2022 (8) TMI 736

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....e learned CIT(A) erred in confirming the penalty of Rs. 4,16,455/- under section 271(1)(C) of the Income Tax Act, 1961, such penalty is requested to be deleted. Your appellant prays for leave to add, to alter and / or to amend the above ground before the final hearing of the appeal. Total tax effect Rs. 4,16,455/-" 3. The brief facts of the case are that the assessee in the present case is an individual and is engaged in the business of share trading. The AO in the present case received information from investigation wing Ahmadabad i.e. ADIT(inv), Unit-3 wherein it was found that the broker Mahipat Raichand Share Broker Pvt. Ltd., was engaged in client code modifications activity in various segments such as equity, derivatives etc. ....

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.... tax sought to be evaded comes to Rs, 12,49,365/-. I, therefore, levy minimum penalty of Rs,4,16,455/-, u/s. 271(l)(c) of the Act." 3.1 Thereafter, in appeal, Ld. CIT(A) also confirmed the penalty u/s 271(1)(c) of the Act imposed by Ld. Assessing Officer with the following observations: "6.6 Despite giving ample opportunities as mentioned in para 5 above, the appellant had not furnished any submission or documentary evidence in support of his claim. It clearly shows that the appellant had nothing to explain or submit as regard taking artificial loss from the broker Mahipat Raichand Share Broking Pvt. Ltd'. through Client Code Modification. In the assessment order as well as penalty order, the AO had specifically given findings that ....

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....that arises whether such client codes were modified at the instance of the assessee or there was some punching error at the end of the share broker. It is because the stock exchange permits the share broker to rectify the mistakes occurred while punching the data. If that be so, then there cannot be any fault which can be attributed to the assessee for the mistakes committed by the share broker. 15.3 Furthermore, the client code modifications give rise to the doubt/ suspicion which requires detailed investigations from the parties concerned to reveal the truth. Merely, there were client codes modifications carried out by the broker cannot the basis to draw an inference against the assessee. In fact, in the case of client code modificatio....