Ram Niwas Chouhan Vs ITO (ITAT Jodhpur)
Jodhpur ITAT: Penny Stock LTCG Cannot Be Branded Bogus Merely on Investigation Wing Report – No Addition Without Evidence Linking Assessee to Accommodation Entry
The Jodhpur ITAT in Ram Niwas Chouhan v. ITO, ITA No. 182/Jodh/2024, AY 2015-16, deleted the addition arising from LTCG of ₹28.54 lakh on sale of shares of Maa Jagdambe Tradelinks Ltd., which the AO had treated as an unexplained cash credit under Section 68. The AO had also estimated 5% commission of ₹1,48,970 under Section 69C, alleging that the assessee had obtained a bogus LTCG accommodation entry.
The assessee had purchased 6,250 shares for ₹1.25 lakh, which were credited to his demat account, and subsequently sold them for ₹29.79 lakh, resulting in LTCG of ₹28.54 lakh.
The Tribunal found that the AO had entirely relied upon the Kolkata Investigation Wing report, which was only general in nature. Significantly, the assessee’s name did not figure in the Investigation Wing report, nor was there anything therein showing that he had indulged in any illegal or irregular activity.
The ITAT further noted that the assessee was regularly engaged in share investments, the scrip was traded on the stock exchange, and both purchase and sale transactions were through banking channels. Despite this, the AO conducted no independent enquiry from the stock exchange, purchaser or seller, including by issuing notices under Section 133(6).
The Tribunal therefore held that in the absence of any adverse material specifically implicating the assessee, an addition cannot be sustained merely on presumptions and surmises. It also relied upon coordinate-bench decisions concerning the very same scrip and the same assessment year, where the transactions were held not to be bogus.
Accordingly, the ITAT directed the AO to delete the additions under Sections 68 and 69C and allowed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This is an appeal by the assessee against order dated 02.02.2024 of National Faceless Appeal Centre, NFAC, Delhi for the Assessment Year 2015-16.
