Hiral Tapankumar Chudgar Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad quashes Penny Stock Reassessments for AYs 2017–18 & 2018–19 – Escaped Income below ₹50 Lakh, Notices beyond 3 years held invalid u/s 149(1)(b)
Ahmedabad ITAT has quashed reassessment proceedings for AYs 2017–18 & 2018–19 arising from alleged penny stock transactions in “Kushal Ltd.”, holding that the escaped income in each year was less than ₹50 lakh & , therefore, notices issued beyond three years from the end of the relevant assessment year were barred by limitation under the amended provisions of section 149(1)(b).
AY 2017–18
Assessee filed a return declaring income of ₹67.22 lakh, including exemption of ₹29.55 lakh as long-term capital gain (LTCG) from the sale of shares of Kushal Ltd. Based on Investigation Wing reports alleging accommodation entries through penny stock manipulation, AO reopened the assessment after more than three years from the end of the relevant AY. AO denied the LTCG exemption, treated the sale consideration as unexplained money u/s 69A r.w.s. 115BBE & added ₹4.26 lakh as unexplained investment in purchase of shares, & ₹2 lakh as unexplained cash deposits during the demonetisation period.CIT(A) passed an ex parte order upholding the additions.
AY 2018–19
Assessee filed a return showing a short-term capital loss (STCL) of ₹52.86 lakh on the sale of Kushal Ltd. shares, but the loss was not carried forward in subsequent years due to the belated filing of return. AO reopened the assessment on similar penny stock allegations, disallowed the STCL, & made additions of ₹23.97 lakh (loans from relatives) & ₹31.39 lakh (investment in shares) as unexplained u/ss 69 & 69A, taxed under section 115BBE. CIT(A) confirmed the additions ex parte.
