TMI Blog2021 (4) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... by the broker to shift the profit - HELD THAT:- Admittedly client codes were modified of the assessee as per the information received from the investigation wing. However, the first question that arises whether such client codes were modified at the instance of the assessee or there was some punching error at the end of the share broker. It is because the stock exchange permits the share broker to rectify the mistakes occurred while punching the data. If that be so, then there cannot be any fault which can be attributed to the assessee for the mistakes committed by the share broker. The client code modifications give rise to the doubt/ suspicion which requires detailed investigations from the parties concerned to reveal the truth. Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Learned Commissioner of Income Tax(Appeals), Ahmedabad-5, dated 05/02/2018 arising in the matter of assessment order passed under s.143(3) r.w.s 147 the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2009-2010. 2. The assessee has raised the following grounds of appeal: 1. The learned Assessing Officer erred in law and on facts of the case in initiating reassessment proceedings u/s 147 of the Act. 2. The learned Assessing Officer has erred in making an addition of ₹ 12,67,380/- as income earned by the assessee on account of client code modification. 3. The learned Assessing Officer erred in law and on the facts in disregarding the contentions raised by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med under section 147 of the Act. 4. The learned AR before us submitted that the reopening cannot be made under section 147 of the Act in the case of the assessee on the basis of client code modification. The learned AR in support of his contention relied on various orders which are available in the paper book. 5. On the contrary, the learned DR contended that the reopening was made under section 147 of the Act on the basis of the information received from the investigation wing wherein it was pointed out that the assessee has diverted the profit by modifying its code maintained with the share broker. The learned DR in support of his contention has filed the written submission which are available on record. 6. We have heard the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity in various segments such as equity, derivatives etc. On analyzing the information/data received from the investigation wing, it was revealed that the broker has shifted the profit belonging to the assessee with respect to F O to another client code amounting to ₹12,67,380/-. Accordingly the AO made the addition to the total income of the assessee. 9. Aggrieved assessee preferred an appeal to the learned CIT (A). 10. The assessee before the learned CIT (A) contended that the AO has not furnished the report received from the investigation which was used for the purpose of the addition of ₹12,67,380/- on account of client code modification. 10.1 It was also submitted that the AO has not brought anything on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c facts of this particular case which are not there in the case of the Kunvarji Finance Ltd. The AO has analyze the pattern of client code modification and after that she arrived on the decision that these client code modifications are not an inadvertent mistake but these were done in a systematic manner to avoid taxes. The appellant has within the short span and after working hours has manipulated the loss arising to some other client to the account of the assessee. These circumstances raises doubts regarding the genuineness of the transactions. Considering the peculiar facts of the case the decision of the AO is justified and the addition made by the AO is confirmed. 12. Being aggrieved by the order of the learned CIT (A), the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event misuse of the facility Stock Exchanges levy penalty / fine for all non-institutional client code modifications. 15.2 Coming to the facts of the present case, admittedly client codes were modified of the assessee as per the information received from the investigation wing. However, the first question that arises whether such client codes were modified at the instance of the assessee or there was some punching error at the end of the share broker. It is because the stock exchange permits the share broker to rectify the mistakes occurred while punching the data. If that be so, then there cannot be any fault which can be attributed to the assessee for the mistakes committed by the share broker. 15.3 Furthermore, the client code modi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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