ACIT Vs Manish Agarwal & Sons (ITAT Delhi)
The case of ACIT Vs Manish Agarwal & Sons (ITAT Delhi) concerns the addition of to the assessee’s income by the Assessing Officer (AO) after treating the entire sale proceeds from the sale of shares in M/s CCL International Ltd. as bogus income of the Income Tax Act, 1961. The assessee had claimed an exemption of as Long Term Capital Gain (LTCG) on this sale for the Assessment Year 2013-14. The AO’s action was based on information from the Department’s Investigation Wing, which identified M/s CCL International Ltd. as a “penny stock” company used by accommodation entry providers to convert undisclosed income into exempt LTCG. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, finding that the AO had brought no concrete evidence on record to prove that the company dealt in penny stock or was involved in share price manipulation, concluding that the share sale was genuine. The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)’s decision, noting that in the absence of evidence demonstrating the company’s involvement in rigging up shares, the sale consideration was rightly claimed as exempt LTCG . The ITAT ultimately dismissed the Revenue’s appeal, also noting that the tax effect involved () was below the prescribed lakh monetary limit for filing an appeal before the Tribunal, as per a CBDT Circular.
