PCIT Vs Avinash B. Jaising (Bombay High Court)
The appeal before the Bombay High Court arose from an order of the Income Tax Appellate Tribunal (ITAT) dismissing the Revenue’s appeal and upholding the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] which had allowed the set-off of Short Term Capital Loss (STCL) against Long Term Capital Gain (LTCG) in a block assessment covering the period from 1 April 1989 to 16 November 1999. The Revenue challenged the ITAT’s order under section 260A of the Income-tax Act, 1961, contending that the assessee had failed to substantiate the transfer of funds and was allegedly unaware of the share transactions forming the basis of the claimed set-off.
The assessee was subjected to a search under section 132 on 16 November 1999, following which a block assessment under section 158BC(c) was completed. In the assessment order dated 29 January 2002, the Assessing Officer disallowed the set-off of STCL amounting to ₹5.18 crore against LTCG of ₹5.21 crore, treating the STCL as non-genuine and an afterthought. The block income was assessed by making additions on account of undisclosed LTCG and unexplained cash credits under section 68. The CIT(A) initially confirmed these additions, leading to an appeal before the ITAT.
