PCIT Vs Sawankumar T Jajoo (Calcutta High Court)
In the case of PCIT Vs Sawankumar T Jajoo, the Calcutta High Court dealt with a revenue appeal challenging the decision of the Income Tax Appellate Tribunal (ITAT), which had dismissed the department’s appeal regarding the assessment year 2013-14. The revenue raised three substantial questions of law, primarily concerning the disallowance of a long-term capital gain (LTCG) claimed as exempt under Section 10(38) of the Income Tax Act. The Assessing Officer had added the LTCG to the income under Section 68, alleging the shares sold were penny stocks used to generate bogus gains. The ITAT, however, found that the assessee provided sufficient evidence to substantiate the legitimacy of the transactions. The tribunal pointed out that the scrips involved were not on the list of 331 suspended companies, and no adverse inference had been drawn by SEBI. Moreover, the assessee had furnished supporting documents like share application forms, bank statements, and demat statements, which the tribunal considered in ruling that the capital gains were legitimate.
The Calcutta High Court, after hearing the arguments and reviewing the facts, noted that the assessing officer had not properly considered the evidence submitted by the assessee. The ITAT had correctly assessed that the shares were not part of any penny stock manipulation scheme and that the assessee had long-term holding intentions, not speculative motives. The court observed that the CIT(A) had granted adequate opportunity to the assessee during the assessment proceedings, and the tribunal’s findings were based on the detailed review of voluminous documents, including the Bombay Stock Exchange’s notice confirming the resumption of trading in Wagend Infra Venture Limited. Since no substantial question of law was found in the case, the Calcutta High Court dismissed the revenue’s appeal, affirming the ITAT’s decision.
