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Home / Corporate Law News / IT Appellate Tribunal quashes IT Dept’s order in relation to use of Penny Stocks for Money Laundering. Read Judgment

IT Appellate Tribunal quashes IT Dept’s order in relation to use of Penny Stocks for Money Laundering. Read Judgment

December 14,2018:

Income Tax Appellate Tribunal (ITAT) has quashed one of first orders issued by Tax Department in relation to use of penny stocks for money laundering purposes.

Income Tax directives
Income Tax directives

In a 20-page verdict, Tribunal expounded that merely producing Evidence of purchase and Sale of the shares was insufficient to prove any wrongdoing.

Judgment of the Tribunal is a major setback for Central Government’s crackdown against use of listed platform for money laundering and tax evasion.

Over 200 entities are being probed for money laundering through penny stocks by multiple regulators including income tax department, capital market regulator Sebi and Ministry of Corporate Affairs.

Judgment was delivered in the case of Ramprasad Agarwal, a Mumbai resident, who had bought shares of Rutron International in 2014 and held them for more than a year before selling them.

Assessing Officer had declined providing long term capital gains (LTCG) exemption for transaction and defendant was asked to pay up Rs 83 lakh tax.

Income Tax Department had based its case on the evidence collected from trades and also a statement given by two witnesses who were Kolkata-based brokers.

The Tribunal stated that,“Officer has not brought any material on record to show that the assesse has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assesse has introduced his own unaccounted money by way of bogus long term capital gain”.

Source Economic Times

Read Judgment @LatestLaws.com:

ITAT’s Judgment on Penny Stocks (Download PDF)

ITAT’s Judgment on Penny Stocks by Latest Laws Team on Scribd

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