Ajay Gupta Vs ITO (ITAT Delhi)
When AO Relies Blindly on Old Penny-Stock Data, Reopening Cannot Stand—ITAT Quashes 147 & Deletes Sec.68 Addition-No Link With Entry Operator, No Fault in Merger-Based Shares—ITAT Delhi Dismantles Entire Bogus LTCG Theory
Assessee declared exempt LTCG of Rs.1,77,59,716/- u/s 10(38) from sale of shares of Yamini Investments Company Ltd. (YICL). He had originally purchased shares of Fidelo Power & Infrastructure Ltd. (FPIL) in May 2014 through cheque, got them dematerialized, & subsequently received YICL shares after FPIL amalgamated with YICL through a Bombay High Court approved scheme. These YICL shares were later sold on the exchange during April–September 2016 at prices between ₹31.22 & ₹38.70. AO reopened assessment u/s 147 alleging the LTCG was bogus, treated Rs.1,78,02,074/- as unexplained cash credit u/s 68, relying heavily on Investigation Wing material & old SEBI orders treating the scrip as penny stock.
Tribunal noted that the Investigation Wing inputs related to events before 2013 when Kolkata Stock Exchange had already stopped trading in the scrip, whereas Assessee’s acquisition of the shares happened only in May 2015 pursuant to amalgamation. Tribunal held that AO mechanically accepted the information as sacrosanct & recorded reasons without independent application of mind. SEBI inquiry & trade patterns from 2012–2014 were found irrelevant to Assessee’s transactions of 2016. No nexus was established between Assessee & alleged entry operator Ram Avtar Aggarwal. Documentary evidences—purchase invoice, demat statements, bank statements, merger order, trade details—supported the genuineness of the transaction. Tribunal also relied on its own coordinate bench rulings in Sujit Madan & Jyoti Gupta involving the same YICL scrip.
