DCIT Vs Reena Ratnesh Jain (ITAT Mumbai)
The appeal before the Income Tax Appellate Tribunal, Mumbai Bench, arose from the order dated 26.03.2025 passed by the Commissioner of Income Tax (Appeals) for Assessment Year 2016-17. The dispute concerned deletion of addition of Rs. 80,23,019 treated as bogus Long Term Capital Gain (LTCG) under Section 68 of the Income Tax Act, 1961, and addition of Rs. 80,230 towards alleged commission for arranging accommodation entries.
The assessee, a resident individual engaged in share transactions, filed her return declaring income of Rs. 9,15,160. Based on information from the Investigation Wing that shares of Goenka Business and Finance Ltd. were penny stock scrips used for accommodation entries, the Assessing Officer reopened the assessment under Section 147. The AO concluded that exponential price increase in the shares indicated manipulation and treated the sale consideration as unexplained cash credit under Section 68, also adding 1% commission.
Before the CIT(A), the assessee contended that transactions were genuine and supported by documentary evidence. The CIT(A) accepted the explanation and deleted both additions.
The Department argued before the Tribunal that preferential shares were acquired at premium and later sold at astronomical prices not supported by company fundamentals. It maintained that the AO’s detailed analysis justified the addition. The assessee submitted that she was a regular investor and had invested in multiple scrips. She contended that price increase alone could not render transactions bogus, and the AO had not produced material to show routing of her own funds. It was also argued that shares were traded on the stock exchange through demat and banking channels, and that restrictions imposed earlier by SEBI were later lifted. Reliance was placed on a co-ordinate bench decision involving the same scrip and assessment year.
