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TMI Blog2022 (1) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant; 2. Holding that the ratio of the judgment of Hon'ble Supreme Court in the case of 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 Rs. 29,66,471/- 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 or alter one or more grounds of appeal. 3. The 2nd issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by sustaining the addition of Rs. 29,66,471/- on account of client code modification done by the broker to shift the profit. 4. The facts in brief are that the assessee in the present case is an individual and filed return of income declaring total income of Rs. 23,31,470.00 only. The AO in the present case received the information from investigation wing Ahmadabad i.e. ADIT(inv), Unit-3 wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shifting in of losses of Rs. 26,35,009/- Thus, by resorting to CCM, in total the income was reduced by Rs. 29,66,471/- by the appellant. Accordingly, the AO added Rs. 29,66,471/- to the income of the appellant. The present appeal is against the above action of the AO. It is seen that the appellant carried out large number of transctions in stock exchange through broker Mangal Keshav Securities Limited. Investigation Wing of the Income Tax Department at Ahmedabad had carried out surveys u/s 133A of the Act on brokers in Ahmedabad and had analysed data from different stock exchanges from F.Y. 2009 to 2010-11. Analysis of this data indicated that there was systemic shifting of huge crystallized losses using CCM in the F & O segment at the National Stock Exchange. This analysis indicated that CCM was used for purpose other than for rectifying genuine errors. In survey u/s 133A of the Act on Mangal Keshav Securities, broker of the appellant, it was found that the broker indulged in large scale Client Code Modifications so as to facilitate shifting of losses and profits to it's clients as per requirements, The AO had information that in the year under consideration, there.we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total CCM 2008-09 138501 2009-10 48358 2010-11 32021 2011-12 243 The appellant failed to refute the allegations of the AO which were based on concrete information and scientific analysis of the same. During the appellate proceedings the appellant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently confirmed by the learned CIT (A). 13.1 Client Code Modification means modification / change of the client codes after execution of trades. Stock Exchanges provide a facility to modify any client code 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this order. Accordingly, we refrain ourselves from deciding the issue raised by the assessee on the validity of assessment order framed under section 147 of the Act. As such the technical issue 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 Rs. 67,22,384/- and thereby making additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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