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2018 (10) TMI 1626 - ITAT JAIPURReopening of assessment - addition on account of transfer of profits under Client Code Modification by brokers in respect of transactions carried out on National Stock Exchange (NSE) - AO also made an addition on account of commission @ 2% on the said amount - Held that:- Once the notice U/s 143(2) of the Act was issued by the Assessing Officer as it is part of the assessment record then we do not find any defect or illegality in the reassessment order so far as the requirement of notice U/s 143(2) of the Act is concerned. Hence, we set aside the impugned order of ld. CIT(A) qua this issue. This ground of revenue’s appeal is allowed. The stock exchange has accepted the reasonable error margin up to 5% and undisputedly in the case of the assessee, the error and rectification of the same by using the Client Code Modification constitute only 0.47%, therefore, the percentage of trade which are rectified are not only within the range but it is on lower side of the range of error margin acceptable in such transactions. The case in hand, it was only 0.47%, therefore, there is no reason to doubt the genuineness of the Client Code Modification done by the broker in the transactions where after the execution of the trade, the broker has carried out the correction of mistakes. A similar view has been taken by the Tribunal in the series of decisions thus in view of the above facts and circumstances of the case and following the decisions of the Coordinate Benches of the Tribunals, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. Hence, both these grounds of revenue’s appeal are dismissed. Reopening of assessment - borrowed satisfaction - Held that:- As relying on SHODIMAN INVESTMENTS PVT. LTD., [2018 (4) TMI 1287 - BOMBAY HIGH COURT] Reopening of the assessment based on the report of DIT (Inv) is not valid when the case is hit by the proviso to Section 147 of the Act. It is pertinent to note that the assessee is not expected to disclose the fact that he has indulged in transaction of fictitious transfer of profits but what is required to be disclosed is the transactions carried out by the assessee thorugh the broker. Hence, once the transactions carried out by the assessee are matter of record then the case does not fall in the category of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The assessee is not supposed to do what ought to have been done by the Assessing Officer during the scrutiny assessment. Accordingly, the reopening is bad in law and liable to be quashed.
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