Amit Sajjan Kumar Gupta Vs DCIT (ITAT Mumbai)
Summary: In Amit Sajjan Kumar Gupta vs. DCIT, the ITAT Mumbai examined whether off-market shares bought by the assessee could be classified as unexplained cash credit under Section 68 of the Income Tax Act. The assessee, an investor and trader, had purchased shares of Maa Jagdambe Tradelinks Ltd. (MJTL) off-market and later sold them through a registered stock exchange, claiming exemption on long-term capital gains. However, the Assessing Officer (AO) classified these transactions as penny stock manipulation, attributing the price increase to alleged malpractices and consequently added the sale proceeds as unexplained income. Despite the assessee providing evidence including purchase invoices, demat statements, bank records, and sale contracts, the AO dismissed these as insufficient.
The appellate tribunal observed that the assessee had met all procedural requirements to establish the genuineness of the transactions, including selling shares on a regulated stock exchange with applicable securities transaction tax (STT) paid. The ITAT highlighted that merely questioning the price fluctuation without conducting further investigation was inadequate to establish manipulation. Relying on similar judicial precedents, the ITAT held that transactions supported by documentary evidence and conducted through regulated channels could not be deemed fictitious solely based on stock value changes. Consequently, the tribunal ruled in favor of the assessee, rejecting the additions made under Section 68 and emphasizing the importance of substantiating allegations with concrete evidence.
