DCIT Vs Bal Kishan Arora (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, in the case of DCIT vs. Bal Kishan Arora for the Assessment Year 2015-16, dismissed the appeal filed by the Revenue against an order passed by the National Faceless Appeal Centre. The primary contention of the Revenue was against the deletion of an addition of ₹1.99 crore made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, treating the assessee’s capital gains from the sale of shares as unexplained income.
The AO had questioned the genuineness of the assessee’s capital gains from the purchase and sale of 50,000 shares of M/s Gold Line Finvest International Ltd., which were bought via a public offer in January 2013 for ₹5 lakhs and later sold on the Bombay Stock Exchange in April-May 2014 for ₹1.99 crore. The AO argued that the extraordinary returns—almost 4000%—were indicative of a sham transaction. The Revenue also cited reports from the Directorate of Investigation, Kolkata, and statements from various parties alleging widespread manipulation in penny stock companies, including Gold Line Finvest.
However, the ITAT observed that both purchase and sale of the shares were routed through recognised stock exchanges under public scrutiny. It noted that no private placement or off-market transactions were involved. The Tribunal found the Revenue’s reliance on unverified investigations and general reports inadequate to establish any collusion or manipulation on the part of the assessee. The ITAT emphasized that there was no direct evidence linking the assessee to any share price rigging.
