TMI Blog2021 (10) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... rial facts of computation of the total income. It could not have been the duty of the assessee to disclose that there are client code modification made by the broker, when in fact profit or loss has been shown by the assessee before the assessing officer and same was scrutinized u/s 143 (3) of the act. It would be the duty of AO to decipher any inference, which he would like to draw. AO has considered the addition by combining the profit earned by the assessee on account of client code modification and further a loss on account of client code modification. Therefore, in fact assessee has earned profit as well as loss because of client code modification whereas the learned assessing officer has considered both these figures as income of the assessee. Addition stating that assessee has failed to provide any substantial evidence that can corroborated that the client code modification was bona fide it was the duty of the learned assessing officer to show that the client code modification made by the broker of the assessee which has resulted into the Under assessment of income of the assessee because of evidences in the possession of the learned assessing officer. We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of jurisdictional conditions stipulated u/s. 147 to section 151 of the Act. 2.2 On the facts and circumstances of the case and in law, the LD CIT (A) erred in upholding the reopening of assessment under section 148 of the act without appreciating the fact that the assessment was already being completed under section 143(3) of the Act and at the relevant point of time the Appellant had disclosed fully and truly all the material facts necessary for making the assessment. As the Appellant had disclosed all material fact at the time of assessment under section 143(3) therefore the case of the Appellant could not be reopened under section 147 of the act after elapsed of 4 years from the end 'of the concerned assessment year. 2.3 On the facts and circumstances of the case and in law, the LD CIT (A) erred in upholding the reopening of completed assessment under section 148 of the act without appreciating the fact that there was a complete absence of application of independent mind of learned AO while recording the reason to believe which procrastinate him to reopen the assessment under section 147. 2.4 On the facts and circumstances of the case and in law, the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on 25.04.2016. Assessee filed objection on 19.05.2016 which were disposed of on 5.12.2016. After that, the Assessing Officer proceeded to make an assessment. 04. During the assessment proceedings the Assessing Officer questioned the assessee stating that SEBI vide Circular dated 06th February, 2003 stated that stock exchanges are not normally permitting changes in the client code accepted for correction of genuine mistakes. It was further noted that there are non-genuine client code modification carried out to book non-genuine losses where the brokers used this facility allowed between 3.30 PM to 4.00 PM to transfer gains or losses from one party to another party under the guise of rectifying errors. The Assessing Officer noted that in this case information is received from Investigation Wing from 1.04.2008 to 31.03.2009 That there is a client code modification by broker M/s. Arch Finance Ltd. wherein the client code modification has resulted into a loss of ₹ 2,73,631/-. Assessing Officer noted that assessee has shifted profit out of ₹ 88,647/- and also shifted loss of ₹ 1,84,984/- and, therefore, there is net reduction in income of ₹ 2,73,631/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.05.2016 which has not at all been proved otherwise. v. He further submitted that assessee has, as such, incurred loss of ₹ 11 crores and, therefore, the mere CCM entrties of ₹ 2,73,000/- could not have made any difference to the returned income of the assessee. In view of this, he submitted that the addition on the merits deserves to be quashed. He referred to the Paper book containing 110 pages and also reasons produced at page Nos. 46 to 54 of the Paper book to support his above contention. 08. The ld. DR merely relied upon the orders of the lower authorities. It was stated that the re-opening is correctly upheld by the ld. CIT (Appeals) and further the addition has been made on the basis of the report of the Investigation Wing, hence there is no infirmity in the orders of the lower authorities. 09. We have carefully considered the rival contentions and perused the orders of the lower authorities. In the present case, we find that a. assessee has filed its return of income on 30th September, 2009 wherein a loss of ₹ 7.65 crores was shown under the head business or profession and a loss of ₹ 6,21,00,000/- was shown under the head capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening of the assessment, it is clearly stated that not all client code modifications are in genuine. Otherwise, the same we would not have given a window of halfan- hour to the brokers to modify the client codes to correct the genuine errors. The learned assessing officer without any allegation has presumed that assessee has entered into nongenuine client code modification activities. Neither the brokerage examined nor the assessee is examined. In fact the nongenuine client code modification activities could be established on the basis of analysis of Levenshtein Distance of Digit Edit analysis where there are edits ranging from three to five in the client code, then it is obvious that the code is not modified but actually replaced. There is no such allegation on finding of the learned assessing officer. d. There is no allegation in the reasons recorded by the learned assessing officer that there is any failure on part of the assessee to disclose fully and truly material facts of computation of the total income. It could not have been the duty of the assessee to disclose that there are client code modification made by the broker, when in fact profit or loss has been shown by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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