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2024-TIOL-810-HC-AHM-IT
IN THE HIGH COURT OF GUJARAT
AT AHMEDABAD
Case Tracker
AMBALAL CHIMANLAL PATEL Vs DCIT[ITAT]
R/Tax Appeal No. 260 Of 2024
THE PRINCIPAL COMMISSIONER OF INCOME TAX 1
AHMEDABAD
Vs
SHRI AMBALAL CHIMANLAL PATEL
Bhargav D Karia & Niral R Mehta, JJ
Dated: April 15, 2024
Appellant Rep. by: Mr Varun K Patel (3802) With Mr Dev D Patel
Respondent Rep. by: None
Income Tax - Sections 10(38) & 68
Keywords - Bogus purchases - Long Term Capital Gains - Unexplained cash credit
THE assessee is an individual. On assessment for the relevant period, the AO made addition of Rs. 2,88,72,634/- being sale proceeds of 2 lakh shares of M/s. Naisargik Agritech (India) Ltd. u/s. 68 of the I. T. Act, 1961 on the ground that the sales and purchase of the above shares were not genuine. The appellant has purchased 2 lakh shares of M/s. Naisargik Agritech (India) Ltd. of face value of Rs.10/- for Rs.20 lacs on 15/03/2011. The appellant sold these shares from 23/06/2014 to 11/07/2014 on Bombay Stock Exchange through the broker Shri Pravin Ratilal Share & Stock Brokers Ltd. and claimed long term capital gain exempt from tax u/s 10(38) of the Act. The AO however, did not allow the claim of long term capital gain on the ground that the purchase and sale of shares of M/s. Naisargik Agritech (India) Ltd. was carefully executed plan to generate bogus long term. The AO stated that the assessee has purchased the shares of a company which was suspended from trading at BSE from 10/04/2000 and has sold it between 3/06/2014 to 11/07/2014 when the trading of share resumed on BSE for two to three months. The AO therefore held that the sharesof M/s. Naisargik Agritech (India) Ltd. has been used to accommodate long term capital gain beneficiaries. The AO has relied upon the case of Mumbai High Court in the case of Sanjay Bimalchand Jain in Income Tax Appeal No. 18/2017 dated 10/04/2017 in support of the above disallowance.
On appeal, the Tribunal held that where assessee holds share for over 3 years, it would be incorrect to treat sale of shares as bogus solely based on suspicion or due to the fact that assessee made substantial quantum of capital...