Inflation of capital gain by showing higher purchase price and paying tax under section 115JB is not questionable

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts in brief are that the assessee for the assessment year 1999-00 had declared long term capital loss of Rs.4,01,75,013/- on sale of shares which had been set off against short term capital gain from sale of shares of Rs.3,98,40,597/- and thus there was net long term capital loss of Rs.10,73,749/-. The book profit of the assessee under section 115JB of the Income tax Act (the Act) was Rs.1,13,25,826/- and, therefore, under the provisions of the said section assessee had deemed total income of Rs.33,97,748/-. The assessee had, therefore paid tax under section 115JB on deemed income. The income declared by the assessee had been accepted by the AO under summary scheme under section 143(1). Thereafter, the AO noted from the assessment order passed under section 143(3) for 2002-03 that the assessee had sold 2,00,000 shares of Gammon India Ltd. in assessment year 1999-2000. The said shares had been purchased in financial year 1995-96. The AO also noted that purchase price of the share was Rs.242.01 per share whereas in the computation of long term capital loss from the said shares in assessment year 1999-2000, assessee had taken the purchase price @248.88 per share. Thus the assessee had inflated the loss to the tune of Rs.17,15,576/- and the income had thus been reduced to that extent. The AO, therefore, issued notice under section 148 which was served on the assessee on 18.4.2005. In response to the said notice, the assessee stated that the return of income filed on 29.12.1999 may be taken as return filed in response to section 148.

Citation :
Income tax Officer Ward 8(2)(4), Room No.213, Aayakar Bhavan, 2nd floor M.K. Road Mumbai-400 020. (Appellant) Vs. M/s. Pacific Energy Pvt. Ltd. 301, Capri Green Field Estate A.B. Nair Road, Juhu Mumbai-400 049. PAN No. AACCP 0544 P(Respondent)