ITAT Dismisses Bogus Transaction Allegation on Chartered Accountant

In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Delhi, cleared Rajesh Agarwal, a Chartered Accountant, of bogus income allegations linked to penny stock transactions.

The assesse, Rajesh Agarwal, is a practising Chartered Accountant, who filed his income tax return on 22.02.2016, declaring income of Rs 7,32,380. The assessee’s case was selected for manual scrutiny due to bogus penny stock transactions. Further, a survey under Section 132 was conducted, and the AO suspected the assessee to be involved in bogus share transactions through two persons, Mukesh Kumar and Deepak Aggarwal. These persons were allegedly helping the assessees to carry out the bogus transactions.

The assessee, however, submitted that he had obtained their Power of Attorney as a CA, for the two individuals still, the AO estimated that Rajesh Agarwal earned Rs 50,00,000 from these transactions. Therefore, the assessee filed an appeal before the CIT(A), which sent the matter back to the assessing officer for fresh assessment. Therefore, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi.

The assesse argued that the AO has raised the issue based on the dealings in share transactions with Mukesh Kumar and Deepak Aggarwal. The assesse also argued that the addition was made based on estimation, and the AO has no material at his disposal.

The tribunal also agreed with the assessee, saying that the AO has not submitted any material during the course of assessment proceedings other than estimating the undisclosed income. Therefore, the ITAT deleted the addition proposed by the Assessing Officer.