Ketan Harilal Mehta Vs ACIT (ITAT Mumbai)
Bogus LTCG Allegation Rejected—Section 10(38) Exemption Allowed; Additions u/s 68 & 69C Deleted
The Mumbai ITAT (E Bench) allowed the appeal of Ketan Harilal Mehta for AY 2014-15 and deleted additions relating to alleged bogus long-term capital gains (LTCG) arising from sale of shares of SRK Industries.
Tribunal held that:
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The assessee had genuinely earned LTCG of ₹74.34 lakh, which was exempt under section 10(38).
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Shares were purchased through proper channels, held in the demat account for more than 18 months, and sold through screen-based trading on BSE via a SEBI-registered broker, with STT paid and sale proceeds received through banking channels.
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The AO did not dispute or disprove any documentary evidence, such as contract notes, demat statements, share certificates, or bank records.
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The allegation of pre-arranged or manipulated transactions was based only on general investigation reports and third-party statements, without any direct or specific evidence linking the assessee to price rigging or accommodation entries.
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No evidence was brought on record to show flow of unaccounted cash or payment of commission; hence, the estimated commission addition of ₹2.26 lakh u/s 69C was unsustainable.
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The issue was squarely covered by a coordinate bench decision in the assessee’s own HUF case, involving the same scrip (SRK), where identical additions were deleted.
Accordingly, the ITAT:
