KAUSHIK CHANDRAVADAN PARIKH,MUMBAI V. NFAC, DELHI

MA 231/MUM/2024

AI Insights

The case involves Kaushik Chandravadhan Parikh, who claimed an exemption for long-term capital gains under section 10(38) of the Income Tax Act, which was denied by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals). The ITAT's initial decision, which ran into 25 pages, detailed the involvement of the appellant in a larger scam involving fictitious entries and price manipulations across various shares, as noted by SEBI and other judicial observations. The Tribunal analyzed over 30 decisions from various jurisdictions, including the Supreme Court, to conclude that the appellant's claims were not supported by any economic fundamentals and were part of a broader scheme to exploit tax exemptions. In the Miscellaneous Application, the appellant argued that previous decisions cited were misapplied and that similar cases had been decided in his favor under different circumstances. However, the Tribunal found that these arguments did not constitute a mistake apparent from the record but rather a reappraisal of the evidence and law, which is not permissible under section 254(2).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32255 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Other Referred Cases: Sanjay Bimalchand Jain (Bom), Swati Bajaj, Durga Prasad More, Mecdowell, Ziauddin A. Siddique, Indravadan Jain
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJKUMAR R. MAKWANA
• Assessee Lawyers: B.V. JHAVERI
• Keywords: Capital Gains; Search and seizure; Rectification of order; Benefit of exemption
• Section: 254(2); 132

