TaxTMI 
TaxTMI 
2015 (8) TMI 861
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....justification deserves to be quashed." 3. The assessee is a Private Limited Company engaged in the business of dealing and investing in stock and securities filed its return of income showing loss of Rs. 32,42,900/-. The return was processed u/s 143 (1) of the Act and subsequently assessment was finalized u/s 143(3) of the Act on 06-11-2006 wherein the learned AO has disallowed business loss shown by the assessee as the assessee did not carry out any business activities during the relevant assessment year. Subsequently, the learned AO levied penalty of Rs. 83,914/- u/s 271 (1) (c ) of the Act, treating it as a case of concealment of income. The relevant Para of the penalty order passed by the learned AO for the assessment year is reproduced hereunder for reference: "4. I have considered the facts of the case. It can be seen that the assessee has claimed excess loss under the head capital gains by Rs. 4,19,568. No plausible explanation could be offered either at the time of assessment proceedings, appeal proceedings or in the course of these proceedings. The case laws relied upon by the assessee is also clearly distinguishable from the facts of the present case. In these circumsta....
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.... Petroproducts (P) Ltd. (supra) relied upon by the appellant are applicable only to a situation where the claims made by an assessee are legally justifiable or some debatable issue is involved or the assessee files an explanation which he is able to substantiate and is able to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. But in the present case, despite the fact that shares were shown as investment in the books of accounts as on 31.03.2003, the appellant claimed the loss resulting from their sale as business loss in its computation of income for the A.Y. 2004-05. Besides, the shares were sold at a much lower rate than the market rate to related persons to create an artificial loss, whose details came to notice only after the case was selected for scrutiny and investigations were made by the assessing officer. The appellant has failed to offer any explanation for treating the capital loss as business loss in its computation of income and also for sale of shares to related parties at a much lower rate than the market rate. The issues are not debatable at all. Thus, t....
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....We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below as well as the judgments cited by both the sides. We find that as per section 48, capital gain has to be worked out after reducing the cost of acquisition of capital asset along with cost of improvement thereto and the expenses incurred on transfer of a capital asset from full value of the consideration received or accruing as a result of the transfer of the capital asset. There is no reference to the market value of the capital asset transferred in section 48 or in any other section except section 50C, which is applicable only in case of sale of landed property. In the case of Judgment of Hon'ble Gujarat High Court rendered in the case of CIT vs. Shri Girish Damjibhai Patel (supra), Hon'ble Gujarat High Court has also referred to the same provisions of section 48 and on the basis of same section 48 of the Act, it was held that since section 48 of the Act does not have any reference to the market value but only to the consideration referred to in the sale deed, there is no error in the ultimate conclusion arrived at by the C1T(A) as well as by the Tribu....
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..... Ltd. vs. C. T.O. (supra), we find that in that case, the issue involved was regarding legal tax planning or Tax avoidance. In the present case, we find that even after addition made by the A. O. Rs. 4,19,504/-, the loss assessed by the A. O. is of Rs. 28,23,396/-. The facts of the present case do not indicate that there was any case of willful tax avoidance or tax evasion. Hence, in our considered opinion, the judgment of Hon'ble apex court rendered in the case of Mcdowell & Co. Ltd. vs. C. T. O. (supra) has no relevance in the present case because we find that in the present case, the reasons are also given for adopting lower price of Rs. 0.26 per share as against the quotation at Bombay Stock Exchange of Rs. 1.52 per share. It is submitted that the assessee company has sold the shares in physical form to the related party whereas the shares traded at Bombay Stock Exchange were demat shares and if the assessee wants to sale the shares at a Stock Exchange, it has got the shares dematerialized which will require time and will also have its cost and moreover, the quantity of shares traded in the stock exchange in various months of the financial year at various dates in the month of....