TMI Blog2022 (1) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the other party was involved in such transaction. Besides this other corroborative evidence has to be brought on record suggesting that there was the exchange of cash among the parties involved in such client code modification transaction. But we note that no such exercise has been carried out by the authorities below. As such there is no whisper in the order of the authorities below that there was the cash transfer between the parties for transferring the income of the assessee to the other party or shifting in the losses. Furthermore, in majority of the cases, the client code medication was carried out by the broker with the relative of the assessee and thus it is very unlikely that the assessee shall manipulate the income/loss with them for the reason that there would be consequential effect on their income too. Meaning thereby, as a whole, there would not any effect on the income of the assessee and her associates unless some contrary evidence are brought on record. Thus in the absence of such verification/examination carried out by the authorities below, we are not inclined to uphold their findings. We are not inclined to uphold the findings of the authorities bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation from investigation wing Ahmadabad i.e. ADIT(inv), Unit-3 wherein it was found that the broker M/s Mangal Keshav Securities Pvt. Ltd., was engaged in client code modifications 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 aggregate profit amounting to ₹ 3,31,462.10 belonging to the assessee on 80 occasion when assessee was the original client. Similarly, there was shifted in aggregate loss of ₹ 26,35,009.10 on 22 occasion when assessee was modified client. Accordingly the AO made the addition of ₹ 29,66,471.20 to the total income of the assessee. 5. Aggrieved assessee preferred an appeal to the learned CIT (A). 6. The assessee before the learned CIT (A) contended that the AO has made the addition on account of client code modification in arbitrary manner. As such the AO has alleged that total 138 times code was modified whereas the profit shifted out or loss shifted in was only 102 time. As such, there was no finding about code modified for remaining 36 times. Likewise, the AO has not provided specific transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of losses and profits to it's clients as per requirements, The AO had information that in the year under consideration, there.were 138 transactions pertaining to the appellant where CCM was used to shift losses and profits. Details are as follows:- F-Y. Transactions No. of Transactions Ascertained Profit/Loss shifted out/shifted in (Rs.) As Original Client 2008-09 Transactions where ascertained Losses shifted out 35 3,31,4627- (Profit shifted out) Transactions resulting in no profit no loss 0 Transactions where ascertained Profit shifted out 80 As Modified Client 2008-09 Transactions where Losses shifted in 22 -26,35,0097- {Loss shifted in ) Transactions resulting in no profit no loss 0 Transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reiterated what it had submitted before the AO. The main thrust of the argument of the appellant is that most of the client code modifications done have taken place between the appellant and the her husband. Since the client codes are similar to each other, CCMs could be due to inadvertent typing error. Any mistake committed by the broker cannot be considered the basis to doubt genuineness of bona fide transactions. A perusal of submissions of the appellant shows that the submissions are very general in nature and lack substance. The appellant has tried to explain the large number of CCMs done in a simplistic way by saying that this could be due to inadvertent error since the code of appellant and its karta were almost similar. The appellant has not been able to refute the allegations of the AO which are specific and which are based on scientific analysis. Merely saying that it has not asked its broker to carry out any modifications, does not help the cause of the appellant. The AO has given specific transactions where profit and loss has been shifted in by Client Code Modification. The appellant has failed to adduce any evidence to show that it has not benefited by these tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e after the trade has been executed to rectify any error or wrong data entry done by the brokers at the time of punching orders. However, such Client Code modification is subject to certain guidelines as to the time limit within which the client code modification is to be carried out, terminal / system on which such modifications can be done etc. The facility is mainly to provide a system for modification of client codes in case genuine errors in punching / placing the orders. It is to be used as an exception and not a routine. To prevent misuse of the facility, the Stock Exchanges levy penalty / fine in certain circumstances. 13.2 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue raised by the assessee becomes infructuous. Hence, we dismiss the same as infructuous. 16. In the result the appeal filed by the assessee is partly allowed. Coming to ITA No. 2577/Ahd/2017 by Amitkumar A Shah (HUF) for A.Y. 2009-10. 17. The assessee has raised following grounds of appeal: The learned CIT(A)-6, Ahmedabad has erred in law and on facts in: 1. Confirming the action of the AO in re-opening the assessment for the reasons as recorded and conveyed in due course of time to the Appellant; 2. Holding that the ratio of the judgment of Hon'ble Supreme Court in the case GKN Driveshaft (India) Ltd. as reported at 259 ITR 19 (2003), 'was followed by the AO. Considering the facts of the case, she ought to have held that the same has not been followed in its letter and spirit, thus rendering the consequential re-assessment order liable to be quashed even on this ground; 3. Confirming the action of the AO in making disallowance of ₹ 67,22,384/- and thereby making addition of the same amount to the returned income, for the reasons as stated in the body of the order. The assessee craves leave to add, amend, delete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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