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2022 (12) TMI 1006

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....ny to other clients is unjust, illegal, arbitrary, illusory & uncalled for. 4. The action of the CIT(A) in not accepting the explanations given by the appellant company and the broker company M/s Narayan Securities Limited regarding the transactions of Rs. 24,19,643/- and adding the same to the income of the appellant company is unjust, illegal, arbitrary, illusory & uncalled for. 5. Appellant craves leave to add, alter, modify or delete any ground of appeal either before or at the time of hearing of the appeal." 2. At the time of hearing no one attended the proceedings on behalf of the assessee. It is seen from the record that no one has been attending the proceedings on behalf of the assessee since 21.01.2021. Various notices of hearing sent to the assessee at the address provided in form no. 36 have been returned unserved with the postal remarks "not known". The assessee has not provided any other address to the Registry. Therefore, the appeal is taken up for hearing in the absence of the assessee and is being decided on the basis of material available on record. 3. Facts of the case are that the case of the assessee was reopened for assessment u/s 147 of the income-tax....

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....ereas in a case where the initial assessment order is under section 143(3), and it is sought to be reopened within four years from the expiry of the relevant assessment year, the AO has to base his 'reasons to believe' that income has escaped assessment on some fresh tangible material that provides the nexus or link to the formation of such belief. In a case where the initial return is processed under section 143(1) of the Act and an intimation is sent to the assessee, the reopening of such assessment no doubt requires the AO to form reasons to believe that income has escaped assessment, but such reasons do not require any fresh tangible material. The Hon'ble Court have further held that w'here reopening is sought of an assessment in a .situation where the initial return is processed under section 143(1), the AO can form reasons to believe that income has escaped assessment by examining the very' return and/or the documents accompanying the return. It is not necessary' in such a case for the AO to come across some fresh tangible material to form 'reasons to believe' that income has escaped assessment. It has also been observed that the first proviso to secti....

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....ation. Since these grounds of appeal are interlinked, these are being adjudicated together. 4.2.1 The AO after a detailed discussion on the modus operandi relating to client code modification and the facts of the case and also based on the transactions entered into by the appellant held that profit of Rs. 24,19,643/- had been shifted out by the assessee and the same was added back to the total income of the assessee. The appellant has submitted that the client code modification entries were punched and by the broker and tire assessee has no hold over the entries. It has also been submitted that lio addition can be made just because a transaction appeared through client code modification entered by the broker unless there is some other evidence that the assessee was responsible for tire entry which is resulting in the reduction of profits. 4.2.2 I have considered the assessment order and the submissions of the appellant. It is noticed that prima facie, copies of all documents have been submitted to substantiate the genuineness of transactions related to client code modification. I find that these documents were also placed before the AO. From the details submitted by the appel....

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....portant facts are noted. First is that many of the transactions out of the 451 transactions involving client code modification are with a few parties who also are parties related to the appellant and/or represent a specific group. For instance, transactions have been entered into with Guardian Portfolio Consultants (P) Ltd and.Panchsheel Securities (P) Ltd where the director is Shri Ashish Saraf who also happens to be the Director of the appellant company and also with Ashish Saraf F1UF. Sandeep Saraf also appears to be a related party'. Similarly, transactions involving cLient code modification were entered into with Dalip Daga & Sons HUF (Karta Dalip Daga) and Srirnad Fiscal Sen ices (P) Ltd (Director Dalip Daga) which form one specific group of parties. Another set of people who appear to be related parties with whom such transactions were entered into are at serial Nos. 8 to 10 and 11 to 13 of the above table. From further analysis of data, it is noted that in the month of February, 2009, out of the 106 transactions, 44 transactions pertain to Kunjbihari Kasat HUF, Nalini Chandrakant Kasat and Ramakant Ramniwas Kasat. From this it is apparent that the transactions entered i....