Suresh Maheshwari Vs DCIT (ITAT Mumbai)
Assessee, a Chartered Accountant, declared LTCG of ₹85.05 lakh on sale of M/s Pine Animation Ltd. shares & claimed exemption u/s 10(38). AO, relying solely on Kolkata Investigation Wing’s report alleging Pine Animation was a penny stock used for accommodation entries, rejected the claim & added the LTCG & ₹21,592 commission as unexplained income. CIT(A) confirmed the addition.
Before Tribunal, Assessee showed complete evidence- purchase bills, demat statements, contract notes, banking proofs, & that transactions were through SEBI-registered brokers with no cash dealings. ITAT noted that AO made no independent enquiry beyond relying on the Investigation Wing report. Further, SEBI’s final order (19.09.2017) had revoked interim restrictions on Pine Animation, finding no manipulation or wrongdoing in its shares.
Relying on coordinate bench ruling in ITO v. Manisha Narpatkumar Chopra (ITA 2443/Mum/2023) & Bombay HC decisions in Shyam Pawar, Ziauddin A. Siddique, Jamnadevi Agarwal & Indravadan Jain (HUF), ITAT held that genuine demat-backed share transactions through banking channels can’t be disbelieved merely due to general investigation reports.
Accordingly, ITAT accepted the LTCG as genuine, upheld exemption u/s 10(38), & directed AO to delete both the additions.
Held: LTCG on Pine Animation shares genuine; AO’s reliance on generic penny-stock report unjustified; addition of ₹85.05 lakh & commission deleted in full.
