COMMISSIONER OF INCOME TAX Vs. GULMOHAR FINANCE LTD.

JUDGEMENT

(1.) NEW Delhi (The 'Tribunal') in ITA No. 2511/Del/2005 relevant for the asst. yr. 2001 -02.

(2.) THE assessee had filed its returns, which were accepted by the AO.

(3.) THE Commissioner of Income -tax ('CIT') was of the opinion that the order passed by the AO was erroneous and prejudicial to the interests of the Revenue and he, therefore, issued a notice under s. 263 of the IT Act, 1961 ("the Act') to the assessee. This notice reads as follows : assessment was completed under s. 143(3) on the income of Rs. 6,37,110." Scrutiny of records revealed that the company is an investment company trading in shares. The shares are the stock of the company and hence cost index cannot be applied. On examination of assessment records by the undersigned it is found that the assessee has sold 45,000 shares of BT Tech Net Ltd. for an amount of Rs. 49,22,912 against the cost price of Rs. 4,50,000 Thus the income earned was Rs. 44,72,912 which should have been credited to the trading/P&L a/c and should have been incurred in taxable income. The AO had completed the assessment and assessed the said income under the head 'Income from business and profession' resulted in under assessment of income. It is further seen that the assessee company had claimed a loss of Rs. 64,80,000 on sale of Prudential ICICI Technology unit got redeemed at NAV of Rs. 3.52 per unit. The loss booked appears to be manipulated for the following reasons : (i) The account statement filed in this regard during course of assessment proceedings is not signed by anybody and it has been mentioned therein 'that the data in this accounts statement may differ from investors' actual position. In view of the above facts the order passed by the AO is considered to be erroneous as well as prejudicial to the interest of Revenue.