Naresh Omprakash Heda Vs ITO (ITAT Mumbai)
Mumbai ITAT Deletes Section 68 Addition on Intraday Penny Stock Trade; Mere Inclusion of Scrip in Investigation Report Not Sufficient
The Mumbai ITAT deleted an addition of ₹6.34 lakh made under section 68, holding that the Assessing Officer could not treat the gross sale proceeds of an intraday share transaction as unexplained cash credit merely because the scrip, VMS Industries Ltd., was identified as a penny stock in an Investigation Wing report. The Tribunal noted that the assessee had purchased and sold the shares on the same day through a registered broker on a recognised stock exchange, resulting in a genuine trading loss of ₹9,935, which had been duly disclosed in the return. There was no claim of exempt long-term capital gains, no artificial loss, and no evidence linking the assessee to any accommodation entry operator or showing that unaccounted money had been routed through the transaction. The Tribunal held that mere suspicion arising from an investigation report cannot replace cogent evidence, and once the purchase and sale formed part of a genuine intraday trade, the entire sale proceeds could not be taxed under section 68. Accordingly, the addition was deleted, while the grounds challenging the validity of the reassessment were left open as the appeal succeeded on merits.
