Case Law Details
Shripal Sheshmal Jain HUF Vs ITO (ITAT Ahmedabad)
In a recent case, the Income Tax Appellate Tribunal (ITAT) Ahmedabad examined whether the sale of penny stocks could be deemed unaccounted income. The appeal filed by Shripal Sheshmal Jain HUF vs. ITO (ITAT Ahmedabad) sheds light on the complexities surrounding such transactions and tax assessments.
The assessee declared income for AY 2012-13, including profits from trading activities involving VAS Infrastructure Ltd. However, the Assessing Officer (AO) raised concerns about potential accommodation entries and initiated proceedings to reassess the income. Despite the assessee’s cooperation and submission of relevant details, the AO treated the sale proceeds of VAS Infrastructure Ltd. shares as unaccounted business income.
During the appeal process, it became evident that the assessee had legitimately purchased and sold shares through a SEBI registered broker. The assessee provided comprehensive documentation, including details of transactions, brokers, and D-mat accounts. The ITAT observed that the AO failed to consider this evidence adequately and relied on unsubstantiated claims.
Furthermore, the ITAT noted that the assessee had correctly categorized the trading activity as business income, eliminating any ambiguity regarding the nature of the transactions. Contrary to the AO’s assertions, there was no claim of Long Term Capital Gain or Short Term Capital Gain associated with the sale of VAS Infrastructure Ltd. shares.
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