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “E” Bench, Mumbai. Before Smt. Kavitha Rajagopal (JM) & Shri Omkareshwar Chidara (AM) M.A. No. 231/Mum/2024 in ITA No. 2064/MUM/2023 (Assessment Year : 2011-12) Kaushik Chandravadhan Parikh 1216, Prasad Chambers Opera House Mumbai 400 004. Vs. DCIT, Circle-19(1) Room No. 604, 6th Floor, Pirmal Chambers, Parel Mumbai-400012. PAN : AADPP19909Q Appellant Respondent Assessee by : Shri B.V. Jhaveri Revenue by : Shri Rajkumar R. Makwana Date of Hearing : 07/02/2025 Date of pronouncement : 04/03/2025 O R D E R Per Omkareshwar Chidara (AM) :- In this above captioned case, ITAT Mumbai passed a detailed order running into 25 pages. The issue involved relates to denial of long term capital gains (LTCG for short) exemption benefit claimed u/s. 10(38) of the I.T. Act. Briefly the facts are as follows : a) From the assessment order passed by the Ld. Assessing Officer (AO for short), it is noted that Shri S.C. Shah of Ahmedabad has admitted during search and seizure operations u/s. 132 of the Act, that he was providing fictitious entries to various persons and based on the same, these appellants were claiming exemption u/s. 10(38) of the Act and the appellant is one amongst them. b) In this ITAT order, more than 30 decisions of various Tribunals/High Courts were analysed where there were price manipulations, SEBI has made scathing observation of this all-India scam, including the “share” dealt by this appellant and finally came to the conclusion as mentioned in this order. c) Reliance was placed on several cases including the Hon'ble Jurisdictional High Court’s decision of Sanjay Bimalchand Jain (Bom) where it was held that if the financials of company does not support Kaushik Chandravadhan Parikh 2 the abnormal price increase of a share, then the denial of exemption claimed by appellant was upheld. Similarly, more than 30 co-ordinate Bench decisions of all parts of country were analysed and discussed in this case where the scam pervaded the entire country. Various decisions of Hon'ble Supreme Court like Durga Prasad More, Mecdowell etc., were also explained for applying “Human Probability Theory”. d) Ld. AO and Ld. CIT(A) concurrently held that the price of this share was rigged artificially to jack up the price even though there are no economic fundamentals to support the price. e) It was mentioned in the order that the appellant was investing huge amounts in shares for several years in fundamentally sound companies like Tata Group, several Public Sector Undertakings etc and in none of these companies, he did not get these type of abnormal gains. f) At page 14 of this order, it was clearly mentioned that Director General of Income Tax (Inv.) Kolkata found that 64811 appellants all over the country availed the benefit of fictitious entries from 70 shell companies and the scam involved is more than Rs. 38000 crores. Reliance was placed on the case of Swati Bajaj of Kolkata High Court where approximately 90 cases were clubbed and heard together and it was held that all these appellants have taken fictitious entries and the exemption u/s 10(38) of the Act was denied. The SLP filed by the appellant was dismissed by Hon'ble Supreme Court. g) At the end of the order at page 24 of this ITAT order, 8 broad reasons were given as synopsis and the appellant’s case was dismissed. 2. Against this detailed Tribunal order, the appellant filed this Miscellaneous Application with the following submissions : a) Decisions of Bombay High Court in the case of Ziauddin A. Siddique, Indravadan Jain are apt for this case and appellant correctly claimed exemption u/s. 10(38) of the Act. b) The appellant says Swati Bajaj case is not applicable to the facts of the case. c) Appellant relied on some more decisions mentioned in this Miscellaneous Application. Kaushik Chandravadhan Parikh 3 d) The appellant has mentioned that Ld. Judicial Member, who is co- signatory of the order gave relief to appellant in similar circumstances. 3. The Ld. DR has argued that the order of the ITAT is very detailed one and Tribunal cannot review the order as there is no mistake apparent from record. Decision : 4. The scope of Miscellaneous Application u/s. 254(2) is very narrow and limited. Unless there is a mistake apparent from record, the Miscellaneous Application cannot be entertained and hence for the following reasons, the Miscellaneous Application filed by the appellant is rejected :- a) The ITAT in this order passed an order after taking into consideration several cases relied on by appellant and all of them were distinguished. More than 30 cases were relied on by the ITAT Bench to come to conclusion arrived at in this case. b) 8 broad reasons were given as a summary as to why the appellant is not entitled to the exemption claimed viz., artificially jacking up the price, no sound financial fundamental to support such huge price, ban order on the operators of SEBI who were involved in this scrip etc. c) The cases mentioned in Miscellaneous Application by appellant like Indravadan Jain etc. were already discussed and distinguished in this ITAT order. d) The Ld. JM held the cases in favour of the appellants where different “shares” were involved like Surabhi Chemicals, Vas Infra Ltd. etc. and each case depends on its facts and circumstances, whereas the “share” involved is different one in impugned case. e) The appellant claims that the Swati Bajaj decision rendered by Kolkata High Court is not applicable to his case whereas the ITAT placed reliance on the same. The ITAT has discussed in detail as to why the case of Swati Bajaj is applicable in this case and definitely this argument is not within the realm of Miscellaneous Application. f) The Tribunal has taken a conscious view after discussing more than 30 cases and there is no mistake apparent from record. As rightly contended by Ld. DR the contentions made by the appellant in this Kaushik Chandravadhan Parikh 4 Miscellaneous petition would result in review of the order passed by the Tribunal, which is not permitted u/s. 254(2) of the Act. g) By no stretch of imagination, a Miscellaneous petition can be entertained when several cases-law were discussed in their 16 pages submission. To come within the purview of Miscellaneous petition, there should be ‘mistake apparent from record’ and not reappraisal of entire order, evidences, arguments and cases-law. In this case, appellant is asking the ITAT to reverse the order in its 16 pages note which is not permissible. h) Reliance is placed on the following decisions for the proposition that the scope of Miscellaneous petition is very limited. 1) The scope and ambit of application u/s. 254(2) is very limited. The same is restricted to rectification of mistakes apparent from record. Recalling entire order and passing a fresh order are not permitted u/s. 254(2) of the Act - CIT Vs. ITAT 196 ITR 683 (orissa). 2) Under the garb of rectification, u/s. 254(2) the ITAT cannot exercise the power of review and recall the order whole hog – Union of India Vs. ITAT 31 Taxman 385 (Raj). 3) Absolute obliteration of earlier order is not within the jurisdiction of ITAT U/S. 254(2) of IT Act – Saha Wallace & Co. 240 ITR 579(Cal). 4) The ITAT cannot in law and facts recall and destroy its final order as a whole to rectify the same u/s. 254(2) – CIT Vs. Prahlad Rai 215 ITR 833 (Gau). 5. Accordingly, there is no merit in the Miscellaneous petition filed by appellant and the same is rejected. Order pronounced in the open Court on 04/03/2025. Sd/- Sd/- (KAVITHA RAJAGOPAL) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 04/03/2025 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. Kaushik Chandravadhan Parikh 5 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai PS "