TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 1041
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....ly the case was reopened by recording the reasons by the assessing officer. In the reasons recorded, assessing officer referred to the information received from Director of Income Tax- Investigation, Ahmedabad and informed the assessee that assessee has made fictitious profit and loss by creating/misusing client code modification. The brokers were alleged to indulging in transferring the fictitious losses to different clients to reduce the tax liability and also fictitious profits to the client. AO informed the assessee that it has taken fictitious loss of Rs. 1,51,93,791/- to set off the profit to reduce the taxability and it has taken fictitious losses with the help of the broker. Therefore the income is escaped within the meaning of section 147 of the Act. 3. Subsequently notice under section 148 of the Act was issued and served on the assessee on 29.03.2016. In response, assessee submitted that the return of income filed by the assessee on 29.08.2009 to be considered as return of income filed in response to notice under section 148 of the Act. The assessee also requested the AO to provide reasons for reopening the assessment, Accordingly the same was provided to the assessee. ....
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....een that both NSE and BSE closely monitor the transactions undertaken by the Brokers and penalised them if there is substantial alteration in the client code. In the assessment order the AO has produced the trade analysis and held that the appellant had availed fictitious loss using client code modification facility. However, the AO has not brought any evidence in support of the same. 4.2.4 The information received from the investigation wing was the lead which required further in-depth investigation by the AO to arrive at the logical conclusion. It was not to be taken as the final report of tax evasion figures which the AO only had to collect. The AO in the assessment order has also not brought out any specific evidence from which it can be concluded that the modification in the appellant's client code was done with the mala fide intention. The addition is made solely on the basis of suspicion and presumptions of the AO that the appellant has assailed fictitious losses. Suspicion, however strong cannot take the form of evidence. The appellant has also referred to various judicial pronouncements wherein under the similar facts judicial authorities have deleted similar additio....
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....hereby Allowed. 5. Aggrieved with the above order, revenue is in appeal raising following grounds of appeal, which is reproduced below: 1. "Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,51,93,791/- without considering the fact that although modification of client code is in the hands of the broker and not the assessee, but the broker would only carry out transactions as directed by his clients." 2. "Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the assessee would have colluded with the broker to book the bogus losses which are not allowable as per Income Tax Act." The appellant prays that the order of the CIT(Appeals) on the above grounds be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary. 6. Against the appeal of the revenue, assessee also filed application under rule 27 of the ITAT rules 1963 and accordingly raised following issues during the course of hearing before us. The issue raised by the assessee are reproduced below: In this c....
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.... reopening of the assessment. He submitted that the reasons recorded by the assessing officer is general and there is no direct finding by the investigation wing and also by the assessing officer in his order that assessee has involved anyway in the client code modification. He placed on record that the reopening of the assessment is bad in law by relying on the case Coronation Agro Industries Ltd vs DCIT (2017) 390 ITR 464 (Bombay) and ITA No. 3498, 3499/Mumbai/2012. 9. In the rejoinder, learned DR submitted that the assessment was reopened with the proper approval of the higher authority and assessing officer has followed proper procedure in reopening of the assessment and he supported the findings of the Ld CIT(A) in this regard. 10. Considered the rival submissions and material placed on record. Since the main appeal is by the revenue, therefore we will first decide on the merit of the case. We notice that assessee is dealing in the business of investment/trading in shares, stocks, securities, commodities, finance and finance instruments. During this year, assessee has recorded a loss in F&O transaction to the extent of Rs. 1,51,93,791/- and the assessing officer came to know....