Jyoti Gupta Vs ACIT (ITAT Delhi)
ITAT Delhi held that additions under section 68 of the Income Tax Act towards penny stock merely on the basis of presumption and concept of human probabilities, without their being any material not justified. Accordingly, appeal allowed.
Facts- During assessment proceedings, AO observed that assessee has earned capital gain amounting to Rs.1,1 1,95,949/- from sale of shares of M/s. Trinity Tradelink Ltd. and M/s. CCL International Ltd. AO observed that assessee has earned windfall gains in both the scrips within a period of short span of time. The company has no credentials to justify sharp price rise to the market prices and not backed up with the assets and net worth of the companies.
After considering the submissions of the assessee, the AO found not acceptable to him. The AO proceeded to treat the transactions as penny stock and relying on the investigation report on penny stock from the Investigation Wing, he disallowed the same u/s 68 of the Act to the extent of Rs.1,28,58,450/-.
CIT(A) sustained the additions. Being aggrieved, the present appeal is filed.
Conclusion- Held that the Assessing Officer and Ld. CIT(A) has applied the concept of Human probabilities and held the above said scrips to be a penny stock without bring on record how the assessee is involved in any of the scrupulous activities or directly linked to one of the person who has involved in manipulation/rigging of share prices, entry operator or exit provider. Therefore, there is no material with the tax authorities to substantiate their findings that the impugned transaction is non-genuine. Therefore, we are inclined to allow the ground raised by the assessee.
