Introduction to ITAT

The Income Tax Appellate Tribunal (ITAT) is a quasi-judicial body in India that handles appeals against orders passed by income tax authorities. It plays a crucial role in resolving tax disputes and ensuring fair and consistent application of tax laws.

The Case of Bhavna Lalit Jain vs. ITO

The case of Bhavna Lalit Jain vs. ITO involves the denial of Long-Term Capital Gains (LTCG) exemption to the assessee, Mrs. Jain, for the assessment year 2014-15. This case is significant because it highlights the issue of tax authorities denying LTCG exemptions based on suspicion without concrete evidence.

The Key Issue

The core of the dispute lies in the Assessing Officer’s (AO) decision to disallow Mrs. Jain’s LTCG exemption on the sale of shares of Surabhi Chemicals and Investment Ltd. (later renamed Super Space Infrastructure Ltd). The AO, acting on information received from the Principal Director of Income Tax (Investigation) Kolkata, suspected the transactions to be part of a scheme involving penny stocks to generate bogus capital gains and evade taxes.