Addition towards trading in penny stock sustained for lack of assistance during appeal proceedings

Tarachand Agrawal Vs ITO (ITAT Ahmedabad)

The appeal filed by the assessee, Tarachand Agrawal, was dismissed by the Income Tax Appellate Tribunal (ITAT) Ahmedabad. The case involved the addition of trading in penny stocks of a shell company, M/s. Vax Housing Finance Corporation Ltd., as the assessee was suspected of obtaining bogus long-term capital gains. The case was reopened under Section 147 of the Income Tax Act, and notices were duly served to the assessee. However, the assessee failed to comply with the notices and did not attend the hearings. The ITAT upheld the addition made by the Revenue due to the lack of assistance and non-appearance of the assessee during the appeal proceedings. The Revenue’s order was considered self-explanatory, reasoned, and found to be valid. As a result, the appeal filed by the assessee was deemed devoid of merit and dismissed.

Facts- On the basis of the information received from the DDIT(Inv.), Unit-6(2), Mumbai that the assessee had entered into trading of Penny Stock of M/s. Vax Housing Finance Corporation Ltd., which is a shell company and being used for getting bogus long term capital gain/loss to the traders, the case of the assessee was reopened u/s. 147 of the Act.

Accordingly, notice whereupon u/s. 148 of the Act upon the assessee on 29.03.2018, was duly served. However, no compliance was made to the statutory notices whereupon final show cause notice dated 19.11.2018 providing a further opportunity of being heard to the assessee were served for making compliance on 26.11.2018, which was duly served upon the assessee on 19.11.2018. As nothing was forthcoming from the assessee, an ex parte order under Section 144 r.w.s. 147 of the Act was passed.

Conclusion- Held that at the time of hearing of the appeal none appeared on behalf of the assessee. In fact, previously in very many occasion, though the matter was fixed for hearing, neither any adjournment has been sought for nor any representative appeared on behalf of the assessee before us. Hence, in the absence of any assistance rendered by the assessee, we do not find any reason to interfere with the order passed by the Revenue, which is self-explanatory and found to be a reasoned one. Thus, appeal filed by the assessee is found to be devoid of merit and hence, dismissed.

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