Case Law Details
Ishwar R Pujara Vs ACIT (ITAT Delhi)
Introduction: In a recent development, the Income Tax Appellate Tribunal (ITAT) in Delhi pronounced its verdict on Section 68 in the case of Ishwar R Pujara Vs ACIT. This case revolves around the addition of Rs.23,67,786 as an unexplained investment related to a transaction in M/s. SVC Resources Ltd. The ITAT’s ruling brings clarity to the intricate relationship between Section 68, which typically deals with unexplained cash credits, and purchase costs.
Detailed Analysis: The appellant contested the addition made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961. According to the grounds of appeal, the AO added Rs.23,67,786 as an unexplained investment in connection to the purchase of 1,45,000 shares of M/s. SVC Resources Ltd. during the Financial Year 2010-11, relevant to the Assessment Year 2011-12.
During the hearing, the appellant’s counsel argued that the shares were purchased from a registered share broker, Systematic Shares and Stock India Ltd. It was revealed that out of the total purchased shares, only 87,301 were sold during the relevant year, generating a meager profit of Rs.52,145.93. The remaining 57,699 shares were not sold and were held in closing stock.
The AO’s decision to rely on a Securities and Exchange Board of India (SEBI) report, specifically for the period up to November 2010, raised concerns. The appellant pointed out that the transactions in question occurred later than the SEBI report’s coverage. The AO, however, added the entire purchase transaction under Section 68, a section traditionally associated with unexplained cash credits.
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