ITO Vs Mayukh Construction Private Limited (ITAT Kolkata)
ITAT Rejects Revenue Appeal Because BSE Confirmed Penny Stock Transactions; Penny Stock Loss Held Genuine Due to Demat Records and Broker Documents; ITAT Relies on SAT Findings to Delete Addition in India Infotech Share Loss Case.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal and upheld the order of the Commissioner of Income Tax (Appeals) deleting an addition of Rs.72,28,366 made by the Assessing Officer (AO) on account of alleged bogus loss arising from transactions in shares of India Infotech and Software Ltd.
The assessee had filed its return of income for AY 2014-15 declaring income of Rs.7,30,390. The assessment was reopened under Sections 147 and 148 after the AO received information that the assessee was allegedly a beneficiary of accommodation entries in the form of bogus long-term capital loss involving penny stock transactions in India Infotech and Software Ltd. The AO treated the company as a manipulated penny stock and concluded that the assessee had claimed a bogus loss of Rs.72,28,366 from sale of the shares.
During the assessment proceedings, the assessee submitted replies to all notices and furnished supporting documents relating to the purchase and sale of shares. The assessee, a non-banking finance company engaged in share trading activities, had purchased 2,49,100 shares of India Infotech and Software Ltd. for Rs.93,92,490 and later sold them for Rs.21,64,124, thereby incurring the loss in dispute. The AO also issued notice under Section 133(6) to the Bombay Stock Exchange, which confirmed the details of the transactions.
