68

• ITAT Banglore on 13th December, 2019 Penny Stock-Penny Stock-When proved that share transactions are tailor made then the submission that transactions are through recognised stock exchange, through banking channels or not allowed cross examination are not acceptable. The claim is required to be proven to be illegitimate by providing all relevant documents to establish sound financial of alledged companies and that fluctuation in price was market driven and to establish genuineness of sale and purchase of alledged scripts. Remanded. Ramesh Chand Kothari (Huf) vs ITO AY 2015-16

• ITAT DELHI on Mar 11, 2020 held in Penny stock- The assessee submitted sufficient ‎documentary evidences before A.O. The A.O. has not brought any adverse material against the ‎assessee so as to make the above additions. The interim order of the SEBI have been revoked ‎against the assessee. The denial of right of cross-examination is a flaw which renders the ‎assessment order a nullity. Hon’ble Supreme Court in the case of Kishanchand Chellaram 125 ‎ITR 713 (SC) and Andaman Timber Industries vs., CCE 314 ELT 641.‎

• ITAT Ahmedabad held on 6.1.2020 that the provisions of section 68 cannot be ‎applied in relation to the sales receipt as the sales receipt has already been shown in ‎the books of accounts as income at the time of sale only particularly when the ‎purchases have been accepted, then the corresponding sales cannot be disturbed ‎without giving any conclusive evidence/finding. No addition can be made on this ‎ground.‎

• The issue is restored to the file of the AO as the assessee was not provided adverse material used by the AO while framing assessment.

• KOLKATA TRIBUNAL on 8.9.2019 held that Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature & source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO’s record. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case, no addition was warranted under Section 68 of the Act. The amount of Rs. 31,75,000/-, as it pertains to the previous assessment year is deleted and for balance sum of Rs.2,66,00,000/- received during the year, the assessee has proved identity, genuineness and creditworthiness of the share subscribers, hence, same is deleted. (Para 38) EVERGREEN RESIDENCY PVT. LTD. vs ITO

• Amount found deposited in a foreign bank is taxable in India u/s 68 & 69 if the assessee is a “Not Ordinary Resident” and to check the residential status of the assessee we have to understand section 6(1) of the Income Tax act 1961.

• The statements of the ‎employees, in search and seizure cases, can be used only if they are supported by some ‎kind of collaborative evidence.

• Income—‎Unexplained cash credits— Assessee raised share capital and share premium ‎during year under consideration- There cannot be any addition u/s 68 merely ‎because assessee could not produce directors of share subscribing companies -If ‎all necessary ingredients of s. 68 had been duly complied with by assessee and ‎notices issued u/s 133(6) have been duly complied with. Revenue’s appeal ‎dismissed

• Penny Stock – On Oct 24, 2018 KOLKATA TRIBUNAL held that Addition ‎made u/s 68 solely on the basis of general report of the investigation wing, Kolkata and ‎accordingly the action of the ld AO was based purely on surmises and suspicions. There ‎is no finding by the ld AO that the transactions were between related parties. Further the ‎concerned scrip was not suspended by SEBI either at the time of transaction of allotment ‎of shares to the assessee or sale of shares by the assessee.‎

• Addition u/s 68 cannot be made where the assessee explains the source of the capital ‎contribution, established the identity of the creditor and also credit worthiness of the ‎parties.