ITO Vs Aditya Agrawal (ITAT Jabalpur)
ITAT Jabalpur Deletes Penny Stock Addition: Investigation Wing Report Alone Insufficient for Section 68 Addition- AO failed independent verification – ITAT upholds CIT(A)’s finding that share transaction was genuine
Revenue filed an appeal against the order of CIT(A), NFAC, Delhi deleting an addition of ₹2,20,137/- made u/s 68 on account of alleged bogus long-term capital gain (LTCG) from trading in shares of M/s Safal Herbs Ltd..
Assessee, Aditya Agrawal, had filed his return declaring income of ₹5,98,850/-, including income from salary, other sources, and trading in commodities. The case was reopened u/s 147 on the basis of information from the Investigation Wing, Ahmedabad, alleging that certain scrips including Safal Herbs Ltd. were used as penny stock to generate accommodation entries of exempt LTCG u/s 10(38).
AO, relying on the Investigation Wing report, treated Assessee’s capital gain of ₹1,24,465/- as non-genuine and added the same along with other credits aggregating to ₹2,20,137/- u/s 68, holding that the transaction was a pre-planned entry.
Before CIT(A)
Assessee submitted that the share transactions were genuine, through recognised stock exchanges, & all payments & receipts were made through banking channels. He also filed documentary evidence including demat statements, contract notes, & bank statements proving the purchase & sale of shares.
