ITAT Mumbai deleted Penny Stock Addition
In a recent case, Mumbai ITAT deleted the addition on account of penny stock in the hands of the Assessee.
The case detail is as under:
Income-tax Officer v. Prakashmal Malraj Jain IT Appeal No. 3271 (Mum) of 2023
Let us have a short overview of the case:
Facts:
1. The assessee had earned Long Term Capital Gain of Rs.59,74,380/- on sale of 32,000 shares of M/s. Moryo Industries Limited for a consideration of Rs.63,51,287/-. The assessee claimed the same as exempt u/s.10(38) of the Income Tax Act.
2. Subsequently, the AO received information that a person named, Giriraj Kishore Agarwal was providing accommodation entries by way of bogus Long Term Capital Gains in the shares of M/s. Moryo Industries Limited.
3. Accordingly, the AO took the view that the Long Term Capital Gain declared by the assessee is bogus in nature and accordingly, reopened the assessment of AY 2014-15 by issuing notice u/s. 148 of the Income Tax Act.
4. In this regard, the AO fully placed his reliance on the report given by the Investigation Wing and accordingly concluded that the Long Term Capital Gainof Rs.59,74,380/- declared by the assessee is bogus in nature.
5. However, he preferred to assess the sale proceeds of Rs.63,51,287/- as income of the assessee on the presumption that the assessee would have received back this amount.
6. CIT(A) deleted the addition on the reasoning that the assessing officer has not found fault with any of the documents furnished by the assessee in support of purchase and sale of shares.
ITAT Mumbai held as under:
1. The AO has not found fault with any of the documents furnished by the assessee evidencing the purchase and sale of shares.
2. Further, the AO has also not carried out any independent enquiry with regard to the transactions carried on by the assessee, i.e., he has simply relied upon the generalised the report given by the Investigation wing.
3. The decision rendered by Hon Bombay High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4thMarch, 2022) is applicable to the facts of the present case.
4. In the result, the appeal filed by the Revenue is dismissed.
The copy of the order is as under:
