Krutik Ashokkumar Parikh-HUF vs. Income Tax Officer, Ward-1(2)(2), Ahmedabad

Parties Involved

Facts Summary

The assessee, a Hindu Undivided Family (HUF), had filed its original return declaring income of Rs. 1,90,780/-. The Assessing Officer (AO) reopened the case of the assessee under section 147 of the Act based on information that the assessee had transacted in a penny stock scrip named 'Karma ISP'. The AO observed that the assessee had sold 7,800 shares of Karma ISP for a consideration of Rs. 21,72,300/- at a rate of Rs. 278.50 per share, despite having purchased the same for Rs. 1,76,670/- at Rs. 22.65 per share. The assessee had claimed the 'long-term capital gain' as exempt under section 10(38) of the Act. However, the AO treated the transaction as sham and non-genuine, adding a sum of Rs. 21,72,300/- to the assessee's income under best judgment assessment.…

Legal Issues

• 1. Whether the delay in filing the appeal should be condoned?
• 2. Whether the CIT(A) rightly upheld the AO's conclusion that the transaction was a sham transaction aimed at tax avoidance?

Judgment Outcome

Decided in favour of Assessee.

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