Rekha Rajesh Jogani Vs ITO (ITAT Mumbai)
Penny stock theory fails again – Revenue can’t rely on generic Investigation Wing reports- ITAT Mumbai deletes entire addition u/s 68 & 69C- No evidence, no addition – ITAT quashes ₹46 lakh bogus LTCG addition – Tribunal upholds documentary evidence
Background
Assessee, Rekha Rajesh Jogani, had declared LTCG of ₹44.52 lakh on sale of equity shares of SRK Industries Ltd., claiming exemption u/s 10(38). AO, based on Investigation Wing reports alleging penny stock manipulation, held that the LTCG was bogus, added the entire sale consideration of ₹45.21 lakh u/s 68, & also added ₹90,432/- u/s 69C as estimated commission @2%. CIT(A), NFAC, upheld the additions, observing that the scrip was tainted & Assessee failed to prove the genuineness of transactions.
Assessee’s Submissions
Before ITAT, Assessee contended that:
- Shares were purchased in May 2012 through Island Media & Entertainment Pvt. Ltd. by cheque, credited to her demat account & later converted to SRK Industries shares under a merger scheme.
- All transactions were through stock exchange & registered brokers, with STT paid & banking channels used.
- Documentary evidence like purchase bills, demat statements, holding reports, contract notes, & bank statements were furnished.
- AO had not identified any defect in the evidence nor linked her to any entry provider.
- Reliance on third-party statements without cross-examination violated natural justice.
Revenue’s Stand
