Shrenik Kumar Virchand Mardia Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has provided significant relief to assessee Shrenik Kumar VirchandMardia, quashing substantial additions made by the Income Tax Officer (ITO) concerning alleged bogus Long-Term Capital Gain (LTCG) and a related commission for Assessment Year 2015-16. The Tribunal found the revenue’s case to be lacking in independent evidence and highlighted critical procedural infirmities, particularly the denial of an opportunity for cross-examination.
The appeal by the assessee challenged the order of the National Faceless Appeal Centre, Delhi (NFAC), which had upheld the assessment order passed by the Assessment Unit, Income-tax Department, under Section 147 read with Section 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). The total income declared by the assessee in the original return for AY 2015-16 was Rs. 3,70,480/-.
Origin of the Dispute: Penny Stock Allegations
The genesis of the dispute lay in information received by the Investigation Wing of the Income Tax Department. This intelligence suggested that the assessee had engaged in stock trading involving shares of M/s Appu Marketing & Manufacturing Ltd. (AMML), also known as Ejecta Marketing Ltd., through the Bombay Stock Exchange (BSE). The AMML scrip was flagged by the Investigation Wing as belonging to a “shell company.”
