SAT Mumbai Rules Tax Refund Claim Outside Its Jurisdiction, Partly Allows “Pandya Ka Funda” Review

The Mumbai Securities Appellate Tribunal (SAT) on 8 May held that any claim seeking refund of income tax paid on trading gains forming part of disgorgement proceedings must be pursued separately under the Income Tax Act, 1961.

Presiding Officer Justice P.S. Dinesh Kumar with Technical Members Meera Swarup and Dheeraj Bhatnagar partly allowed a review application arising from the “Pandya Ka Funda” stock manipulation case but declined to interfere with findings on fraudulent trading and computation of disgorgement.

The Bench held that “….once a fraud is established, any gain made out of such fraudulent act is a 'wrongful gain'.”

On 29 January 2026, the Tribunal had partly allied an appeal and upheld the Securities and Exchange Board of India's (SEBI) findings, confirming disgorgement of Rs. 7.56 crore, remitting Rs. 3.16 crore to SEBI for recomputation, and imposing costs of Rs. 25 lakh on the applicants.

The present review arose from an application filed by Alpesh Vasanji Furiya and others seeking reconsideration of the earlier order. They challenged SEBI's computation of disgorgement and argued that price movements prior to the recommendations reflected market forces. They contended that disgorgement should have been restricted to the difference between the recommendation price and the eventual sale price.

The applicants further argued that the Tribunal wrongly treated a “without prejudice” communication as an admission of disgorgement, failed to address their claim for refund of income tax paid on trading gains, and imposed Rs. 25 lakh costs without adequate reasoning. They also submitted that SEBI froze their bank and demat accounts without prior intimation despite the remand for recomputation.

SEBI opposed the application and submitted that once fraud stood established, disgorgement had to be computed on a net gain basis. It further argued that any claim relating to refund of income tax could be pursued separately under the Income Tax Act, 1961.

Rejecting the challenge to disgorgement computation, the Tribunal relied on WhatsApp chats between Furiya and the anchor Pradeep Pandya concerning six scrips, including Fairchem, Jindal Poly, Godfrey Phillips, Sparc, NCL, and Indigo. It held that the communications established a nexus between the parties and supported the findings of manipulative trading.

On the income tax issue, the Tribunal held that the applicants must seek remedies under the Income Tax Act. It noted that the investigation period ran from 1 November 2019 to 4 October 2021, falling in financial years 2019–20 to 2021–22, while the order of the Whole Time Member dated 11 June 2024 fell in financial year 2024–25.

It also referred to reliance placed on Monal Y Thakker, where the Income Tax Appellate Tribunal, Ahmedabad had excluded payments made to SEBI. It noted:

“Admittedly, the investigation period is between 01.11.2019 and 04.10.2021. These dates fall between FY 2019-20 and 2021- 2022. The WTM has passed his order on 11.06.2024, which falls in FY 2024-25. In Monal Y Thakker relied upon by Mr. Rustomjee, the ITAT, Ahmedabad has excluded the payments made to the SEBI. In our view, it is appropriate for the applicants to seek remedy under the Income Tax Act, 1961.”

On costs, the Tribunal noted that proceedings before SAT function as a first appeal. It also considered that the applicants had deposited over 90% of the disgorgement amount at a preliminary stage without protest. It accordingly waived the Rs. 25 lakh costs imposed earlier. It held:

“….keeping appellants' conduct in view and the fact that this appeal is akin to a first appeal, we deem it appropriate to waive the costs imposed by us in the order under review.”

The Bench declined to entertain grievances relating to freezing of bank and demat accounts, holding that those issues arose subsequent to the review application and did not form part of the present challenge.

Accordingly, SAT partly allowed the review application only to the extent of waiving the Rs. 25 lakh costs imposed in its earlier order.

For Appellants: Advocates Khushil Shah and Kunal Singh

For Respondent: Senior Advocate Shiraz Rustomjee, Advocates Manish Chhangani, Sumit Yadav, Abhay Chauhan, Atul Agrawal, Prateek Pai and Smriti Singh