TaxPub(DT) 7852 (Chen-Trib) INCOME TAX ACT, 1961
Section 10(38)
In order to claim exemption from payment of tax, assessee had to put before authorities proper materials which would enable them to come to a conclusion and AO must keep in mind that onus of proving the exemption rests on assessee, therefore AO should furnish adequate opportunity to assessee on the material, etc., to be used against him and on appreciation of all the aspects, AO would decide the matter in accordance with law.
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Exemption under section 10(38) - Eligibility of - Genuineness of the transactions of shares -
Assessee purchased shares in cash and sold them on various dates and claimed Long Term Capital Gains. AO after analyzing these transactions concluded that LTSG booked by assessee in his books were pre-arranged method to evade taxes and launder money. Assessee was not able to prove the unusual rise and fall of share prices to be natural and based on the market forces. Therefore, AO held that assessee entered into make-believe transactions, as presented by a pre-mediated series of steps, with a view to imparting a color of genuineness and character of commercial nature, to such share transactions and disallowed the same. Held: The right to exemption must be established by those who seek it, the onus therefore lies on assessee. In order to claim exemption from payment of income-tax, assessee had to put before authorities proper materials which would enable them to come to a conclusion. AO must keep in mind that onus of proving the exemption rests on assessee. Therefore, AO concerned should require assessee to establish who, with whom, how and in what circumstances transactions were carried out, etc., to prove that the transactions were actual, genuine, etc. AO should furnish adequate opportunity to assessee on the material, etc., to be used against him and on appreciation of all the aspects, AO would decide the matter in accordance with law.
REFERRED : CIT v. Ramakrishna Deo (1959) 35 ITR 312 (SC) : 1959 TaxPub(DT) 0094 (SC) Sanjay Bimalchand Jain v. Pr. CIT & Anr. (2017) 89 taxmann.com 196 (Bomb-HC) : 2017 TaxPub(DT) 5257 (Bom-HC) Pr. CIT v. Laxman Industrial Resources Ltd. ITA No. 169/2017, C.M. APPL. 7385/2017 vide Order, dated 14-3-2017 : 2017 TaxPub(DT) 4088 (Del-HC) M/s Kanhaiyalal & Sons (HUF) v. ITO I.T.A. No. 1849/Chny/2018, dated 6-2-2019 Sunil Kumar Lalwani v. ITO ITA No. 659 & 660/CHNY/2018 dt. 9-1-2019 Aravind Nandlal Khatri v. ITO ITA No. 2035/Chny/2038 for assessment year 2011-12 vide Order, dated 3-12-2018
FAVOUR : In assessee's favour by way of remand
A.Y. :
IN THE ITAT, CHENNAI BENCH
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