Case Law Details
Paramjit Gandhi Vs DCIT (ITAT Delhi)
The intricacies of income tax assessments often manifest in disputes over capital gains and losses. In the case of Paramjit Gandhi vs. DCIT, recently adjudicated by the Income Tax Appellate Tribunal (ITAT) Delhi, the central issue revolved around the disallowance of long-term capital loss incurred by the assessee on the sale of shares. The tribunal’s decision shed light on the importance of substantiating claims and the need for a thorough examination by tax authorities.
Background of the Case:
Paramjit Gandhi, the appellant, had sold 822,500 equity shares of Flexpack Technology Pvt. Ltd (FPTPL), a private company. The shares, initially allotted to the assessee at par value, were sold at a negotiated price of Rs. 3 per share to an existing shareholder, Smt. Sunita Jain. The sale resulted in a declared long-term capital loss of Rs. 92,50,512/-. However, the Assessing Officer (AO) raised concerns about the authenticity of the transaction.
The AO alleged that the sale was an arranged transaction since Smt. Sunita Jain eventually transferred the shares back to the initial promoters of FPTPL. Consequently, the AO disallowed the claimed long-term capital loss.
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