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2021 (7) TMI 184 - ITAT AHMEDABADAddition of profit shifted out and the loss shifted in by way of Client code modification - Profit or the loss during the time when code were modified - transactions in F & O segment through the involvement of the broker - AO on the basis of the data received from the National stock exchange found that there was the change in the code of the assessee maintained with the broker with respect to certain transactions carried out in F and O segment - HELD THAT:- Admittedly client codes were modified of the assessee as per the information received from the Stock Exchange. Client code modifications may give rise to the doubt/ suspicion which requires detailed investigations from the parties concerned to reveal the truth. Merely, there were client codes modifications carried out by the broker cannot be the basis to draw an inference against the assessee. In fact, in case of client code modification the code of the other party is entered at the place of the assessee. Thus the other party is also required to be investigated whether the other party was involved in such transaction. Besides this there has to be brought other corroborative evidences suggesting that there was the exchange of cash among the parties involved in such client code modification - no such exercise has been carried out by the authorities below. As such there is no whisper in the order of the authorities below that there was the cash transfer between the parties for transferring the income of the assessee to the other party and vice versa. Thus in the absence of such verification/examination carried out by the authorities below, we are not inclined to uphold the findings of the AO. The number of transactions in respect of which the client codes were modified are less than 1% of the total transactions carried out by the assessee. Therefore, such changes in the client code cannot be said as a colourable device adopted for shifting out and shifting in the profit/loss. The changes in the codes were not made at the fag end of the year under consideration i.e. March 2010. In other words it was not possible for the assessee to ascertain its profit or the loss during the time when code were modified as the changes were made in the mid-of the year. Thus it cannot be said that the assessee to reduce its taxable income has resorted to client code modification method. There is no basis on the part of the AO alleging that changes in the code limited to one digit represent genuine punching errors whereas changes in the codes ranging between 4 to 5 digits do not represent the genuine punching errors. The changes in the number of digits in the code cannot be a criteria to draw an inference against the assessee. We are not inclined to disturb the findings of the ld. CIT-A. Accordingly we uphold the same and direct the AO to delete the addition made by him. Hence the ground of appeal of the Revenue is dismissed.
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