TMI Blog2020 (3) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... has merely held that an amount of ₹ 2 crore out of the amount disclosed by Shri Nayan Thakkar has been received by the assessee from the clients by aiding them by suppressing their profits by way of diversion of profits through the methodology of client code modifications. Contention of the revenue that the addition with regard to client code modifications was subsumed in the addition made on account of non-disclosure made under section 132(4) of the Act, does not merit acceptance - Decided in favour of assessee. - MISC. CIVIL APPLICATION (OJ) NO. 1 of 2016 In R/TAX APPEAL NO. 607 of 2015 - - - Dated:- 12-3-2020 - HONOURABLE MS.JUSTICE HARSHA DEVANI And HONOURABLE MR.JUSTICE A.G.URAIZEE MRS MAUNA M BHATT FOR THE PETITIONER MR B S SOPARKAR FOR THE RESPONDENT JUDGMENT ( PER : HONOURABLE MS.JUSTICE HARSHA DEVANI ) 1. By this application, the applicant (original appellant) seeks recall of the order dated 02.11.2015 passed by this Court in Tax Appeal No. 607 of 2015 and seeks admission of the appeal on the proposed substantial questions of law. 2. The applicant, as appellant, preferred the captioned Tax Appeal against the order dated 19.03.2015 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of client code modification. It was submitted that the addition made pursuant to the disclosure was on the basis of the client code modification conducted by the assessee. It was accordingly submitted that the issue of client code modification is duly covered by proposed question (A) and hence, the order dated 02.11.2015 passed in Tax Appeal No. 607 of 2015 be recalled and the appeal be admitted on the proposed substantial question of law. 6. Opposing the application, Mr. S. N. Soparkar, Senior Advocate, learned counsel for the respondent submitted that there is no error in the order dated 02.11.2015 passed by this Court as client code modification can never apply to the assessee as it is not a client but a broker. It was submitted that the allegation against the assessee is that it permitted its clients to have inter se adjustment, and hence, no addition can be made in its hands in the name of client code modification. 6.1 Next it was submitted that for the purpose of exercising powers of review, an error must be an error apparent on the record. Reliance was placed upon the decision of the Supreme Court in Parsion Devi v. Sumitri Devi, (1997) 8 SCC 715, wherein, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of merits, deserves to be rejected. 7. The facts as appearing from the assessment order dated 23.12.2009 passed under section 153A(1)(b) read with section 143(3) of the Act are that the assessee is a broker and Kunvarji Finance Private Limited is a client of the assessee. Inquiries revealed that the assessee M/s. Kunvarji Commodities Brokers Private Limited had done client code modifications for an unusually high number of times. According to the Assessing Officer, client code modifications have been made to hide the correct profit of a particular client. In the assessment order, the Assessing Officer has recorded that an analysis of the data captured in the computer hard disk seized from the head office of the respondent was made by the Investigation Wing. The profit/loss was recomputed without effecting the client code modification i.e. without code modifications . In other words, profit/loss has been worked out with reference to the old clients instead of new clients . The result of such recomputation revealed that different clients of Kunvarji Commodities Broker Private Limited (the assessee) including the group company Kunvarji Finance Private Limited had diverted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized by the Department were not made available to the assessee for a long time. Moreover, the Commissioner (Appeals) and the Tribunal have recorded concurrent findings of fact that the additions have no reference to the seized material and that there is no material or evidence to support the additions made by the Assessing Officer. In other words, the addition is sought to be made solely on the basis of the statement recorded under section 132(4) of the Act which has been subsequently retracted, without such statement being corroborated by any material on record. In the decisions on which reliance has been placed upon by the learned counsel for the appellant, the statement of the assessee, though subsequently retracted, was corroborated by the material seized during the search, whereas in the present case the Tribunal has recorded a categorical finding to the effect that in the assessment order, the Assessing Officer has not pointed out any defect or discrepancy in any of the documents seized from the business premises of the assessee and that the addition has been made only on account of client modification code. Under the circumstances, the conclusion arrived at by the Tribunal t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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