TaxTMI 
TaxTMI 
2021 (2) TMI 935
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....nts. For the assessment years under dispute the assessees, in regular course, have filed the return of income as per section 139(1) of the Act. Returns filed by the assessees were initially processed u/s 143(1) of the Act. Subsequently, the Assessing Officer vide letter dated 11.03.2016 received information from DDIT (Inv.), Ahmedabad that certain assessee's were engaged in tax evasion through client code modification and the assessee is one of them. On the basis of such information Assessing Officer reopened the assessments u/s 147 of the Act. Ultimately, the Assessing officer completed the assessments u/s 143 (3) r.w.s. 147 of the Act making addition of various amounts and also computed commission income at 2%. Accordingly, the additions were made at the hands of the assessee. Though, the assessee challenged the assessment orders before learned Commissioner (Appeals) both on the validity of reopening of assessment u/s 147 of the Act as well as merits of the additions. Further, the learned Commissioner (Appeals) did not find merit in the grounds raised. Accordingly, he dismissed the appeals filed by the assessee. 4. The learned Counsel for the assessee drawing my attention to t....
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.... by some brokers by misusing the client code modification facility in F&O segment on NSF during the FY. 2008-09. The brokers were alleged to be indulging in transferring the fictitious losses to different clients to reduce their tax liability and also fictitious profit to other clients. As per the information received by the DDIT (Inv), Ahmedabad from NSF, Client code Modification (CCM) data for A.Y. 2009-10 and the CCM transactions received from NSF were further analyzed and the mapping of data was done to ascertain the exact amount of fictitious profit/losses in each case. On detailed analysts by the DDIT (Inv.), Unit-1(3), Ahmedabad, it was established that the brokers has misused client code modification facility and created nongenuine losses and profits. These losses and profits were given to different clients/beneficiaries according to their requirement. The clients have taken fictitious losses to set off against their profits with a view to reduce their tax liability. Some of the Client have confirmed that they hove misused the facility of client code modification in order to create fictitious losses/profits. They have committed that they have received commission at the rote....
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....he client code modification facility in F&O segment on NSE during March, 2010. The brokers were alleged to be indulging in transferring the fictitious losses to different clients to reduce their tax liability and also fictitious profit to other clients. As per the information received by the DIT (I&CI), Mumbai from NSE, Client Code Modification (CCM) data for F.Y. 2009-10, and the CCM transactions received from NSE were further analysed and the mapping of data was done to ascertain the exact amount of fictitious profits/losses in each case. On detailed analysis by the DIT (I & CI), Mumbai, it was established that the brokers has misused client code modification facility and created non-genuine losses and profits. These losses and profits were given to different clients/beneficiaries according to their requirement. The clients have taken fictitious losses to set off against their profits with a view to reduce their tax liability. Some of the Client have confirmed that they have misused the facility of client code modification in order to create fictitious losses/profits. They have admitted that they have received commission at the rate varying from 0.5% upto 2% on the amount of loss....
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....fficer passed the order in regular assessment proceedings. 4. We note that the reasons in support of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and/ or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the Assessing Officer to come to reasons do not indicate the basis for the Assessing Officer to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine error, originally occurred while punching the trade. The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income. Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment. 5. In the above view, prima facie, we are of the view that the impugned notice is....