Sana Md. Saqib Puthawala Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad deletes addition on alleged bogus LTCG in Kushal Tradelink shares – No live link, no evidence, mere suspicion cannot justify tax
Assessee had declared LTCG of ₹23,02,040 on sale of shares of Kushal Tradelink Ltd and claimed exemption u/s 10(38). Assessment was reopened u/s 147 based only on Insight Portal information alleging accommodation entries in Kushal Group. AO denied exemption, treated entire gain of ₹23,59,580 as unexplained income & added 6% commission ₹1,41,575 u/s 69C. CIT(A) upheld the additions.
Assessee’s contention:
- Reopening based on “borrowed satisfaction” without independent application of mind.
- All documents such as demat, contract notes, bank statements, STT-paid transactions, were filed.
- No material/statements were given to assessee, no cross-examination.
- Relied on Gujarat HC in Ashishbhai Jashwantbhai Desai HUF (07.01.2025).
Tribunal’s Findings:
Reopening invalid in substance
- AO relied only on Insight Portal info without showing live link or independent satisfaction.
- Gujarat HC in Ashishbhai Desai HUF held such reopening is borrowed satisfaction.
No evidence of assessee’s involvement in price rigging or accommodation entry
- Merely because there was price rigging in Kushal Tradelink does not mean every investor is a beneficiary.
- No broker link or statement produced.
- No cash trail, no off-market deals.
Genuine transactions established by assessee
- Shares purchased through SEBI registered broker.
- Payments through bank, reflected in demat.
- Regular investor, not one-off transaction.
- AO did not point out any defect in documents.
Revenue failed to rebut evidence
- Once assessee discharged onus, burden shifted to Revenue.
- Revenue brought no contrary material.
Addition based on suspicion & general allegation
- AO made addition on presumption, conjecture & general investigation report.
- Such addition cannot stand without concrete evidence.
Conclusion of Tribunal:
- LTCG addition of ₹23,59,580 deleted.
- Commission addition of ₹1,41,575 u/s 69C also deleted.
- Entire assessment addition unsustainable in law & facts.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
