Balram Chainrai Vs International Taxation (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai recently adjudicated on an appeal filed by Balram Chainrai against an assessment order concerning the disallowance of a short-term capital loss (STCL) and an addition under Section 69A of the Income Tax Act, 1961. The core of the dispute revolved around the genuineness of share transactions involving M/s Gini Silk Mills Ltd., which the revenue authorities had categorized as a “penny stock.”
Background of the Case:
Balram Chainrai, an individual and non-resident Indian based in Hong Kong, filed his income tax return for the Assessment Year 2018-19, declaring a significant total income including substantial Short Term Capital Gains (STCG) and Long Term Capital Gains (LTCG). Information received by the Assessing Officer (AO) suggested that bogus long-term or short-term capital gains/losses were being booked by trading in shares of M/s Gini Silk Mills Ltd.
During the relevant year, the assessee had sold 82,309 shares of M/s Gini Silk Mills Ltd. on December 6, 2017, incurring an STCL of Rs. 73,05,006. This loss was set off against other STCG earned by the assessee. The AO initiated reassessment proceedings under Section 148A(b) and subsequently Section 148, contending that the assessee was a beneficiary of bogus STCL.
