Sangeeta Kalpesh Chawala Vs ITO (ITAT Mumbai)
Conclusion: Mere involvement in a flagged scrip, in absence of concrete evidence of manipulation or unaccounted funds, could not justify taxing bonafide transactions. Therefore, the additions under sections 68 and 69C were unsustainable.
Held: AO reopened the case under section 147 and added ₹28.27 lakh as unexplained cash credit under section 68, along with a 2% commission disallowance of ₹56,546 under section 69C—on the assumption that the gains were mere entries in a penny stock scam. It was held that additions made by AO and sustained by CIT(A) were based on mere suspicion and general investigation reports without any cogent material directly linking the assessee with rigging or manipulation of the shares of M/s Regency Trust Ltd.. The genuineness of assessee’s documents, including contract notes, demat statements, and bank records, was never doubted, and no independent enquiry was conducted to disprove the transactions. Relying on binding precedents, including the jurisdictional High Court decision in Pr. CIT v. Indravadan Jain HUF (2023) and the coordinate bench ruling in Shah Sandeep Anant Kumar HUF v. ITO (2024), the Tribunal concluded that the additions under sections 68 and 69C were unsustainable.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
