TMI Blog2020 (6) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... e has tangible information in the form of various reports of investigation, which is also backed by SEBI report, there was no assessment on the assessee on the return filed, and he found that there is a derivative loss booked by the assessee. Such loss is not genuine as per those reports. Thus we do not find any reason to interfere with the order of the ld AO and CIT (A) in upholding reopening of assessment - no infirmity in the reasons recorded by the learned assessing officer and in the reopening of the assessment under section 147. AO had tangible material, clear-cut information about the change of client code of assessee by TCG stock broking Ltd, exact nature of the changes are also available, it was also known to him that it is not miss punching or but complete change of all the keys. Ingenuine loss - when the assessing officer has categorically shown that there is a genuine allegation that the transaction entered into by the assessee of booking the loss is not genuine, the duty is cast upon the assessee to show that they are genuine. AO has categorically shown whole transactions with evidence to the assessee but assessee merely relied on the paperwork of client code m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. 2.2 That further, the reasons recorded were mere reasons to suspect and were just to make fishing and roving enquiries, such as no independent enquiry was conducted by the assessing officer before issuing such notice under section 148 and as such the proceedings so, initiated under section 148 was a mere pittance and was liable to be quashed as such. 3. That the learned COMMISSIONER OF INCOME TAX (APPEALS) has further erred in law and on facts in sustaining the addition of ₹ 1 37445/ on account disallowance of loss on account of future and options transactions in stock exchange. 3.1 That in doing so, the learned COMMISSIONER OF INCOME TAX (APPEALS) has completely ignored and arbitrarily brushed aside the documentary evidences filed by the assessee company and due enquiries being conducted by the assessing officer himself under section 131 of the act (which finds mention in the order of the assessment, but not given to assessee for rebuttal), wherein the stockbroker has accepted the genuineness of the said losses and thus, the addition so made by learned assessing officer and sustained by the learned CIT (A) was based on mere suspicion and surmises and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 143 (2) were issued. The assessee filed its objection on 1/6/2016 against the reopening of the assessment which was disposed of by letter dated 18/10/2016. The learned assessing officer sent verification letter on 8/11/2016 under section 133 (6) to Crimson financial services Ltd requiring it to file certain details which were filed on 10/11/2016 about the client code modification. The broker narrated the method of client code modification and stated that there is no record generated or maintained at the time of such modification and hence it is not possible to confirm whether any client code modification has been done in the above account or not. The assessee was also issued a show cause notice which was replied by the assessee on 22/12/2016. By that letter in para number 9 assessee relied on certain judicial precedent against the reopening of the assessment and in para number 10 it is submitted that assessee has placed certain orders through its brokers and the trades have been executed by the respective brokers and confirmed from time to time and assessee denied that there is no fictitious loss as alleged is booked by the assessee company. Assessee further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on all the four occasions on different dates and times, the client code of assessee is replaced with the code of same another person on all the occasions. He further noted that Mr. Satinder Pal Gupta is a common director in the broker of the assessee M/s Pee Aar securities Ltd and the assessee company and therefore it had the facility to change the client code at its convenience. In view of this, the learned assessing officer made an addition of ₹ 137455/- to the total income of the assessee on account of client code modification and there after determined the total income of the assessee at ₹ 189586/ against the returned income of ₹ 52131/ by passing an order on 22/12/2016 under section 147/143 (3) of the act. 6. The assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned COMMISSIONER OF INCOME TAX APPEALS. He passed an order on 23/2/2018 dismissing the appeal of the assessee against the reopening of the assessment as well as on the merits of the addition. Therefore assessee is in appeal before us. 7. The learned authorised representative filed a paper book and drew our attention to page number [4] and [5] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned assessing officer under section 148 of the act stating that reopening proceedings are bad in law as well as on the marriage the additions are not warranted. Thus on reopening he argued that reopening deserves to be quashed. 8. On the merits of the issue, he submitted the statement of accounts from Crimson financial services Ltd for the assessment year 2009 10 and copies of all the contract notes issued. It was also put to our attention that the assessee has mentioned before the assessing officer that it is the onus on the assessing officer to show that there is an escapement of income on the basis of the above evidence. He further referred to the letter dated 10/11/2016 mentioned by the Crimson financial services private limited to the assessing officer wherein it has been stated that there is no record generated/maintained at the time of client code modification and hence it is not possible to confirm whether any client code modification has been made in the above account of the assessee or not. Therefore it was submitted that there is no confirmation from the broker or from any other party that the loss of ₹ 134760 incurred by the assessee is a contrived loss. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he financial year 2008 09 to 2010 11. He also mentions that SEBI has conducted a probe into the modification of the client Codes by the brokers pursuant to observation of the finance ministry about many such modifications taking place in derivatives transactions at the National stock exchange. Therefore, a detailed investigation was carried out and on the basis of the data received from National stock exchange, after analysis of data received from NSE and after considering the contentions of 12 brokers and few of their clients across India, it was concluded that client code modification has been used as a tool for tax evasion. The assessee company has reduced its income by ₹ 1 34760 through one of the broker Crimson financial services. The learned assessing officer received above information and found that assessee has claimed the above loss which is not genuine. The basis of the above reason was a report of survey and the details of the transaction carried out by the assessee. The report shows that it is not a genuine error because of the reason that it is not wrong punching of one or two keys but, code has been replaced. Therefore, it cannot be considered as a genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 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 error, originally occurred while punching the trade. The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income. Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment. 5. In the above view, prima facie, we are of the view that the impugned notice is without jurisdiction as it lacks reason to believe that income chargeable to tax has escaped assessment. [Underline supplied by us] 12. Hon high court held that there was no reasons mentioned by the AO in that case that CCM was not on account of genuine error. In the present case the revenue has shown that it is not a genuine error as complete keys have been changed. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Delhi High court in [2019] 112 taxmann.com 204 (Delhi)/[2020] 268 Taxman 198 (Delhi) . hence reliance on the decision of Sahb Infrastructure does not help the case of assessee. In view of this, we do not find any infirmity in his action. Therefore ground number 2 of the appeal is dismissed. 14. As ground number three deals with the addition on its merit. The only argument of the assessee that it is placed on record all the documents and enter evidences in the shape of contract notes to discharge the burden. He therefore submitted that the loss has arisen in based on the above contract notes. It is also the claim that the share broker has categorically stated that he does not have any record of client code modification. On careful analysis of all the arguments submitted by the assessee we find that the client court has already been modified in the case of the assessee where the transactions belonged to some other company but were later on modified in the name of the assessee company. The assessee did not show that it has placed such orders before the broker; the assessee is merely showing the contract notes. Contract notes are merely colorable documents to show that client ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners:- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. 12. Quite clearly, ordinarily the order on an appeal should be pronounced by the bench within no more than 90 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an unprecedented order in the history of India and vide order dated 6-5-2020 read with order dated 23-3-2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15-3-2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly , and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020 . It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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