TMI Blog2013 (3) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... sesse has been proved. The word ‘conceal’ contemplates conscious act and same has to be proved even after different explanations added to Sec. 271(1)(c) as stand today. - No penalty - Decided in favor of assessee. - ITA No.2119/Mum/2010 - - - Dated:- 25-1-2012 - SHRI G.E. VEERABHADRAPPA AND SHRI R.S. PADVEKAR, JJ. Appellant by: Shri Vijay Mehta Respondent by: Shri P.K.B. Menon ORDER PER R.S. PADVEKAR, JM In this appeal the assessee has challenged the impugned order of the Ld. CIT (A) -38, Mumbai dated 15.01.2010 for the A.Y. 2006-07 raising grievance for confirming the penalty levied by the A.O. u/s.271(1)(c) of the Act. The assessee has taken the following effective grounds: 1. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax erred in confirming the penalty u/s.271(1)(c) of Rs. 13,00,000/-. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax failed to appreciate the fact that the client code modifications were for genuine reasons for which the explanation was furnished which the CIT (A) failed to appreciate. 3. On the facts and circumstances of the case and in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to his notice that there were 22081 transactions on MCX in which clients codes have been modified by the assessee and his explanation was sought. Shri Pratik Doshi stated that the assessee had a very high attrition rate of dealers. Most of the dealers who work for the assessee during that period had left them and some dealers were removed from the service. The assessee had lodged complaints in the Police Station for misdeeds committed by Shri Ajay Shah and Shri Akhil Gupta who were ex-employees of Delhi office for indulging in various malpractices including client code modification without the knowledge of the assessee. Shri Doshi offered Rs. 55 lakhs as an additional income over and above the income already declared in the regular return by stating that the same was offered to buy peace and to avoid protracted litigation. The basis for the offer was also stated. Subsequently, revised computation was filed declaring Rs. 36,39,000/- as additional income in place of Rs. 55 lakhs previously declared and same was accepted without disturbing a single penny and assessment was completed. The A.O. initiated the penalty proceedings u/s.271(1)(c) of the Act. The assessee filed the explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one trade transferred from A to B and again the same trade is transferred from B to A of which net impact is zero but the two transactions are included in the total turnover. 2. Effect of the Modifications It is submitted that because of trade modifications we say that all the trade modifications are genuine and no motive to shift profit of one person to another or vice versa. For this purpose you may consider the following submissions: i) No broker / sub broker would indulge in modification of client code when the effect of shifting profit from one head to other head is small/less than compared to brokerage earned. Costs viz; brokerage, service tax, stamp duty and exchange transaction cost for one leg of the transaction is as under: For every Rs. 1,00,00,000: Brokerage Rs. 5,000 Service Tax Rs. 612 Stamp Duty Rs. 100 Exchange Transaction Cost Rs. 400 Rs. 6,112 Thus for a two leg transaction, the total transaction cost inclusive of brokerage earned, will be Rs. 12,224. Thus when effect is small in the transaction one can very well assume that the modification is without any motive to transfer the income. ii) The mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue before the Ld. CIT (A) but without success as the penalty was confirmed. Now, the assessee is in appeal before us. 4. We have heard the rival submissions of the parties and perused the records. The Ld. Counsel took us through the paper book, more particularly, page no.8 9 where the details of the impact on the Profit Loss A/C due to the modification in transaction (unaccounted) is given. He took us through page no.10 to 18 of the paper book where the details of the impact on the profit and loss account of modification in the clients transaction are given. The ld. Counsel tried to demonstrate that even in many cases of the transactions, there is negative figure and assessee has not received any benefit. He submits that the dealer associated with the assessee are huge in numbers and many times it is very difficult to have the control over them in punching the clients transaction. He submits that huge transactions are carried out from many terminals and it is difficult to have the control for the reason that at the relevant time, said trading was done on the internet. He further submits that in many cases the volume of code modification is higher but data-wise and tran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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