Penny stock addition deleted by ITAT Mumbai as no role has been attributed and/or established qua rigging of the shares

 

Recently, Hon’ble Mumbai ITAT in case of Shri Mahaveer Kanwarlal Ranka in ITA No.224/M/2024 dated 29.11.2024 has deleted the LTCG Addition on penny stock by observing that no role of Assessee has been attributed and/or established qua rigging of the shares.

Let us have a Short Overview of the Case:

 In this case, the assessee has submitted the following documents before AO and CIT Appeal:

(i) Contract note cum sale bill
(ii) confirmation of stock broker
(iii) Bank statement,
(iv) Dmat statement,
(V) Bhav copy (rate publication) and
(VI) CIN master data of listed company

Still CIT Appeal simply relying mainly on the judgment passed by the Hon’ble Kolkata High Court in the case of PCIT vs. Swati Bajaj (2022) (139 taxmann.com 352) (Cal) made the addition and disregarding the documents filed at the time of hearing.

The Hon’ble Mumbai ITAT in case of Shri Mahaveer Kanwarlal Ranka in ITA No.224/M/2024 dated 29.11.2024 held that

“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. Even otherwise, no role has been attributed and/or established qua rigging of the shares upon the Assessee. 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, by deleting the additions under consideration. Hence, the additions under consideration are deleted.”

While considering above, ITAT Mumbai has relied upon various jurisdictional HC order.

The copy of the order is as under:

1732879292-h3bYtd-1-TO