ITO Vs Prithvi Raj Kandoi (HUF) (ITAT Delhi)
AO reopened the assessment u/s 148 based on information from Investigation Wing & treated Rs.8,05,127/- (investment in Global Capital Markets Ltd.) as bogus u/s 68, further adding Rs.24,153/- u/s 69C as commission expenditure (3% of trade value). AO concluded that transactions were only accommodation entries for routing unaccounted money. CIT(A) deleted both additions.
Before Tribunal, Dept argued that these were sham penny stock transactions & CIT(A) erred in granting relief. Assessee countered that purchases were through recognized stock exchange with STT paid, supported by demat account, broker notes & bank statements. Further, there was no sale in the year, hence no LTCG or loss. It was submitted that AO merely relied on Investigation Wing’s report without independent verification. Reliance was placed on recent decisions including Sunita Sarda Vs ACIT (ITA 2215/Del/2023, 14.05.2025), Vishal Aggarwal Vs ITO (ITA 125/Del/2020, 14.09.2022), PCIT Vs Vipin Jain (Delhi HC, ITA 95/2021, 12.03.2024), & Uttam Das Vs ITO (ITAT Kolkata, 19.11.2024), all holding similar additions unsustainable.
Tribunal observed that purchases were duly evidenced, no contrary material was brought on record & AO had not shown any direct nexus of Assessee with alleged operators. Following Supreme Court in CIT Vs Odeon Builders Pvt. Ltd. (110 taxmann.com 64), it held that addition cannot be made merely on third-party reports without independent inquiry. It further noted that Revenue’s appeal was also hit by CBDT Circular 5/2024 (monetary limit Rs.50 lakhs). Accordingly, Tribunal upheld CIT(A)’s deletion of both additions u/s 68 & 69C. The Revenue’s appeal was dismissed.
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