TMI Blog2020 (10) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... per the BSE procedure, he has to take the request in writing. With regard to suo moto modification it need not. Since the transaction was made through banking channel and settlement was already made for this transaction, that means the transaction must be completed subsequent to the completion of this transaction. So the broker cannot make modification after closure of the trading for the particular day. No factual submission coming from revenue and the addition was made by the assessing officer based on presumptions without any cogent material against the assessee - Decided in favour of assessee. - I.T.A. No. 3478/Mum/2018 - - - Dated:- 27-7-2020 - Shri Pawan Singh, JM And Shri S. Rifaur Rahman, AM For the Appellant : Shri Michael Jerald, DR For the Respondent : Shri M Subramanian, AR ORDER PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER: The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) 36 in short referred as Ld. CIT(A) , Mumbai, dated 28.02.18 for Assessment Year (in short AY) 2009-10. 2. Brief facts of the case are, assessee filed its return of income for AY 2009 10 on 29.08.2009 declari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Services Private limited and as per the investigation the above said party has taken advantage of the client code modification. In the list of clients who were verified, it also contains the name of the assessee. However there is no discussion of the findings relating to assessee but assessing officer proceeded to make addition in the case of assessee also, without there being any findings that assessee also indulged in such activities, AO proceeded to make addition since assessee has recorded a loss during the year. 4. Aggrieved with the above order, assessee preferred an appeal before Ld. CIT(A) objecting the above addition on client code modification and also reopening of the assessment. Assessee also filed a detailed submission relating to the above grounds. After considering the submissions of the assessee, Ld CIT(A) rejected the contention of the assessee with regard to reopening of the assessment and with regard to merit of the case, Ld CIT(A) deleted the addition made by the assessing officer with the following observation, for the sake of brevity it is reproduced below: 4.2.3 After considering the totality of facts, rival submissions, the applicable law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO held the client code modifications to the malafide with the intention to transfer the profit to other person by modifying the client code so as to avoid the payment of tax. From the circular of the Commodity Exchange, it is evident that client code modification is permitted on the same day. Therefore, we are unable to find out any justification for the allegationof the of the Assessing Officer that the client code modification was with the malafide intention. When the client code was modified on the same day, there cannot be any malafide intention. Had client modification done after the transactions period when the price of the commodity has already changed, then perhaps there could have been some basis to presume that client code modification is intentional. However, when the client code modification is done on the same day, in our opinion. there was no basis or justification to hold the same to be malafide. 4.2.7 Hence, in view of the observations above, I believe that the addition has been made by the AO merely on the basis of suspicion, presumptions, surmises and conjectures. The modification in the client code is in the hands of the broker and the appellant cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Tribunal in defense of the C.I.T.(A)'s order. It is also requested that this application may kindly be placed before the Hon'ble members for favor of their orders and direction. 7. At the time of hearing, Ld DR brought to our notice findings of the Ld CIT(A) and submitted that no doubt the client code modification can be made by the broker and however without the permission of the client the broker cannot make any changes. He also brought to our notice para 6.2 and 6.3 of the assessment order to highlight that the various clients have taken advantage of the client code modification and transferred the profit or loss to other clients and in this regard, he relied in the case of Delhi SMC, ITA No. 7222/Delhi/2017 in the case of Vijay Kumar Goel sons (HUF) versus ITO, in this case the broker gave a statement that it has modified the client code with the permission of the assessee and assessee contended that the broker must have given the statement under duress and assessee could not substantiate its submission and also it is proved that assessee is the beneficiary in whose case the loss was recorded by modifying the client code, thereby, reducing the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has led to reduction of taxable income. With regard to assessee, no such findings in the records. The Ld CIT(A) gave a clear finding that the addition was made by the assessing officer merely on the basis of suspicion, presumptions, surmises and conjectures. The modification in the client code is in the hands of the broker and the assessee cannot be made responsible for the act of others and he also observed that the payments for the losses were made by the assessee to the broker through banking channel and the assessing officer has not disputed the above fact and has also not brought out any evidence of cash coming back to the assessee. Further he observed that all the modifications were made on the same day of the transaction which further substantiates that the same cannot be made with malafied intention. 11. Even the revenue is in appeal raising grounds that the modification of the client code is in the hands of the broker and not with the assessee, but the broker would only carry out transactions as directed by his clients. Further they raise the ground that the broker must have colluded with the assessee to carry out the client code modification. In our considered view, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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