Suresh Chandra Sadh Vs DCIT (ITAT Agra)
The Income Tax Appellate Tribunal (ITAT), Agra Bench, in the case of Suresh Chandra Sadh vs. DCIT, has upheld the addition of ₹80.17 lakh made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, treating the claimed long-term capital gains (LTCG) as bogus. The Tribunal found no merit in the taxpayer’s defense regarding genuineness of the transaction involving shares of Yamini Investments Company Ltd. (YICL).
Background of the Case
The assessee, an individual, had filed his original return of income for Assessment Year 2016–17 declaring ₹9,71,140. The return was later reopened under Section 147 based on information received from the Directorate of Investigation (DDIT), New Delhi, alleging that the assessee was among beneficiaries of accommodation entries relating to bogus LTCG through penny stocks.
Pursuant to the notice issued under Section 148, the assessee re-filed his return, disclosing the same income. The AO examined the documents and recorded that the assessee had purchased 2,50,000 shares of Fidelo Power and Infrastructure Ltd. (FPIL) for ₹2,50,000 in FY 2013–14, which later got converted into 2,00,000 shares of YICL upon amalgamation. These YICL shares were sold between June 2015 and March 2016 through the Bombay Stock Exchange for ₹82,67,339, resulting in an LTCG of ₹80,17,339. The share price had appreciated 33 times in just over a year.
Findings of AO and CIT(A)
The AO treated the capital gain as unexplained cash credit under Section 68, rejecting the assessee’s claim for LTCG exemption under Section 10(38). The AO cited several red flags:
