TMI Blog2021 (1) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... orks out to around 3% of the total transactions only and in our view, the said volume, in fact, vindicates the explanation of the assessee. Further none of the clients has been found to be bogus and all of them have complied with KYC norms, meaning thereby the identity of all the clients stand proved. None of them has disowned the transactions and all of them have also declared the income in their respective returns of income. All these factors, in our view, support the contentions of the assessee. We are of the view that the Ld CIT(A) was justified in deleting the additions - Decided in favour of assessee. - ITA No. 6235/MUM/2017 (Assessment Year: 2010-11) - - - Dated:- 7-12-2020 - SHRI RAVISH SOOD (JUDICIAL MEMBER) AND SHRI N.K. PR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... susing the client code modification facility in F O segment on National Stock Exchange (NSE) during March 2010 and that one of the beneficiaries was the assessee having taken a loss of ₹ 1,60,53,332/-, the Assessing Officer (AO) reopened the assessment by issuing notice u/s 148 of the Act. During the course of assessment proceedings, the assessee filed a copy of its ledger account, contract note and bank statement reflecting payment and receipt transactions with the stock broker M/s Techno Shares Stocks Ltd. Further the assessee filed a reply vide letter dated 01.03.2016 which is reproduced at page 3-7 of the assessment order. However, the AO was not convinced with the said reply of the assessee and made an addition of ₹ 1,60, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch orders were placed by the assessee. Further it is explained that the assessee had paid required margins as per mandatory rules and guidelines of NSE and further, all these transactions had been carried out on the NEAT (National Exchange for Automated Trading) System i.e. fully automated screen based trading system transaction. Also it is explained that all the transactions have been settled by cheques or bank transfer ; the Department has failed to prove the undisclosed income for the impugned assessment year ; evidence, if any with the Department has not been furnished to the assessee to rebut the same and therefore, such evidence cannot be used against the assessee, which would be violation of principles of natural justice. Thus the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a fact that the assessee company has started its operations only in July, 2005 by converting individual membership into corporate membership. Further, the commodity exchange was about 3-4 years old only at the relevant point of time. Hence, the assessee cannot be considered to be an established player in the years under consideration. Further, the movement of prices of commodities cannot be predicted by anyone with accuracy and hence it is inconceivable or unlikely that the assessee could have made profits consistently, even if it is assumed for a moment that the assessee had actually carried out the transactions for its own benefit. We notice that the assessee has offered explanations as to why it carried out the transactions in its own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these factors, in our view, go to show that the assessee has carried out the transactions on behalf of its clients only, even though the transactions were executed in the code of the assessee initially. 13. Further, the Ld CIT(A) has pointed out that there was no modification of client code to the tune of ₹ 3.31 crores and further there was change of code from one client to another client to the tune of ₹ 6.16 crores. In both these cases, the question of shifting of profit earned by the assessee does not arise at all. The action of the AO in assessing the above said profits in the hands of the assessee only show that there was no proper application of mind on the part of the assessing officer. 14. Another important point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. In our view also, the assessing officer has drawn adverse conclusions against the assessee without properly bringing any materials to suppor the view, i.e., the additions have been made on suspicion and surmises only. Accordingly, we uphold the order of Ld CIT(A) in both the years under consideration. 7.1 In the instant case, as mentioned earlier the assessee filed a reply dated 01.03.2016 regarding client code modification. The AO has only produced the said reply in his assessment order. The AO has not made even a preliminary/elementary inquiry to verify the contentions of the assessee. In such a situation, facts being identical, we follow the above order of the Co-ordinate Bench and affirm the order of the Ld. CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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