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TMI Blog2019 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... and contrary to the facts and the provisions of the law. WITHOUT PREJUDICE TO THE ABOVE 2. On the facts and under the circumstances of the case, the learned Assessing Officer has erred in not allowing the speculation loss pertaining to the current yeari.e. A.Y 2010-11 of Rs. 4,831/- to be carried forward to subsequent years and the reasons assigned for doing so are wrong and contrary to the facts of the case and the provisions of the law. 3. On the facts and under the circumstances of the case, the learned Assessing Officer has erred in making an addition of Rs. 2,71,800/- to the appellant company's total income on the alleged ground of shifting of profit/loss on share transactions through client code modification, the reasons assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65 216535. 85 271800. 85 271800. 85 2 1 0 The above information has been duly examined by the undersigned. Modification of the client codes is a practice under which brokers change the client codes in sale and purchase order of securities after the trades are conducted. While it is legally permitted to rectify inadvertent errors in punching order, such modification have also been misused for manipulative activities in the market. SEBI conducted a probe into "Modification of client codes" by brokers, pursuant to observations by the Finance Ministry about many such modifications taking place in derivatives transactions at the National Stock Exchange during 2010. The survey report provided by the ADIT(Inv) unit 1(3), Ahmedabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, I have reasons to believe that income Rs. 271800.85 chargeable to tax has escaped assessment by reason of the failure on part of assessee to disclose fully and truly all material facts necessary for its assessment for A.Y. 2010-11 within the meaning of Sec 147 of Income-tax Act, 1961." Accordingly, notice u/s 148 dated 30.03.2016 was issued and truly served upon the assessee. In response to this notice, the assessee filed a letter dated 06.04.2016 requesting to treat its e-return of income filed u/s 139(1) of Income-tax Act, 1961 on 22.09.2010 as return filed in response to notice u/s 148 of the Act. Subsequently, the assessee was provided vide this office letter dated 08.06.2016 the reasons recorded for reopening of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. Vs DCIT 353 ITR 474 (Guj), where the Hon'ble High Court held the formation by belief is essentially within AO's subjective satisfaction-at the stage of issue of notice, only question is whether there was relevant material on which the AO could have formed requisite belief. In case of M/s. Coronation Agro Industries Ltd. v/s DCIT 6(2)(1), as brought out by the Hon'ble Bombay High Court, the A.O did not have the requisite information like date of transaction, nature of transaction and detail of counter party. However, in the case of appellant, the A.O. possessed the nature and details of transaction. Other details can be extracted by using available information. Therefore the A.O is within jurisdiction and acted in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perandi of shifting profits was not known to the Revenue as not disclosed by the petitioner when the Assessing Officer passed the order in regular assessment proceedings. 4. We note that the reasons in support of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and /or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the Assessing Officer to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine er ..... X X X X Extracts X X X X X X X X Extracts X X X X
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