Kishori Pankaj Agarwal Vs ITO (ITAT Ahmedabad)
Assessee purchased 10,000 shares of Kappac Pharma Ltd (KPL) offline in 2012 & sold them through Emkay Global on the stock exchange during FY 2014-15, declaring LTCG of ₹54,82,894 u/s 10(38). AO treated KPL as a penny stock based on Investigation Wing, Kolkata report & held that LTCG was bogus, adding the entire sale proceeds u/s 68. CIT(A), NFAC confirmed the addition.
Before Tribunal, Assessee submitted that the issue was already decided in favour of her mother-in-law (Lalita Ramniranjan Agarwal) in ITA 662/Ahd/2023 involving identical facts & same KPL scrip. AR produced complete documents—purchase records, demat statements, contract notes, broker statements & bank credits. It was emphasized that KPL was not part of BSE’s penny stock list, no SEBI action existed for price rigging, & Assessee was a regular investor since 2006.
Tribunal examined a series of binding precedents:
- Gujarat High Court in Affluence Commodities Pvt Ltd (2024) holding KPL transactions genuine;
- Gujarat High Court in Sandipkumar Parsottambhai Patel (2023);
- Supreme Court in Kuntala Mohapatra (2024) & Renu Aggarwal (2023) holding that STT-paid listed-exchange transactions backed by demat & banking trail cannot be treated as bogus without incriminating material;
- Multiple ITAT rulings declaring KPL not a penny stock.
ITAT noted that AO relied solely on generalized Kolkata Investigation Wing patterns, without any specific adverse material against Assessee or broker, & ignored robust documentary evidence. Suspicion, surmises & human-probabilities theory cannot override legally proven transactions. Following jurisdictional HC & coordinate-bench rulings, Tribunal held LTCG genuine & deleted the entire addition of ₹54,82,894 u/s 68.
