SC Upholds Reassessment Quashing as No Exempt LTCG Was Claimed in Penny Stock

PCIT Vs Nikunj Dhanuka (Supreme Court of India)

SC Dismisses Revenue’s Appeal Because Reopening Was Based on Factually Incorrect Information;  SC Affirms That Section 147 Reopening Cannot Stand Without Accurate Material Supporting Exemption Allegations;  SC Refuses to Interfere Because No Exemption Under Section 10(38) Was Claimed in Disputed Scrip;  SC Backs ITAT and High Court Because Revenue Could Not Establish Basis for Penny Stock Reopening

The Supreme Court of India dismissed the Special Leave Petition (SLP) filed by the Revenue against the judgment of the Calcutta High Court in a case concerning reopening of assessment under Section 147 of the Income Tax Act based on alleged bogus long-term capital gains arising from transactions in the shares of VMS Industries Ltd. The Supreme Court condoned the delay but, after hearing the Revenue’s counsel, declined to interfere with the impugned judgment and dismissed the SLP. All pending applications were also disposed of.

Read HC Judgment in this case: No Evidence of Penny Stock Exemption Claim, Calcutta HC Quashed Reassessment

The Calcutta High Court had earlier examined the Revenue’s appeal filed under Section 260A against the order of the Income Tax Appellate Tribunal (ITAT), Kolkata Bench, for Assessment Year 2012-13. The Revenue had questioned the Tribunal’s deletion of additions made under Sections 68 and 69C and had argued that the assessee had generated bogus exempt long-term capital gains through penny stock transactions involving VMS Industries Ltd. The Revenue also contended that the assessee had failed to produce evidence establishing the genuineness of the transactions.