DCIT Vs Bajrang Lal Aggarwal (ITAT Delhi)
ITAT Delhi Upholds Deletion of Penny Stock Addition — No Incriminating Material Found in Search; Section 153A Cannot Be Invoked in Unabated Year
A search u/s 132 was conducted on 19.12.2019 in the Stonex Group cases & a warrant was executed on the locker of the Assessee, Bajrang Lal Aggarwal. In response, assessment u/s 153A was completed making an addition of ₹19,20,877/- u/s 68, treating the Assessee’s long-term capital gain (LTCG) on shares of Alankit Ltd. as unexplained credit.
CIT(A) deleted the addition holding that the same was not based on any incriminating material found during search but was merely an analytical observation of financial data of Alankit Ltd. AO had alleged that the share price rose abnormally by over 250% in less than two years, branding it a penny stock transaction.
CIT(A) noted that the original assessment for A.Y. 2015-16 had attained finality before the search, & therefore, being an unabated assessment, additions could be made u/s 153A only on the basis of incriminating material found during search. Relying on the Supreme Court ruling in PCIT v. Abhisar Buildwell Pvt. Ltd. (Civil Appeal No. 6580 of 2021, dated 24.04.2023), it was held that no such material existed in this case. The AO’s addition, based merely on general analysis, was therefore unsustainable.
