Nitesh Kumar Gadiya Vs ITO (ITAT Surat)
Summary: The Surat Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal concerning Assessment Year 2015-16 and deleted additions made under Sections 68 and 69C of the Income-tax Act, 1961 in respect of long-term capital gain arising from sale of shares of Lifeline Drugs & Pharma Ltd.
The assessee, an individual, had filed his return declaring total income of Rs.3,94,180/- on 20.09.2015. The case was selected for scrutiny through CASS on account of, inter alia, suspicious share transactions and exempt long-term capital gains shown in the return. During assessment proceedings, the Assessing Officer noted LTCG of Rs.5,97,789/- claimed as exempt under section 10(38). The order records that the assessee had sold 2400 shares of Lifeline Drugs & Pharma Ltd. for Rs.5,99,649/-, resulting in LTCG of Rs.5,97,489/- after deducting purchase cost of Rs.2,160/-.
The Assessing Officer relied upon the Kolkata Investigation Report titled “Project Bogus LTCG/STCL through BSE Listed Penny Stocks” and observed that Lifeline Drugs & Pharma Ltd. was identified as a penny stock. According to the Assessing Officer, the company had inadequate financial strength and business activity while its share price had increased from Rs.36.10 at the time of purchase to Rs.249.90 at the time of sale. The Assessing Officer consequently treated the LTCG of Rs.5,97,489/- as unexplained credit and made an addition under section 68.
