ACIT Vs Ankur Anand (ITAT Lucknow)
No Addition U/s 68 in Search Cases Without Incriminating Material – Penny Stock LTCG Additions Deleted – Dept Appeals Dismissed
In these connected search assessments u/s 153A, the AO treated exempt LTCG claimed u/s 10(38) on alleged penny stock transactions as bogus and made additions u/s 68 running into crores. The CIT(A) deleted the additions holding that no incriminating material relating to the LTCG transactions was found during search and the assessments had already attained finality.
Before ITAT, the Department argued that abnormal price rise, entry operator statements and surrounding circumstances proved bogus LTCG. However, the Tribunal observed that the assessment orders did not refer to any seized incriminating material linking the assessees to accommodation entries. Balance sheets in digital form and statements u/s 132(4) were held not to constitute incriminating material by themselves.
Relying heavily on SC decision in PCIT vs Abhisar Buildwell Pvt. Ltd., ITAT reiterated that completed/unabated assessments can be disturbed in search proceedings only on the basis of incriminating material found during search. Since the LTCG issue was raised only during assessment proceedings and not based on seized evidence, additions u/s 68 were unsustainable. Accordingly, all departmental appeals were dismissed and deletion of LTCG additions was upheld.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
