SEBI Investigation of broker Alone Insufficient to Label Assessee’s LTCG as Bogus

ITO Vs Indravadan Jain HUF (ITAT Mumbai)

In the realm of tax litigation, the case of ITO vs. Indravadan Jain HUF presented before the Income Tax Appellate Tribunal (ITAT) in Mumbai stands out as a significant ruling that addresses the genuineness of share transactions and the implications of investigations on brokers by regulatory authorities. This article delves into the tribunal’s reasoning, the facts of the case, and its implications for similar cases in the future.

Background of the Case: The core issue in ITO vs. Indravadan Jain HUF revolved around the assessing officer’s (AO) treatment of the assessee’s share transactions as bogus. The AO’s suspicion was primarily based on the Securities and Exchange Board of India (SEBI) initiating an investigation into Ramkrishna Fincap Pvt. Ltd., and the revelation that transactions through M/s Basant Periwal and Co. on the stock exchange floor constituted more than 83% of the activity.

Tribunal’s Analysis and Findings

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