ITAT Mumbai Rejects Revenue’s Penny Stock Allegation, Upholds LTCG on Goenka Business Shares

Additions Under Section 68 Set Aside for Lack of Independent Enquiry

The Mumbai “D” Bench of the Income Tax Appellate Tribunal dismissed the Revenue’s appeal against relief granted to Reena Ratnesh Jain for Assessment Year 2016–17, affirming deletion of ₹80.23 lakh added as alleged bogus long-term capital gains under Section 68 of the Income-tax Act. The Bench comprising Saktijit Dey and Makarand Vasant Mahadeokar held that the Assessing Officer had acted merely on an Investigation Wing report branding the scrip of Goenka Business and Finance Ltd. as a penny stock, without conducting any independent verification linking the assessee to accommodation entry operations. The Tribunal noted that the assessee had purchased shares through a registered broker, payments were routed through banking channels, securities were credited in a demat account, and sales were executed on the stock exchange with full documentary trail. No defect was pointed out in contract notes, bank statements or demat records. In absence of evidence showing that the assessee’s own unaccounted money had been routed back in the garb of capital gains, mere abnormal price rise could not justify treating genuine transactions as sham.

Price Rise Alone Not Proof of Bogus Transactions, Says Tribunal

The Bench strongly criticised the Department’s reliance on conjectures regarding financial fundamentals and price movement of the company’s shares. It observed that selective suspicion was impermissible, particularly when the Assessing Officer had accepted capital gains from other scrips showing even steeper appreciation. The Tribunal also took note that SEBI’s temporary trading restrictions on certain stocks had later been lifted, and trading in Goenka Business and Finance Ltd. had resumed on recognised exchanges, reinforcing transactional legitimacy. Following earlier coordinate bench rulings on the same scrip, the ITAT held that documentary compliance shifts the burden to the Revenue, which had failed to bring any cogent material establishing price rigging involving the assessee. Consequently, both the Section 68 addition and the estimated commission for alleged accommodation entries were rightly deleted, and the Department’s appeal was dismissed in entirety.