Kiran Kothari Vs ITO (ITAT Kolkata)
In the case of Kiran Kothari vs ITO, the ITAT Kolkata ruled in favor of the assessee, reversing the order passed by the Commissioner of Income Tax (Appeals) dated 16.01.2017 for the Assessment Year 2013-14. The matter centered around the treatment of ₹24.87 lakhs declared as long-term capital gains (LTCG) from the sale of shares in Tuni Textile Mills Ltd. The Assessing Officer (AO) had concluded that the gains were not genuine and treated the proceeds as unexplained cash credits under Section 68 of the Income Tax Act, relying heavily on a general investigation report and the statement made by a director of the company during a survey. The AO had observed an unusual price rise and trading volume in the company’s shares and linked the transaction to a larger network of allegedly manipulated stock trades.
The assessee countered by stating that the shares were purchased after the alleged preferential allotment and not through any such route. The purchase and sale were made through a registered broker and properly recorded in demat and bank statements, with Security Transaction Tax and brokerage duly paid. The Tribunal found merit in the assessee’s argument that the AO had failed to provide specific evidence against him. The earlier purchase was not questioned in prior assessments, and the off-market transaction was legally valid as per prior rulings of the ITAT. The ITAT emphasized that decisions must be grounded in specific evidence and not based on generalized suspicions. Citing precedent and the absence of direct evidence against the assessee, the Tribunal deleted the addition made under Section 68, allowing the appeal.
