TMI Blog2018 (12) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... that if he had shifted the profits to an outsider, he would have received back corresponding amount from the recipient of the profit. However, the Assessing Officer has not brought any material on record to show that the profit was received back. This argument of the Appellant can also not be supported because the party receiving the profit, under manipulative schemes, cannot transfer the money either by book entry or by bank transaction. It is only the Assessee who can tell the manner of money received back. Appellant has not given satisfactory explanation with respect to the losses incurred by using Client Code Modification (based on the report received from National Stock Exchange and the inquiry' by the Investigation Wing, Ahmedabad). The grounds of appeal are not substantiated further to prove the allegations leveled by the Appellant. Accordingly, the grounds of appeal are decided against the assessee. - ITA No. 7222/Del/2017 - - - Dated:- 30-10-2018 - Sh. H.S. Sidhu, Judicial Member For the Assessee : Sh. Anil Kumar Gupta For the Department : Shri B.S. Anant, Sr. DR. ORDER This appeal is filed by the Assessee against the order dated 28.9.2017 passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even after stating in his {CIT(A)} order that the transactions reported by the assessee of ₹ 4,13,593.55 are not those related to CCM. That the assessee had no other dealings with the broker named in the reasons. 5. The assessee craves to raise any other and/or additional grounds of Appeal during the appellate proceedings with you honour s kind permission. 2. The brief facts of the case are that an information email was received from ADIT (Inv.) Unit-1(3), Ahmedabad vide letter dated 18.3.2016 in respect of Client Code Modification (CCM) Dissemination of beneficiary client who have taken contrived losses and shifted out profit during the FY 2009-10. As per the information, the assessee availed contrived losses of ₹ 4,63,706/- by shifting out ascertained profit of ₹ 4,63,706/-. Hence, the proceedings u/s. 147 of the I.T. Act, 1961 has been initiated after recording the reasons that the income of ₹ 4,63,706/- has escaped assessment for the AY 2010-11. The statutory notice u/s. 148 of the Act has been issued on 29.3.2016 to the assessee to furnish return of income for the AY 2009-10. In response to the same, the assessee filed the requisite details. Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any claim of loss of ₹ 4,63,706/- and the reasons given by CIT(A) for confirming the said additions are erroneous and not sustainable both on facts and in law and accordingly the addition of ₹ 4,63,706/- on account of alleged contrived losses is liable to be deleted. In the last it was further submitted that the lower authorities erred in law and fact in addition of ₹ 4,63,706 allegedly as concealed income, whereas the same was never claimed as loss by the assessee. There were genuine losses of ₹ 4,13,593.55 only, being paid to A to Z Stock Trade Private Limited, the broker mentioned in reasons. Hence, the addition of ₹ 4,63,706/- was wrongly made by the Assessing Officer on account of alleged contrived losses even after stating in his order that the transactions reported by the assessee of ₹ 4,13,593.55 are not those related to CCM. That the assessee had no other dealings with the broker named in the reasons. In view of above submissions, the ld. Counsel for the assessee has requested to allow the appeal of the assessee. 4. On the other hand, Ld. DR relied upon the order of the Ld. CIT(A) and stated he has passed a well reasoned order, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation Wing that CCM has been used as a tool for tax evasion and only settled traders have been considered to arrive at the beneficiaries. The participants in the market admitted the use of CCM for margin management and loss shifting. The ADIT Investigation, on further verification found that the brokers misuse the facility of CCM. They admitted receipt of commission @ 0.5% to 2% on the amount of losses / profits for transferring such losses / profits to their clients. The brokers revised their computation of income and paid taxes on such commission. The Assessee is one of the beneficiaries of such design. The Assessee has maneuvered unaccounted funds / cash for getting the accommodation entry to reduce the taxable income. Based on this information the case was reopened by issuing the notice u/s 148 of the 1.1 . Act, 1961. During the assessment proceedings, the AR for the Appellant submitted that the Assessee had paid advance money to M/s A to Z Stock Trade Pvt. Ltd. in December 2009 and the cheque was cleared in January 2010. The transaction took place on lsl March 2010 resulting in loss which is alleged as manipulation. Nobody can visualize or fix the quantum of loss which ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the Assessee. Therefore, legal course of action availablVA witij-the. Assessing Officer was to reopen the assessment proceedings-T v following due procedure. In this way I find that there was no infirmity in the procedure to reopen the assessment proceedings. The Appellant has- further relied on the decision of the Hon ble High Court of Delhi in the case of Principal Commissioner of Income Tax-6, vs. Meenakshi Overseas Pvt. Ltd. ITA 692/2016. In this judgment it is held that the recording of reasons to believe and not reasons to suspect is the precondition to the assumption of jurisdiction u/s 147 of the I.T. Act. The reasons to believe must demonstrate link between the tangible material and the formation of belief or the reason that income has escaped assessment. The procedure followed by the Assessing Officer passes the test of scrutiny laid by the above decision of the Hon ble High Court because the information with respect to the Assessee was definite. The quantum involved had to be investigated by reopening the assessment. 4.3.5 Major objections raised by the Appellant is that the impugned loss of ₹ 4,63,706/- is not correct in terms of figures. To this effect, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant because what required to be modified was only the client code for which limited time is given by the Stock Exchange. Now a days techniques have been evolved to get the data ready before hand for uploading on the site. Another argument by the Appellant is that if he had shifted the profits to an outsider, he would have received back corresponding amount from the recipient of the profit. However, the Assessing Officer has not brought any material on record to show that the profit was received back. This argument of the Appellant can also not be supported because the party receiving the profit, under manipulative schemes, cannot transfer the money either by book entry or by bank transaction. It is only the Assessee who can tell the manner of money received back. 4.3.6 After giving due consideration to the facts of the case and submission of the Appellant, I am convinced that the Appellant has not given satisfactory explanation with respect to the losses incurred by using Client Code Modification (based on the report received from National Stock Exchange and the inquiry' by the Investigation Wing, Ahmedabad). The grounds of appeal are not substantiated further to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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