ACIT Vs Sudhir Ramswaroop Mundra (ITAT Nagpur)
The appeal arose from the order of the Commissioner of Income Tax (Appeals)-3, Nagpur, for Assessment Year 2014-15. The Revenue challenged the deletion of an addition of ₹2,52,47,265 made under Section 68 of the Income-tax Act in respect of sale proceeds of shares and the assessee’s claim of exemption under Section 10(38) on long-term capital gains (LTCG).
The assessee had filed a return declaring total income of ₹23,63,330. During scrutiny assessment, the Assessing Officer noticed that the assessee had claimed exempt LTCG of ₹2,47,08,362 arising from the sale of shares of Luminaire Technologies Ltd. The assessee had originally purchased 50,000 shares of Paridhi Properties Ltd. for ₹5,00,000 through banking channels. Following the amalgamation of Paridhi Properties Ltd. with Luminaire Technologies Ltd., approved by the Bombay High Court, the assessee received 5,00,000 shares of Luminaire Technologies Ltd. The shares were dematerialised and subsequently sold through HDFC Securities on the Bombay Stock Exchange after payment of Securities Transaction Tax, generating sale proceeds of ₹2,52,47,265. The Assessing Officer relied on an Investigation Wing report from Kolkata alleging that the scrip was a penny stock used for generating bogus LTCG and treated the entire sale consideration as unexplained cash credit under Section 68, denying exemption under Section 10(38).
