Mohamedistiyak Mohamediqbal Patel Vs ITO (ITAT Surat)
In the case of Mohamedistiyak Mohamediqbal Patel Vs ITO (ITAT Surat), the Income Tax Appellate Tribunal (ITAT) has ruled in favor of the assessee, deleting an addition of Rs. 48.48 lakh for penny stock investment. The assessee had been accused of making unexplained investments in shares of M/s Comfort Fincap Ltd., a penny stock company, based on information provided by the Income Tax Investigation Wing, Kolkata. However, the ITAT found that there was insufficient evidence to support the claim and the addition made by the Assessing Officer (AO).
The case began when the assessee filed his return of income for the assessment year (AY) 2014-15, declaring an income of Rs. 2,20,550. The AO, during the assessment proceedings, referred to information received from the Kolkata Investigation Wing regarding long-term and short-term capital gains linked to penny stocks. According to the Investigation Wing, the assessee had purchased shares of M/s Comfort Fincap Ltd. worth Rs. 48.78 lakh, which were alleged to be unexplained investments. The AO added this amount to the total income of the assessee, questioning the genuineness of the share transactions.
In response, the assessee submitted that the total investment was only Rs. 63,239.45, which was made in a few shares purchased and sold on the same day, resulting in a short-term capital gain of Rs. 3,207.07. The assessee provided supporting documents, such as contract notes and Demat account statements, to substantiate his claim. However, the AO rejected the explanation, citing information from the Investigation Wing, which suggested that the assessee had made a larger investment in the shares of the company.
