Smt. Karuna Garg Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi has delivered its judgment in the case of Smt. Karuna Garg vs ITO. The matter revolved around the treatment of Long-Term Capital Gains (LTCG) claimed as exempt under Section 10(38) of the Income Tax Act, 1961, in relation to the sale of shares alleged to involve penny stocks. This decision sheds light on procedural shortcomings and evidentiary expectations in scrutiny assessments.
Background of the Case
The appellant, Smt. Karuna Garg, declared LTCG from the sale of shares of two companies:
- M/s Esteem Bio Organic Food Processing Ltd.
- M/s Rander Corporation Ltd.
The shares were acquired online through ISF Securities and SMC Global Securities, and transactions were routed through dematerialized accounts. Payments were made via banking channels, and sales proceeds were received similarly.
The Assessing Officer (AO), relying heavily on an investigation report from the Directorate of Income Tax (DIT), Kolkata, alleged that the transactions were sham and aimed at converting unaccounted money into white money through bogus LTCG.
Assessment Proceedings
During scrutiny assessment, the AO raised doubts about the genuineness of the appellant’s share transactions, citing findings from the DIT investigation. The report alleged that certain brokers and companies manipulated share prices to facilitate tax evasion.
