ITO Vs Ankit Naresh Tulsian (ITAT Pune)
Penny Stock Allegation Falls Flat – SEBI Final Report Saves the Day- Reopening on Same Facts = Change of Opinion: ITAT Quashes 148 & Deletes ₹1 Cr Addition
Revenue appealed deletion of ₹1,00,08,500 added u/s 69A on the allegation that LTCG from sale of 2,00,000 shares of Mishkafin Finance & Trading Ltd. (MFTL) was bogus. AO relied on SEBI’s interim order alleging price rigging & treated the LTCG exempt u/s 10(38) as unexplained money taxable u/s 115BBE.
CIT(A) examined extensive documents—contract notes, demat statements, bank entries, STT-paid sale through stock exchange, CDSL confirmations—& held the transaction genuine. Crucially, the CIT(A) noted that SEBI’s final report dated 05.10.2017 had absolved 104 entities including the assessee of any manipulation in the MFTL scrip. No adverse finding, no cash trail, no incriminating material, & no opportunity of cross-examination were ever provided by the AO.
On appeal, Tribunal upheld the CIT(A)’s reasoning. It held that:
- The reopening u/s 148 (20.03.2020) was invalid since the same issue had already been examined earlier & the AO had dropped prior proceedings — thus the second 148 was a mere change of opinion, contrary to Kelvinator (SC).
- On merits, the assessee fulfilled all statutory conditions of section 10(38): holding period > 1 year, demat, STT-paid sale through recognized exchange, bank-channel consideration.
- With SEBI’s final report exonerating the scrip & no independent AO inquiry, the entire addition rested on suspicion, not evidence.
Relying notably on Gujarat High Court in M.S. Gokuldham Enterprise LLP (same MFTL scrip), the Tribunal held the LTCG to be genuine & dismissed the Revenue’s appeal.
