DHANASEKARAN MANGAYARKARASI,TIRUCHENGODE vs. DCIT, CIRCLE-1, ERODE

The assessee is an individual and filed the return of income for AY 2013-14 declaring total income of Rs. 12,87,250/-. The A.O noticed from the information available in the insight portal of the Department that the assessee had earned a profit of Rs.1,39,37,280/- by trading in the penny stock share of

The Ld. Authorized Representative (AR) of the assessee during the course of hearing submitted the following details with regard to the STCG declared by the assessee in the return of income:

The Ld. AR further submitted that the assessee was holding only 9,000 shares of M/s. Out of City Travel Solutions Ltd. out of which 1851 shares were sold during the year under consideration. The Ld. AR in this regard drew our attention to the brokers' statement (page 81 of paper book). The Ld. AR also submitted that the assessee during the course of hearing has submitted all the relevant details including the contract notes, bank statements etc. to substantiate the actual trading done by the assessee in the impugned script. The Ld. AR argued that the assessee cannot be asked to prove negative factor and the addition merely based on the information available in insight portal without any corroborative material cannot be sustained.

The Ld. Departmental Representative (DR), on the other hand, relied on the orders of the lower authorities.

We have heard the parties, and perused the material available on record. The A.O has made an addition u/s. 69A of the Act in the assessee' case based on the information available in the insight portal of the Department stating that the assessee has made a profit of Rs.1,39,37,280/- from the trading in the shares of M/s. Out of City Travel Solutions Ltd. which is a penny stock. On perusal of the order of the A.O, we notice that the A.O has given detailed finding with regard to the investigation report, modus operandi and exit providers etc. however, it is noticed that the A.O has not recorded any finding with regard to the details submitted by the assessee and on what basis the impugned addition is made in the hands of the assessee other than the information from the insight portal. On perusal of the brokers’ statement, we notice that the assessee's holding of the shares of M/s. Out of City Travel Solutions Ltd. is only 9,000 out of which 1851 shares are sold during the year

Even the CIT(A) while upholding the order of the A.O has not brought any material on record to substantiate the contention that the assessee has indeed made the profit as mentioned in the insight portal information but has sustained the addition stating that the claim of STCG offered by the assessee from the impugned shares is a self serving document. Even during the course of hearing before us, the Revenue did not bring anything on record in support of the addition made in the hands of the assessee. In the given case, it is not in dispute that the assessee has traded in the shares of M/s. Out of City Travel Solutions Ltd. which is a penny stock and that the assessee has made a profit of Rs. 2,14,530/- from the sale of the said shares. The dispute is only with regard to the quantum of profit earned by the assessee and whether the assessee has claimed exemption u/s. 10(38) of the Act towards LTCG on the same. The contention of the Revenue that the assessee has not submitted any details with regard to the impugned transactions is not tenable for the reason that the assessee is denying the entire transaction and that the assessee cannot be expected to prove a negative fact that he has not earned the LTCG as alleged by the revenue. As already mentioned the revenue has not brought on record any material other than the information from the insight portal to substantiate the contention that the assessee has indeed earned the profit as claimed by the Revenue. Considering the overall facts and circumstances of

In the result, the appeal of the assessee is allowed. Order pronounced on 10th day of July, 2026 at Chennai.