The Securities Appellate Tribunal (SAT) has held that income tax paid on alleged unlawful gains cannot be deducted from disgorgement ordered by the Securities and Exchange Board of India, while partly allowing a review application filed by Alpesh Furiya and related entities.
The application sought reconsideration of SAT’s January 29, 2026 order in a case involving alleged fraudulent trades linked to stock recommendations aired on television by Pradeep Pandya.
Order challenge
The appellants challenged the earlier order on three grounds: the computation of disgorgement, denial of adjustment for the income tax paid on trading gains, and the imposition of ₹25 lakh as costs.
Rejecting the plea on tax adjustment, SAT said any relief relating to income tax paid on the disputed gains would have to be pursued separately under tax laws.
“In our view, it is appropriate for the applicants to seek remedy under the Income Tax Act, 1961,” the Tribunal said.
SAT said that the investigation period covered November 2019 to October 2021, while SEBI’s disgorgement order was passed in June 2024. Referring to the ruling in Monal Y Thakker vs ACIT by the Income Tax Appellate Tribunal (ITAT), Ahmedabad, the Tribunal observed that payments made to SEBI in disgorgement proceedings had been excluded for income tax purposes in that case.
Appellants said that trades amounting to ₹3.16 crore had been executed before the stock recommendations were issued and therefore, should not have been included while calculating unlawful gains.
“The applicants' contention that the disgorgement must be calculated as the difference between quoted price at the time of recommendation and the sale price is meritless… the entire gain has been rightly construed by the WTM as wrongful gain and upheld by us in the order under review,” SAT said in an order dated May 8.
However, SAT granted partial relief by waiving the ₹25-lakh costs imposed in its earlier order. The Tribunal said that the appellants had already deposited more than 90 per cent of the disgorgement amount at a preliminary stage
Published on May 12, 2026