The case ITA No. 1809/DEL/2020 involves Shruti Maheshwari, who is contesting a revisionary order issued by the Pr. Commissioner of Income Tax (Appeals) for the assessment year 2015-16. This review examines the circumstances leading to the appeal and the subsequent tribunal decision.
Shruti Maheshwari filed an income tax return for the assessment year 2015-16, which was selected for complete scrutiny. The main focus of the scrutiny was a series of transactions involving penny stocks, specifically the sale of shares of Channel Nine Entertainment Ltd., where significant gains were reported.
The Pr.CIT, using Section 263 of the Income Tax Act, challenged the original assessment, suggesting it was erroneous and prejudicial to the interests of the revenue due to insufficient inquiry into the spike in the share prices and the nature of the transactions. A show cause notice was issued to Maheshwari, demanding a reevaluation of the assessed income.
In response, Maheshwari argued that the transactions were part of her regular trading activities and that all profits were declared as business income. The tribunal found that the original inquiry by the Assessing Officer was adequate and that the profits from the penny stocks were treated appropriately under the law. The tribunal ruled in favor of Maheshwari, setting aside the Pr.CIT’s revisionary order.
This case highlights the scrutiny involved in penny stock transactions and the standards required for revisionary actions under Section 263. It underscores the importance of the taxpayer’s ability to substantiate their financial activities with appropriate documentation and the necessity for tax authorities to provide substantial evidence when altering initial assessments.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform