Kamal Khetan Vs DCIT (ITAT Mumbai)
Suspicion can’t replace Proof- Banking & Demat records win the day-Penny Stock additions deleted – No direct evidence linking assessee to price manipulation in shares – Modus operandi spelt by itself is not an adequate ground to impeach the transactions- ITAT Mumbai
Mumbai ITAT quashed additions made on alleged bogus Long-Term Capital Gains (LTCG) from penny stock transactions, holding that in the absence of specific incriminating material linking Assessee to any accommodation entry provider or price rigging activity, the claim of exemption u/s 10(38) could not be denied merely on the basis of general investigation reports.
Assessee, a real estate promoter, had declared exempt LTCG of ₹1.62 crore from the sale of shares of ACI Infocom Ltd.. The shares were acquired via preferential allotment, held for more than 18 months, & sold through a SEBI-registered broker on the BSE, with all transactions routed through banking channels & reflected in the assessee’s demat a/c.
AO, relying heavily on a report from the Investigation Wing alleging widespread manipulation in certain penny stocks, treated the LTCG as accommodation entries & added ₹6.09 lakh u/s 69C as alleged commission for obtaining the LTCG entry. Reference was also made to a SEBI order which the AO interpreted as confirming irregularities in ACI Infocom’s scrip.
