DCIT Vs Sanjeev Agrawal HUF (ITAT Delhi)
Penny Stock Allegation Fails – ITAT Delhi upholds Exemption on LTCG Revenue’s appeals arose from reassessment orders u/s 147 r.w.s. 143(3) wherein AO treated Long Term Capital Gain (LTCG) of ₹1.25 crore earned by Sanjeev Agrawal HUF on sale of 3.63 lakh shares of Capital Trade Link Ltd. as bogus accommodation entry, denying exemption u/s 10(38) & making further addition of unexplained commission u/s 69C.
Assessee demonstrated that shares were purchased through banking channels, dematerialised in DMAT, & subsequently sold through registered broker on BSE after payment of Securities Transaction Tax (STT). Supporting evidence including contract notes, broker statements, DMAT statements, & financials of the company were filed. It was shown that Capital Trade Link Ltd. had consistent revenues, profits, assets of over ₹159 crore, & dividend declarations, & its scrip was neither suspended nor delisted by SEBI.
CIT(A) deleted the additions, relying on earlier Delhi ITAT ruling in Sanjeev Agrawal (Individual) for AYs 2016-17 & 2017-18, where identical LTCG on the same scrip was held genuine.
ITAT noted that AO acted merely on suspicion without disproving evidence or conducting independent inquiry. Sale transactions were through regulated stock exchange mechanism & proceeds received in pre-identified bank accounts. Tribunal also referred to Supreme Court’s ruling in PCIT Vs. Renu Aggarwal [2023] 153 taxmann.com 579 (SC), which upheld deletion of additions in similar penny stock allegations due to absence of adverse material. Accordingly, ITAT upheld CIT(A)’s order, confirmed that the LTCG claim u/s 10(38) was genuine, deleted addition of ₹1.28 crore, & dismissed Revenue’s appeals for both years.
