9911796707
TMI Blog2024 (8) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... issue are discussed in brief. The assessee is a carrying on business in Indus, coal etc. The AO received information that certain stock brokers were manipulating F & O transactions in the stock market in order to generate bogus losses and gains. The modus operandi was that certain group of traders will sell stock options at an unreasonably lower price without any corresponding off setting position in the underlying scrip. Later, during the course of the day, those stock options will be bought back at market rates, which are usually substantially higher. These transactions will result unusual loss to a group of persons and huge gains to some other persons. This system of operation was called reversal trade. In this regard, both SEBI and inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered to be bogus in nature. The Ld CIT(A) was not convinced with the submissions of the assessee. He took the view that it is the responsibility of the assessee to prove that the transactions are genuine. However, the assessee has failed to do so. Further, the loss has arisen due to change and modification of client code done by the broker, which fact proves that the loss was generated and shifted to the assessee. Accordingly, he confirmed the disallowance made by the AO. 5. We heard the parties and perused the record. We notice from the assessment order that the assessing officer has fully relied upon the report of the investigation wing with regard to the alleged manipulative practices in the F & O transactions, mainly for the reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated through alleged client code modification. The Hon'ble Bombay High Court has held in the case of Coronation Agro Industries Ltd vs. DCIT (2017)(82 taxmann.com 75)(Bom) that the client code modification done by the assessee's broker cannot be a ground to believe that there had been any escapement of income. However, the Ld CIT(A) has also confirmed the disallowance primarily on the basis of report of the investigation wing. Since the transactions are supported by proper documents and since they cannot be disbelieved based on the generalized report of the investigation wing, we are of the view that the disallowance confirmed by the Ld CIT(A) was not justified. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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