Capital loss was disallowed by disbelieving the sale consideration. The tribunal held that if the revenue alleges that the assessee has grossly understated the sale consideration, then the onus is on the revenue to prove with cogent materials that the assessee had indeed received higher sale price. Further, it was held that if no enquiries whatsoever were conducted in the hands of the purchaser of shares, the entire disallowance of long term capital loss was made only out of surmises, suspicion and conjectures. It was incumbent on the part of the AO to make further investigations by cross verifying the same from the purchaser of shares. Without doing so, he cannot simply disbelieve the consideration reported by the assessee and disallow the long-term capital loss claimed thereon. (AY .2011-12)
Electrocast Sales India Ltd. v. Dy. CIT (2018) 64 ITR 14 (Kol.)(Trib.)
S. 74 : Losses – Capital loss– shares sold at meagre value – sale price disbelieved by AO and accordingly, capital loss disallowed – Held, AO did not point out any discrepancy in the sale consideration – Held, AO did not conduct any enquiry in the hands of the purchaser – Held, loss cannot be disallowed.