ITO Vs Manisha Narpatkumar Chopra (ITAT Mumbai)
The Revenue filed an appeal before the ITAT Mumbai against the order dated 15.05.2023 passed by the CIT(A), NFAC, Delhi for Assessment Year 2015–16. The dispute concerned deletion of additions made by the Assessing Officer (AO) in respect of alleged bogus Long Term Capital Gains (LTCG) arising from sale of shares of Pine Animation Ltd., treated as penny stock, and estimated commission expenditure.
The assessee had filed her return declaring NIL income. Based on information from the Investigation Wing, Kolkata, the AO reopened the assessment under Section 148. The Investigation Wing had reported manipulation of penny stocks to generate bogus capital gains. It was alleged that the assessee sold shares of Pine Animation Ltd. for ₹4,39,75,148/- and claimed exemption under Section 10(38) on LTCG of ₹4,37,82,238/-.
The assessee had purchased 50,000 shares for ₹1.50 lakhs in January 2013. Following a stock split, she received five lakh shares and sold them between June and September 2014 through a stock exchange platform. Since the holding period exceeded one year, exemption under Section 10(38) was claimed.
The AO relied extensively on the Investigation Wing report, price movement patterns, financial performance of the company, and statements of alleged brokers and exit providers. The AO concluded that the transactions were not genuine and treated the entire sale consideration as unexplained cash credit under Section 68. Additionally, 5% of sale consideration was estimated as unexplained commission under Section 69C. The AO denied the assessee’s request for cross-examination of persons whose statements were relied upon and invoked the principle of human probabilities, referring to the Supreme Court’s decision in Sumati Dayal.
