Shailesh Chandak (HUF) Vs ITO (ITAT Surat)
ITAT Surat held that since the assessee failed to properly explain the source of credit it can safely be concluded that shares were penny stocks with sole purpose to route unaccounted money in the grab of share profit hence addition under section 68 sustained.
Facts- The case of the assessee was selected for scrutiny. It was found that the assessee had sold shares of Nouvea Global Ventures Ltd. (NGVL) amounting to Rs.3,64,478/-, Pearl Agricultural Ltd. (PAL) amounting to Rs.21,02,213/- and Pearl Electronics Ltd. (PEL) amounting to Rs.21,02,213/-, totalling to Rs.44,91,100/-. AO observed that share transactions related to these three companies are not genuine and they are only accommodation entries.
AO added Rs.44,91,100/-u/s 68 of the Act and a further sum of Rs.89,822/- as unexplained expenditure u/s 69C of the Act. The AO also taxed the same u/s 115BBE of the Act. The AO taxed Rs.44,91,100/- u/s 68 of the Act and after reducing the same, the business loss was determined at Rs.44,27,693/-. However, such business loss was not allowed to be set off or carried forward. The income from business of share trading was accordingly determined at Rs. Nil. The total assessed income was Rs.44,80,922/- as against returned income of Rs.1,39,030/-.
