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2021 (4) TMI 1118 - AT - Income TaxValidity of reopening of assessment u/s 147 - basis of client code modification - HELD THAT:- We note that the Hon’ble Punjab and Haryana High Court has decided the issue in favour of the Revenue in the case of Shri Rakesh Gupta [2018 (5) TMI 445 - PUNJAB AND HARYANA HIGH COURT]] which was reopened under section 147 of the Act based on the same investigation report Income Tax Department. In view of the above, we do not find any merit in the case of the assessee. Accordingly we uphold the reopening made by the AO under section 147. Addition on account of client code modification done by the broker to shift the profit - HELD THAT:- Admittedly client codes were modified of the assessee as per the information received from the investigation wing. However, the first question that arises whether such client codes were modified at the instance of the assessee or there was some punching error at the end of the share broker. It is because the stock exchange permits the share broker to rectify the mistakes occurred while punching the data. If that be so, then there cannot be any fault which can be attributed to the assessee for the mistakes committed by the share broker. The client code modifications 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 the basis to draw an inference against the assessee. In fact, in the case of client code modification the code of the other party is entered at the place of the assessee. Thus the other party also required to be investigated whether the other party was involved in such transaction. Besides this other corroborative evidence has to be brought on record suggesting that there was the exchange of cash among the parties involved in such client code modification transaction. But we note that 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. Thus in the absence of such verification/examination carried out by the authorities below, we are not inclined to uphold their findings. We are not inclined to uphold the findings of the authorities below. We direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
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