Smt. Rekha Modi Vs ITO (ITAT Mumbai)
Mumbai ITAT Deletes Penny Stock Additions Under Section 69A; Investigation Reports Alone Cannot Implicate Every Investor
The Mumbai ITAT disposed of three connected appeals for Assessment Years (AYs) 2013-14, 2015-16 and 2016-17 by treating AY 2013-14 as the lead case, as the controversy and facts were substantially identical. The assessee had originally filed the return for AY 2013-14 declaring income of ₹3,12,520, which was processed under section 143(1). Reassessment proceedings under section 147 were initiated pursuant to information from the Investigation Wing regarding alleged manipulation in the scrips of M/s ACI Infocom Ltd. and M/s Safal Herbs Ltd. The Assessing Officer relied upon investigation reports, statements, alleged price rigging, synchronized trading, SEBI observations, search findings relating to certain persons, and analysis of the financials and price movements of the companies. The AO treated the sale consideration of ₹19,83,364 from M/s ACI Infocom Ltd. shares and ₹17,61,408 from M/s Safal Herbs Ltd. shares, aggregating to ₹37,44,772, as unexplained money under section 69A, and also added ₹5,240 under the head “Income from Other Sources.” The CIT(A) upheld both the reassessment and the additions, applying the principle laid down in CIT v. Durga Prasad More and the test of human probabilities.
