Yogesh P. Thakkar Vs DCIT (ITAT Mumbai)
The case of Yogesh P. Thakkar Vs DCIT before ITAT Mumbai involves allegations by the income tax department regarding bogus long-term capital gains from share transactions in Radford Global Ltd and Blazon Marbles Ltd. Despite SEBI’s interim order, SEBI later acquitted Thakkar and Radford Global Ltd of any share price manipulation.
The Income Tax Assessing Officer (AO) relied heavily on an interim SEBI order and the Kolkata investigation wing’s report to conclude that Thakkar’s share transactions were not bona fide. The AO treated the sale proceeds as unexplained cash credits under section 68 of the Income Tax Act, adding a 2% commission under section 69C.
However, ITAT Mumbai found that:
- Thakkar’s transactions were executed through a registered broker with genuine documentation.
- Payments were made through account payee cheques and subjected to Securities Transaction Tax (STT).
- The revenue failed to establish Thakkar’s direct involvement in price manipulation or with entry operators.
- SEBI’s final order in 2017 acquitted Thakkar and Radford Global Ltd of share price manipulation, listing them among the 82 entities cleared.
The ITAT Mumbai decision underscores the importance of substantive evidence in tax assessments. Despite initial suspicions, Thakkar’s case highlights that transactions executed with proper documentation and compliance with market norms cannot be dismissed solely based on suspicions or interim regulatory actions.
