Zikrullah Chaudhary Vs DCIT (ITAT Pune)
The ITAT Pune dismissed the assessee’s appeal and upheld the order of the CIT(A), which had confirmed the Assessing Officer’s treatment of ₹93,48,858 claimed as long-term capital gain (LTCG) on sale of shares of M/s. Tanu Health Care Ltd. and M/s. Comfort Intech Ltd. as income from other sources for Assessment Year 2005-06. The case arose from a search conducted under Section 132 on 24.10.2007, pursuant to which proceedings under Section 153A were initiated. The assessee had declared LTCG of ₹65,97,975 and claimed exemption of ₹27,50,883 in the return of income.
During assessment proceedings, the Assessing Officer observed that the assessee had purchased the shares at nominal prices and sold them at substantially higher prices. It was further noted that the shares had been acquired in March 2004, while payment for their purchase was made only in April 2005. According to the Assessing Officer, the pattern of transactions, the trading history of the shares, and the surrounding circumstances suggested that the transactions constituted a colourable device to convert unaccounted money into long-term capital gains. The assessee was issued a show-cause notice proposing to treat the capital gain of ₹93,48,858 as income from other sources.
