Скачать или смотреть Is addition for penny stock justified when A.O. failed to impeach the credibility of evidences?

(2025) 126 ITR (Trib) 137
In the Income Tax Appellate Tribunal
(Before V. Durga Rao, Member (Judicial) AND K.M. Roy, (Accountant Member))

Deputy Commissioner of Income-tax
v
Naresh Laxminarayan Grover

I.T.A. Nos. 524, 525 and 526/Nagpur/2024 (assessment years 2014-2015, 2015-2016 and 2016-2017)

March 21, 2025

Playlist: Penny Stock

A.Y.: 2014-15 TO 2016-17

Favouring: Assessee

Question: Is addition for penny stock justified when A.O. failed to impeach the credibility of evidences?

1) For assessment years 2014-2015 to 2016-2017, doubting the genuineness of sale and purchase of shares by the assessee, the Assessing Officer made an addition under section 68 of the Income-tax Act, 1961, holding the assessee's short-term capital gain to be not genuine.

2) The assessee was of the view that the action of the Assessing Officer in reopening the assessment amounted to a mere change in opinion, that the reasons for reopening did not indicate that the Assessing Officer was in possession of any new material, and that the reopening was, therefore, illegal.

3) The Commissioner (Appeals) granted relief to the assessee on the ground that the shares were bought and sold on the Bombay Stock Exchange, they were delivered in the assessee's demat account, the transactions were through leading brokers of the country, the payments were made through banking channels, and there was nothing on record to show that the assessee, or the brokers, were involved in price rigging of the shares; he held the gains made through such share transactions genuine.

4) On appeal by the Revenue that the Commissioner (Appeals) had allowed the short-term capital gains overlooking the fact that the share-issuing companies were either shell companies, penny-stock companies or companies engaged in fraudulent booking of long-term and short-term, capital gains or loss.

5) Held, dismissing the appeal, that the facts cited by the Assessing Officer were illusory and baseless.

6) When the assessee had paid tax on short-term capital gains under section 111A at 15 per cent., the Assessing Officer's reclassification of it for taxation under section 68 read with section 115BBE was without any basis.

7) This cavalier attitude of the Assessing Officer could not be countenanced in the absence of any worthwhile inquiry.

8) There was no scope to tinker with the well-reasoned order passed by the Commissioner (Appeals).

9) The clean chit given in the acquittal order of the Securities and Exchange Board of India was the final nail in the coffin and dispelled all doubts and aspersions cast by the Assessing Officer.

10) The Department had failed to impeach the credibility of the evidences submitted.

11) Incidentally, the tax effect of the appeal was below the prescribed limit of Rs. 60 lakhs and there was no allegation that the assessee was part of an organised tax evasion involving penny-stock companies and accommodation entries.

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Link for some important videos:

1) WHETHER TRIBUNAL CAN REMAND MATTER IN ENTIRETY WHERE DEPARTMENT DID NOT FILE CROSS APPEALS?- https://www.youtube.com/watch?v=gkqMk...

2) WHETHER ASSESSEE HAS ALSO TO CHALLENGE THE FINDINGS OF THE A.O THAT NOTICE HAS BEEN SERVED?- https://www.youtube.com/watch?v=XbZWh...

3) WHETHER EXTENDED TIME LIMIT U/S 149(1)(b) CAN BE USED ON THE BASIS OF SALES CONSIDERATION U/S 48?- https://www.youtube.com/watch?v=WuRt9...

4) WHETHER NOTICE SENT TO SECONDARY EMAIL IS VALID IF NOT SENT TO PRIMARY E-MAIL U/S 148?- https://www.youtube.com/watch?v=aAzHE...

5) WHETHER ENTRIES IN BOOKS OF ACCOUNTS CONCLUSIVE TO DETERMINE TAXABLE INCOME OF ASSESSEE?- https://www.youtube.com/watch?v=Rx8JQ...