ITAT Mumbai case on ‘penny stocks’ where there is no evidence of wrongdoing by assessee and all relevant documents are produced:
Mahaveer Kanwarlal Ranka Vs ACIT (ITAT Mumbai) Appeal Number : ITA. No. 224/M/2024
Facts:
1. The AO on the basis of the investigation carried out by the Kolkata Investigation Directorate into 84 penny stocks including M/s. JMD Tele Films Industry Ltd. being one of it, reopened the case of the assessee and show caused the Assessee to justify its transactions carried out qua LTCG.
2. The Assessee in order to establish the genuineness of the purchase of shares, provided the following documents: (i) Contract notes cum purchase bills, (ii) Global report, (iii) Confirmation of stock broker MIs. IIFL securities, (iv) Bank statements, (v) Dmat statement dated 07.01.2009, (vi) Stocks split advice, bhav-copy (rate publication), (vii) Balance sheet of the earlier year ended 31.03.2009 and ITR acknowledgmentreceipt, computation of balance sheet of impugned year.
3. However considering “the findings of the investigation wing, unusual rise in the price of the shares, analysis of the transactions and ignorance of the Assessee about shares of the penny stock companies, cash trail in the account of the entry provider”, the AO held that the Assessee has failed to discharge its onus and ultimately disallowed the claim of the Assessee u/s 10(38) of the Income Tax Act.
ITAT Mumbai held as under:
1. Hon’ble Apex Court in the case of Pr. CIT vs. Renu Agarwal (2023) 456 ITR 249(SC) has dismissed the SLP against the judgment passed in ITA No.44 of 2022 on 06.07.2022 by the Hon’ble Allahabad High Court, wherein the Hon’ble High Court has also dealt with the identical issue as involved in the instant case.
2. We reiterate that the Assessee by producing the relevant documents referred to above before the authorities below as well as before us has duly discharged the onus cast upon him u/s 68 of the Act and admittedly there is no adverse order/penalty order against the Assessee.
3. Even otherwise, no role has been attributed and/or established qua rigging of the shares upon the Assessee.
4. Hence, considering the peculiar facts and circumstances in totality, we are inclined to allow the claim of the Assessee u/s 10(38) of the Act.
The copy of the order is as under:
