The Income Tax Appellate Tribunal (Delhi) has quashed an assessment which was merely based on Interim order from Securities Exchange Board of India (SEBI)
The assessee Tapas Kumar Mallick purchased 40000 equity shares through Initial Public Offer (IPO) of HPC Bioscience Ltd on 15.03.2013 and payment was made on 16.03.2013. Out of 40000 equity shares which were purchased in Financial Year 2012-13, 39000 equity shares were sold during the year under consideration for a sale consideration of Rs. 2,10,23,848/- and after deducting cost of acquisition of Rs. 14 lakhs, long term capital gain was declared at Rs. 1,96,23,848/-. This long term capital gain was claimed to be exempt under section 10(38) of the Act.
During the course of scrutiny assessment proceedings and drawing support from the outcome of investigation by SEBI as well as the Income tax department, the Assessing Officer formed a belief that the share prices of HPC Biosciences Ltd were rigged by a cartel and discussed the Ad-Interim Order of the SEBI dated 29.06.2015 in order No. WTM/RKA/ISD/54/2015. Referring to various judicial decisions, the Assessing Officer came to the conclusion that the explanation offered by the assessee in respect of source of this capital introduced being share sale transactions, was not satisfactory. Resultingly the assessee is aggrieved by the addition of Rs. 2,10,23,848/- under section 68 of the Income tax Act, 1961 thereby denying the claim of exemption under section 10(38) of the Act.
Judicial Member Bhavnesh Saini and Accountant Member N.K. Billaiya while allowing the appeal of the assessee ruled, “This SEBI order is dated 22.12.2020 whereas the transactions which have been considered in this appeal took place in F.Y. 2014-15 and therefore, restrain after a gap of more than 5 years would do no good to the Revenue. This order has restrained named noticees from accessing security market by issuing prospectus, offer document or advertisement soliciting money from the public in any manner for a period of 8 years. Obviously, this restraint is prospective.”
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