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2018 (12) TMI 450

thout connecting the information with the assessee - onus to prove allegations - Held that:- In the process, the Appellant is a beneficiary in whose case the loss has been booked by modifying the client code, thereby, reducing the taxable income. - As argued that margin management can be done by broker by usurping funds of clients with it. In this case, loss shifting is not the matter ; it is only the matter of usurping the funds of the Appellant. It is stated that huge voluminous transaction cannot be modified in one hour provided by the Stock Exchange. - We are not convinced with the assertion of the 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 .....

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losses whereas assessee never made 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. 4. on the facts and circumstances of the case and in law, the assessing officer 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. Ld. Commissioner of Income Tax (Appeal) erred in confirming the addition of ₹ 4,63,706/- made by the assessing officer on account of alleged contrived losses 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 perm .....

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bmitted that Ld. CIT(A) wrongly not quashed the notice u/s 148 and the assessment order passed by the Assessing Officer. The Assessing Officer erred in holding there can t be any documentary evidence of negative premises. The onus to prove allegations was on the AO, which he wrongly shifted to assessee. He further submitted that The AO was required to give evidence as to alledged Client Code Modification was done at the behest of the assessee and the Commissioner of Income Tax (Appeal) erred in confirming the addition of ₹ 4,63,706/- made by the assessing officer on account of alleged contrived losses. It was further submitted that the action of the Ld. CIT(A) is incorrect in confirming the addition of ₹ 4,63,706/- made by the Assessing Officer on account of alleged contrived losses whereas assessee never made 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 .....

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ad in respect of Client Code Modification with the dissemination of beneficiary clients who have taken contrived losses and shifted out profit during FY 2009-10. The list includes the name of the Assessee having availed contrived losses of ₹ 4,63,706/-. The Assessing Officer issued notice u/s 148 based on the information received. 4.3.3 Briefly, the Assessing Officer remarked that Investigation Director Ahmedabad conducted Survey u/s 133A to investigate into Orchestrated misuse of 'Client ('ode Modification' for tax evasion at the premises of 12 brokers across India. The Survey report was prepared on the basis of data received from M/s National Stock Exchange and after analysis of the data together with examination of the contention of the brokers. It was informed by the Investigation 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 amo .....

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kers using the method of Client Code Modification. The report to this effect was a received from the ADIT, Investigation. Ahmedabad disclosing the facts that survey was conducted at the premises of 1 2 brokers and a few of their clients across India. The ADIT also received information from National Stock Exchange in this regard. The ADIT' analyzed the data received from NSE, the contention of the brokers was considered by the Investigating Authority. The participants in the market admitted under oath that CCM was used for margin management and loss shifting. The list provided by the Investigation Wing included the name of M/s Vijay Goel & Sons HUE. In this way, it can be said that the Assessing Officer had in his possession very relevant information with precise details against 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- .....

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e broker to usurp the money of the Assessee. If the Appellant was cheated by the broker by any such act. he should have filed a criminal case against the broker. But I find that no such action has been reported by the Appellant. On the other hand, I find that in the process, the Appellant is a beneficiary in whose case the loss has been booked by modifying the client code, thereby, reducing the taxable income. It is argued that margin management can be done by broker by usurping funds of clients with it. In this case, loss shifting is not the matter ; it is only the matter of usurping the funds of the Appellant. It is stated that huge voluminous transaction cannot be modified in one hour provided by the Stock Exchange. I am not convinced with the assertion of the 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 Offi .....

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