TaxTMI 
TaxTMI 
2019 (12) TMI 491
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....ogus loss on account of CCM. 2. The action being arbitrary, erroneous and unlawful must be quashed with directions for appropriate relief. 3. The assessee craves leave to add, amend or otherwise alter the ground of appeal. 2. The brief facts of the case are that the assessee filed its e-return of income on 28.9.2010 for the AY 2010-11declaring income of Rs. 31,92,710/-. The return of the assessee was processed u/s. 143(1) of the Income Tax Act, 1961 (in short "Act"). Subsequently, information was received from the office of the Pr. Director of Income Tax (Inv.), Ahmedabad that some brokers were diverting profits/losses through adopting Client Code Modification facility. The case of the assessee was reopened u/s. 147 of ....
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....92,710/- which was processed u/s 143(1) of the Act. Later on, proceedings u/s 147/148 of the Income-tax Act, 1961 ('the Act') were taken in this case which culminated in a reassessment in terms of the order dated 14.12.2017 causing an enhancement of income of Rs. 2,31,804/-. Against such action an appeal was filed before the Ld. CIT(A), New Delhi who confirmed the addition as made in the reassessment order. It is noted that the Assessing Officer, while carrying out reassessment, did not even pause to consider as to what activities were pursued by the Company. He was obsessed to give effect to a report admittedly received by him from the DI (Investigation), Ahmedabad in respect of Client Code Modification cases in some share transact....
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.... any action taken independently by the broker been intimated or communicated to the assessee company. As such, we state that the client mode modification facility, if any, must have been used by the broker to rectify the genuine mistakes/errors as per the SEBI guidelines." 5.2 The Assessing Officer thereafter summarised his findings and concluded the assessment by making an addition of Rs. 2,31,804/-. While doing so, the reasons stated by the Assessing Officer are as under:- "4.3 I have considered and examined the reply filed by the assessee, and the same is not found to be acceptable for following reasons:- i. Specific information was received' from the office of DGIT (Inv.) describing modus operandi of the brokers....
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.... trading as required to fit into the scheme of things of a taxpayer. The investigation wing has detected the same by way of a survey. I have considered the facts as above and also the submission of the appellant and also perused the order. The jurisprudence referred to by the Ld. AR is distinguishable on the facts of the case. The material relied upon by the AO in taxing the income sought to be shifted out using the route of client code modification is valid and hence the addition of Rs. 2,31,804/- is sustained. The ground of appeal is ruled against the appellant." 5.4 Before doing so the Ld. CIT(A) cited the following Para from the judgement and order of the Apex Court:- "Conclusion - 46 - Considering the reversal transactions,....
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....(Inv), Ahmedabad and the case laws on the subject. Both of them failed to note even the basic facts of the subject case. The Assessing Officer failed to note that there was no information from the DI (Inv) with regard either to the assessee or his broker having indulged in any objectionable transaction. He also failed to note that in this case CCM had not been done in the last two months of the year as opined by him. The corrections as effected in the CCMs were of a most nominal amount of Rs. 2 Lakhs plus which could not lie in the realm of manipulation. The broker of the assessee on enquiry had confirmed that the modifications were all genuine. The Assessing officer had not found any evidence of any under-hand commission having been paid t....