Tribunal upholds assessee's appeal, rejects Revenue's claim under section 69B of Income Tax Act.

The Tribunal dismissed the Revenue's appeal and the assessee's cross objection, affirming the Commissioner of Income Tax (Appeals)' decision to delete the addition under section 69B of the Income Tax Act. The Tribunal found insufficient evidence to support the claim that the company's shares were penny stocks, noting the assessee's legitimate investment activities and minimal loss incurred. The judgment was delivered on 07.08.2023.

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Issues involved:
The judgment involves the challenge by the Revenue and cross objection by the assessee regarding the addition made under section 69B of the Income Tax Act in relation to shares traded by the assessee in a company alleged to be a penny stock.

Revenue's Challenge:
The Revenue contested the deletion of the addition made under section 69B by the Assessing Officer, arguing that the company's shares were manipulated to provide accommodation entries. They relied on the identification of the stock as a penny stock by the Investigation Wing and cited legal precedents to support their case.

Assessee's Defense:
The assessee, on the other hand, defended their position by highlighting their regular investment activities in shares, providing detailed evidence of transactions, and emphasizing the nominal nature of the loss incurred. They referenced previous Tribunal decisions where similar additions were deleted and relied on the order of the Commissioner of Income Tax (Appeals) in support of their case.

Tribunal's Analysis and Decision:
Upon reviewing the submissions and evidence, the Tribunal observed that the assessee had invested in the shares of the company in question along with other substantial investments, conducted transactions online through a registered broker, and provided supporting documentation for the transactions. The Tribunal noted the absence of offline purchases, lack of long-term capital gains, and the minimal loss declared by the assessee. They concluded that there was no justification for upholding the addition made by the Assessing Officer under section 69B, as there was insufficient evidence to support the claim that the company was a penny stock. The Tribunal dismissed the Revenue's appeal, finding no infirmity in the order of the Commissioner of Income Tax (Appeals).

Cross Objection by Assessee:
The assessee filed a cross objection challenging the jurisdiction of the Assessing Officer and the validity of the assessment order. However, since the addition made by the Assessing Officer was already deleted by the Commissioner of Income Tax (Appeals) and upheld by the Tribunal, the cross objection was dismissed.

Conclusion:
The Tribunal dismissed the appeal filed by the Revenue and the cross objection filed by the assessee, upholding the decision of the Commissioner of Income Tax (Appeals) to delete the addition under section 69B. The judgment was pronounced in open court on 07.08.2023.

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