9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (5) TMI 1536 - AT - Income TaxAddition u/s 68 - sale of shares of the penny stock companies - commission paid to the entry provider @ 35% - HELD THAT - As decided in Kamalesh Mohandas Lakhwani 2023 (8) TMI 505 - ITAT MUMBAI relating to transactions in shares of same company as that of assessee we find no reason to hold the assessee liable for having invested in the said share in the absence of any corroborative evidence. A.O. has also not made any enquiry as to the payments made by the assessee to the recognized broker nor has the A.O. brought on record any material evidence to show that it was a mere bogus transaction except for the information received from the DDIT (Investigation) that M/s. Vas Infrastructure Ltd. was a penny stock.mere suspicion that the assessee has invested in alleged penny stock scrip cannot be made basis of addition u/s. 69B of the Act. Appeal filed by the revenue is dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal questions in this case revolve around the legitimacy of the Long Term Capital Gains (LTCG) claimed by the assessee, which the revenue contends are fictitious and part of a scheme involving penny stocks to evade taxes. The issues considered include:
ISSUE-WISE DETAILED ANALYSIS 1. Legitimacy of LTCG and Transactions in Penny Stocks Relevant legal framework and precedents: The case hinges on the interpretation of Section 68 of the Income-tax Act, which deals with unexplained cash credits. The revenue relied on the Investigation Wing's report, which listed M/s VAS Infrastructure Ltd. as a penny stock. Court's interpretation and reasoning: The Tribunal considered the evidence presented by the assessee, which included documented transactions through account payee cheques, stock exchange records, and credible broker transactions. The Tribunal noted that similar cases had been decided in favor of the assessee by other benches. Key evidence and findings: The Tribunal found that the assessee had held the shares for a significant period, paid Security Transaction Tax (STT), and provided substantial documentary evidence, including Demat and bank statements, which were not disputed by the AO. Application of law to facts: The Tribunal applied the principles from previous decisions, emphasizing the need for corroborative evidence beyond mere suspicion or reports from the Investigation Wing. Treatment of competing arguments: The Tribunal dismissed the revenue's reliance on the Investigation Wing's report, noting the lack of direct evidence of manipulation by the assessee. Conclusions: The Tribunal concluded that the transactions were genuine and not part of a scheme to generate fictitious LTCG. 2. Deletion of Additions under Section 68 Relevant legal framework and precedents: Section 68 requires the assessee to provide satisfactory explanations for any credits in their accounts. The revenue argued that the assessee failed to do so. Court's interpretation and reasoning: The Tribunal noted that the CIT(A) had correctly appreciated the facts and evidence, which indicated genuine transactions. Key evidence and findings: The Tribunal found no discrepancies in the documentary evidence provided by the assessee, such as contract notes and Demat statements. Application of law to facts: The Tribunal applied the legal standard of human probabilities and the surrounding circumstances, as established in precedents like Durga Prasad More and Sumati Dayal. Treatment of competing arguments: The Tribunal found the revenue's arguments unconvincing, given the lack of direct evidence against the assessee. Conclusions: The Tribunal upheld the CIT(A)'s decision to delete the additions, finding no evidence of bogus transactions. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Tribunal stated, "In the absence of any material evidences to corroborate the information received from DDIT that M/s. Vas Infrastructure Ltd. is a penny stock, we find no justification in upholding the addition made by the A.O." Core principles established: The Tribunal reinforced the principle that mere suspicion or reports from investigation authorities are insufficient for additions under Section 68 without corroborative evidence. Final determinations on each issue: The Tribunal dismissed the revenue's appeal, confirming the CIT(A)'s decision to delete the additions related to the alleged fictitious LTCG.
|
