Nishant Parekh Vs ITO (ITAT Rajkot)
In this case, Assessee (legal heir of late Mina Parekh) had claimed exemption u/s 10(38) on long-term capital gains (LTCG) arising from sale of shares of PS IT Infrastructure & Services Ltd. (formerly Parag Shilpa Investments Ltd.). AO rejected the claim & treated the entire sale proceeds of ₹3.28 crore as unexplained cash credit u/s 68, further taxing it at 30% u/s 115BBE. AO relied on generic allegations of penny stock scam & price manipulation & denied Assessee’s request for cross-examination of alleged hawala operator. CIT(A) upheld the addition using strong language, calling penny stock gains “the biggest tax fraud scam” & applied various Latin maxims, ignoring Assessee’s documentary evidence.
Before Tribunal, Assessee pointed out that this exact scrip & issue had already been decided in favour of Assessee by the Rajkot ITAT in Ashok T. Jobanputra (31.07.2024), where LTCG on the same scrip was accepted because Assessee had produced purchase bills, bank statements, demat records, contract notes, STT payment, & fulfilled all conditions of section 10(38). Department could not distinguish the earlier decision.
Tribunal quoted extensively from the Jobanputra decision, reaffirming that AO had not conducted any independent inquiry, never issued notices u/s 133(6) to the broker or companies, never disproved any evidence, & relied only on assumptions & investigation wing reports. Assessee, on the other hand , had fully demonstrated genuine purchase by cheque, demat conversion, holding for more than 12 months, sale through SEBI-registered broker, payment of STT, & receipt through bank. There was no evidence of price rigging, no statement involving Assessee, & no material showing involvement in any scam.
