In case the option to pay tax under composition levy is denied by the proper officer, can the person avail ITC on stock after denial

Yes. ITC can be availed by filing, a statement in FORM GST ITC-01 (containing
details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock) by him on the date on which the option is denied as per order in FORM GST CMP- 07, within a period of thirty days from the order.

(FAQ 27: COMPOSITION LEVY)