PCIT Vs Sangitaben Jagdishkumar Shah (Gujarat High Court)
Bogus Loss Allegation Rejected Because SEBI Had Not Blacklisted the Share Script; Share Trading Loss Allowed Because Transactions Were Conducted Through Banking Channels; Revenue Appeal Fails Because No Evidence Contradicted Genuine Share Transactions; Loss on Share Transactions Cannot Be Treated as Bogus Without Defects in Evidence.
The Gujarat High Court dismissed a tax appeal filed by the Revenue challenging the order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2011-12. The Revenue sought consideration of a substantial question of law regarding whether the Tribunal had erred in deleting an addition of ₹3,33,466 made on account of an alleged bogus loss arising from transactions in the shares of VAS Infrastructure Ltd., which the Assessing Officer treated as a penny stock and part of an organized tax evasion arrangement.
The assessee had originally filed her return of income on 31 March 2012 declaring a total income of ₹4,46,520. Subsequently, information was received from the office of the Deputy Director of Income Tax (Investigation), Mumbai, stating that VAS Infrastructure Ltd. was a penny stock allegedly used to provide accommodation entries of bogus long-term capital gains and losses to beneficiaries. The information also indicated that the assessee was one of the beneficiaries. Based on this information, the assessment was reopened under Sections 147 and 148 of the Income Tax Act after recording reasons and obtaining the necessary approval.
