Case Law Details
Chirag Tejprakash Dangi Vs ITO (ITAT Mumbai)
Introduction: In the case of Chirag Tejprakash Dangi Vs ITO, ITAT Mumbai, the tribunal examined the treatment of cash credits and long-term capital gains related to the sale of shares. The dispute arose when the Assessing Officer (AO) treated the sale proceeds of shares as cash credits under section 68 of the Income Tax Act, 1961, and disallowed the exemption claimed under section 10(38) of the Act. The AO also estimated commission expenses incurred on procuring alleged bogus long-term capital gains and assessed them under section 69C of the Act.
Detailed Analysis:
1. Background of the Case: The assessee, Chirag Tejprakash Dangi, sold shares of Radford Global Ltd. (earlier known as PS Global Ltd.), Surbhi Chemicals & Investment Ltd., and Pyramid Trading & Finance Ltd. (now known as Mishka Finance & Trading Ltd.). These transactions were claimed as exempt under section 10(38) of the Income Tax Act.
2. AO’s Findings: The AO, relying on a report from the Investigation Wing in Kolkata, concluded that the shares were penny stocks, and their sale proceeds were cash credits. Additionally, the AO estimated commission expenses associated with alleged bogus long-term capital gains.
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