TaxTMI 
TaxTMI 
2018 (4) TMI 1361
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.... is a sub-broker in shares. The Assessing Officer disallowed the claim on account of derivative transactions of Rs. 8,91,057/-. The Assessing Officer held that the assessee had entered into limited transactions and all the transaction in which the assessee entered into were transactions in which Client Code Modification (CCM), was made by the broker, through whom the transactions were affected. He held that the loss which were booked by the assessee were actually incurred by somebody else, but by changing the code subsequently, the broker transferred the loss to the assessee. The Assessing Officer gave a letter to the stock exchange for verification of the genuineness of the transactions. The stock exchange has confirmed that modifications ....
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...., bank statements evidencing cheque payments for all these transactions, payment of security transactions tax before the Assessing Officer. The National Stock Exchange has confirmed that these transactions have taken place in the exchange and in the name of the assessee. The issue that has to be adjudicated, is whether, when CCM is done to correct errors, it can be inferred that manipulation has been done by the assessee. 4.1. The Kolkata 'A' Bench of the Tribunal, in the case of M/s. Ratnabali Commodities vs. The Income Tax Officer, Ward-12(3), Kolkata, in ITA No. 787/Kol/2013, Assessment Year 2008-09, order dt. 30/08/2017, wherein at para 5 & 6, it has been held as follows:- "5. Heard rival submissions and perused the material availabl....
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....eding year. 7.1 From the foregoing discussion, we find that indeed the client's code and name were modified in respect of transactions claimed by assessee. However, on perusal of record. we find that the impugned transactions were carried out through banking channel and all the supporting evidence such as contract note, payment of STT were filed at the time of assessment proceedings. We also find that Ld. CIT(A) confirmed the order of AO on the basis of his guess-work as evident from his appellate order which is reproduced below:- "there is a possibility that the modifications might have been made to accommodate the appellant as the broker of the appellant was a sister concern. " Further the Id. CIT -A has observed in his order as....
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....rom the confirmation received from NSE. Therefore, the modifications in the client's name and code cannot justify the impugned loss as bogus. Thus, we conclude that the impugned addition has been made by the Authorities Below on the basis of surmise and conjecture which is not permissible in the eyes of law as held by the Hon'ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT Bihar and Orissa (1959) 159 ITR 289 (SC). Therefore, we hold that the impugned loss cannot be subject-matter of addition on the basis of suspicion. In this regard we also rely in the case of CIT vs. Kundan Investment Ltd. reported in 263 ITR 626 (Cal) where Hon'ble jurisdictional High Court has held:- "The Tribunal had found that all rele....