Hemant Devji Thakkar HUF Vs Assessing Officer (ITAT Mumbai)
Penny Stock Alert Cannot Justify Adding Entire Share Sale Value Under Section 68: Mumbai ITAT
The dispute
In Hemant Devji Thakkar HUF v. Assessing Officer, the Mumbai Bench of the Income Tax Appellate Tribunal examined an addition of ₹2,23,345 under section 68 for assessment year 2012–13. The amount represented the stated sale value of shares in Aarya Global Shares and Securities Ltd., a company identified in investigation material as a penny stock allegedly used for accommodation entries.
The Tribunal held that the investigation material called for scrutiny, but the Assessing Officer had not connected the assessee’s particular trades to any manipulation. He had also failed to examine the assessee’s central explanation: most of the stated sale value came from same-day trades settled on a net basis. The Tribunal directed deletion of the entire addition.
How the assessment arose
The HUF filed its original return declaring income of ₹1,82,391. Following information from the Investigation Wing about dealings in Aarya Global shares, the Assessing Officer reopened the assessment. His order discussed the company’s finances, trading volumes, share price movement and the general method by which penny stock transactions could be used to generate artificial gains or losses.
