The Securities Appellate Tribunal (SAT) has ruled that income tax paid on alleged unlawful gains cannot be deducted from the disgorgement amount ordered by the Securities and Exchange Board of India (SEBI). This decision partially allows a review application submitted by Alpesh Furiya and associated entities.
The application requested a reconsideration of SAT’s January 29, 2026, decision in a case related to alleged fraudulent trades connected to stock recommendations made public by Pradeep Pandya.
The appellants contested the earlier ruling on three fronts: the calculation of disgorgement, the refusal to adjust for income tax paid on trading gains, and the imposition of costs amounting to ₹25 lakh.
In denying the request for tax adjustment, SAT stated that any relief regarding income tax on disputed gains must be sought separately under tax laws. “It is appropriate for the applicants to seek remedy under the Income Tax Act, 1961,” the Tribunal emphasized.
According to the SAT, the investigation period spanned from November 2019 to October 2021, with SEBI’s disgorgement order issued in June 2024. Citing the ruling in the case of Monal Y Thakker vs ACIT by the Income Tax Appellate Tribunal (ITAT), Ahmedabad, the Tribunal noted that payments made to SEBI in disgorgement proceedings were excluded from income tax considerations in that instance.
The appellants argued that trades totaling ₹3.16 crore were executed before the stock recommendations were published and should, therefore, not have been included in the calculation of unlawful gains. SAT countered this claim, stating, “The entire gain has been rightly construed by the WTM as wrongful gain and upheld by us in the order under review.”
Nonetheless, SAT provided partial relief by waiving the ₹25 lakh cost previously imposed, noting that the appellants had already deposited over 90 percent of the disgorgement amount at a preliminary stage.
The ruling was published on May 12, 2026.
