INCOME TAX ACT, 1961

Section 158BD

Income from undisclosed sources - Interest income - Proportion of investment in shares -

AO while framing block assessment order for the period from 1-4-1995 to 27-9-2001 under section 158BD read with section 158BC disallowed losses claimed in return of income pertaining to shares of 12 companies. Tribunal in appellate proceedings deleted disallowance. Revenue challenged this by way of appeal before High Court pleading that losses were booked and claimed in returns of income filed for the block period, however, no delivery of physical shares was effected after more than a year of booking of the losses till the date of search, i.e., 27-9-2001. Further, after a lapse of two years from the date of booking of these losses no entries were made in memorandum of transfer of shares. Held: Tribunal arrived at finding of fact after considering material evidence on record so as to hold that assessee was entitled to claim of the contrived losses suffered by it. Tribunal had also rightly considered the fact that in assessment under the block period only the undisclosed income, which is found from seized material could only be considered for addition as in total income of assessee. In the facts of case, assessee has already disclosed losses by making necessary entries in books of account and, therefore, AO and CIT(A) were not justified in disallowing contrived losses claimed by assessee. Tribunal had also taken into consideration the factual aspect of the matter that sale bills were issued by brokers, payments were made by cheque by respective buyer of shares and such transactions were duly reflected in books of account. In such circumstances, it could not be said that Tribunal had committed any error in holding that assessee was entitled to claim contrived losses in total income for the respective year.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 1-4-1995 to 27-9-2001

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