DCIT Vs Arihant Suresh Jain (ITAT Mumbai)
No addition u/s. 68 of the Income Tax Act, 1961, merely for trading in penny stock, when the assessee submits necessary details and the AO fails to bring anything contrary on record.
Facts of the case: The assessee’s case was reopened based on the information received from the investigation wing, alleging that the assessee was a beneficiary of bogus Long Term Capital Gain (LTCG) /Short Term Capital Loss (STCL) through trading in scrips of VMS Industries and Scan Steels Limited. During the reassessment proceedings, the assessee did not make any reply. Consequently, the AO added the amount of LTCG of Rs. 8,47,921/- as unexplained cash credit u/s. 68 of the Act on the ground that the price of the scrips were rigged and that the undisclosed money of the assessee was routed back with the help of Naresh Jain.
The assessee filed an appeal before CIT(A), wherein the additions were deleted on the ground that the assessee had filed all the necessary documents before AO like contract notes, bank statement, details of STT paid computation of total income. The AO did not point out any defects in these documents. The broker of the assessee was also not indulged in the price rigging. The CIT(A) also held that AO has not brought anything to prove that Naresh Jain had paid cash to the assessee. Further, the assessee had not claimed any LTCG/STCL and the sale and purchase of shares formed part of the business income of the assessee. The additions were deleted. The Revenue filed the appeal before ITAT.
