Ashok Vijaykumar Kotecha Vs ACIT (ITAT Pune)
In the case of Ashok Vijaykumar Kotecha vs. ACIT, Circle-1, Jalgaon (ITA No. 1453/PUN/2023), the Income Tax Appellate Tribunal (ITAT) Pune ruled in favor of the assessee, deleting the addition of ₹1.52 crore made under Section 68 of the Income Tax Act, 1961.
Case Background
The assessee, Ashok Vijaykumar Kotecha, filed his return for AY 2011-12, declaring an income of ₹1.79 crore. The assessment was originally completed under Section 143(3) read with Section 153A. However, the case was reopened under Section 147 after the Department received information from the investigation wing regarding transactions in the penny stock M/s Nivyah Infrastructure & Telecom Services Ltd.
The Assessing Officer (AO) alleged that the assessee had engaged in the sale of 78,925 shares of the said company for ₹1.52 crore, claiming tax exemption on Long-Term Capital Gains (LTCG) under Section 10(38). The AO concluded that the transactions were bogus, treating the proceeds as unexplained income under Section 68 and also adding ₹9.15 lakh under Section 69C as commission allegedly paid for entry facilitation.
Appeal and Tribunal Ruling
The key arguments before the ITAT included:
1. Double Taxation: The same amount had already been added to the income of Dilip Kotecha, the assessee’s brother, from whose premises the relevant documents were seized.
2. No Unexplained Income: The shares were allotted through a preferential issue, held in a demat account, and sold via recognized stock exchanges with applicable Securities Transaction Tax (STT).
3. No Independent Inquiry by AO: The addition was made solely based on third-party information without verifying the facts independently.
The Tribunal observed that:
