Ushma Ashish Shah Vs ITO (ITAT Mumbai)
The Mumbai ITAT partly allowed the assessee’s appeal for AY 2017-18, deleting additions made under Sections 69 and 69C of the Income Tax Act in respect of transactions in shares of a company alleged to be a penny stock. The assessee had filed the return declaring income including short-term capital gains. Subsequently, the assessment was reopened under Section 148 based on information received from the Investigation Wing alleging that the assessee had entered into penny stock transactions involving Kushal Group. During reassessment, the assessee furnished bank statements, computation of capital gains, details of purchase and sale of shares, and other supporting documents. However, the Assessing Officer treated the sale consideration of ₹13,39,008 as unexplained income under Section 69 and made a further addition of ₹26,780 under Section 69C towards alleged commission for accommodation entries. The CIT(A) confirmed both additions.
Before the Tribunal, the assessee contended that no exemption under Section 10(38) had been claimed and that the gains from the impugned share transactions had already been offered to tax as short-term capital gains. It was also submitted that all transactions were executed through recognised banking channels and that no material established any connection with the alleged share price manipulators. The assessee argued that taxing the entire sale consideration under Section 69 would amount to double taxation.
