Case Law Details
Atmiben Aliptkumar Doshi Vs ITO (ITAT Ahmedabad)
Introduction: The case of Atmiben Aliptkumar Doshi vs. ITO, heard by the Ahmedabad ITAT, addresses the eligibility of Long Term Capital Gains (LTCG) exemption under Section 10(38) of the Income Tax Act, 1961, in cases involving alleged bogus scrips. The appeal was filed against the CIT(A)’s decision for the Assessment Year 2015-16.
Detailed Analysis: The assessee claimed LTCG exemption on the sale of shares of Kappac Pharma Limited under Section 10(38) of the Act. However, the Assessing Officer observed discrepancies in the transaction, particularly the purchase of shares in physical form with cash payment, involvement of dubious brokers, and suspicious timing of transactions. The AO concluded that the transactions were sham, intended to evade tax by laundering unaccounted income.
The Assessing Officer conducted an independent inquiry, considering the facts and evidence provided by the assessee. Despite ample opportunities given to the assessee, the AO found the purchase of Kappac Pharma shares and subsequent transactions to be dubious. The AO also referred to an Investigation Report on Penny Stocks to support his findings.
The CIT(A) dismissed the appeal, affirming the AO’s conclusions. The CIT(A) noted the discrepancies in the share purchase process, including the purchase in cash despite an active demat account, and the suspicious timing of share transfers and sales.
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