Dilip Bhanverlal Dangi (HUF) Vs ITO (ITAT Mumbai)
Penny Stock LTCG Addition U/s 68 Deleted – Documentary Evidence Accepted; Suspicion Cannot Replace Proof – ITAT Mumbai
The assessee (HUF) claimed exemption u/s 10(38) on long-term capital gains of ₹19.41 lakh arising from sale of shares of Radford Global Ltd. The AO, relying on investigation reports alleging penny stock manipulation, rejected the exemption and treated entire sale proceeds of ₹19.97 lakh as unexplained cash credit u/s 68. CIT(A) upheld the addition.
Before ITAT, the assessee demonstrated that shares were purchased and sold through recognized stock exchange via registered broker, held in demat account for more than one year, and all payments were routed through banking channels supported by contract notes and confirmations. The Tribunal noted that Revenue failed to conduct independent enquiry or bring any direct evidence linking the assessee to price rigging or accommodation entry operators. Neither the assessee nor the broker was found in any SEBI list of beneficiaries.
ITAT held that mere reliance on general investigation reports or abnormal price movement cannot justify addition in absence of specific incriminating material. Since documentary evidence remained uncontroverted and suspicion cannot substitute proof, the addition u/s 68 was deleted and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal filed by the assessee arises out of the order dated 13/08/2025 passed by the Ld. Commissioner of Income Tax (Appeals), Addl./JCIT(A)- Agra, Mumbai [hereinafter the “Ld.CIT(A)”] for A.Y. 2014-15.
