Revenue appeal allowed in claiming exemption u/s. 10(38) by manipulating share price of SRK Industries

S.N. Sodhani HUF Vs PCIT (Supreme Court of India)

Supreme Court allowed the appeal of the revenue in manipulation of share price of SRK Industries recording fictitious Long Term Capital Gain and claiming exemption under section 10(38) by following case of Swati Bajaj.

Facts- This appeal has been filed by the revenue u/s. 260A of the Income Tax Act, 1961 raising substantial question of law that whether on the facts and circumstances of the case that Income Tax Appellate Tribunal erred in ignoring the direct and circumstantial evidence brought on record by AO in the form of modus operandi contrived by the accommodation entry providers who manipulated the share price of SRK Industries Ltd. and provided facility for round tripping of assessee’s unaccounted money to record fictitious Long Term Capital Gains of Rs.19,48,385/- in favour of the instant assessee which is also claimed as exempted income tax u/s 10(38) of the Income Tax Act, giving rise thereby to the vice of perversity in the process of decision making.

Conclusion- Held that no independent reasoning has been given by the learned Tribunal but the Tribunal chose to follow the decision of the Coordinate Bench in I.T.A. No. 354/Kol/2018 dated 24th August, 2018. In fact, in the said decision the earlier decision was affirmed. Those decisions were appealed against in the case of Principal Commissioner of Income Tax Vs. Swati Bajaj, SCC online Cal 1572 the appeal filed by the revenue were allowed and the substantial questions of law were answered in favour of the revenue. The said decision will squarely apply to the case on hand. Thus applying the case of Swati Bajaj, the appeal filed by the revenue is allowed and the substantial questions of law of law are answered in favour of the revenue.