2023 (2) TMI 1057

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.... The assessment order passed is ab-initio void, inasmuch as, notice issued u/s 148 of the IT Act, 1961, was not issued in the manner prescribed vide section 151 of the IT Act, 1961. 4. The assessment order passed is ab-inito void, inasmuch as, while the notice u/s 148 of the IT Act, 1961, was issued by one officer reasons our recoreded by another officer. The order is also bad in law, inasmuch as it suffers from many anamolies. 5. The assessment order passed is ab-initio void in as much as same has been passed without providing any material/ documents/evidences based on which impugned addition of Rs.9,88,861/- has been made. 6. The assessment order passed making an addition of Rs. 9,88 861/-is ab-initio void, inasmuch as, inspite of specific request, no opportunity to cross examine the share broker was granted, based on whose alleged testimony impugned addition has been made. Thus the order under appeal suffers from the vice of non-observance of principles of natural justice. 7. The learned lower authorities have grossly erred in making/ upholding an addition of Rs.9,88,861/- to the returned income without bringing any material or evidence on rec....

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....trading amounting to Rs.4,231/- and added the same back to the income of the assessee and thereby framed the assessment under section 143(3) read with section 147 of the Act. 3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition made by the AO by dismissing the appeal filed by the assessee. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal. 4. I have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 5. Undisputedly the assessee has claimed a loss of Rs.9,84,630/- and profit of Rs.1,41,056/- during the year under assessment from the loss in share transaction. 6. It is also not in dispute that the assessee's original code was 11420. It is also not in dispute that as per investigation carried out by the ADIT(Inv.) client code of M/s. BP Equities Pvt. Ltd. are 27271, 27309 and 27311. 7. In the backdrop of the aforesaid ....

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....lly it was a punching error by the broker but the same was rectified by the broker by rectifying correct client code. It is also admitted fact on record that there is only one transaction entered into by the assessee through his broker M/s. BP Equities Pvt. Ltd. as mentioned at serial number 1 of the table extracted in the preceding paras and all other transactions mentioned in the table were found to be correct. 9. First of all the assessee challenged the reopening by the AO by raising additional grounds which are admitted being a purely legal ground on the ground that reason in this case was recorded by Mr. Sandeep Kumar Singh Income Tax Officer - 19(2)(3), Mumbai as available at Page 3 of the paper book whereas notice under section 148 of the Act as available at page 1 of the paper book was issued by Mr. Nilesh Talkar, Income Tax Officer wherein he has specifically mentioned that he has reason to believe that assessee's income chargeable to tax for the assessment year 2010-11 has escaped assessment within the meaning of section 147 of the Act. Furthermore the assessee has demanded the statement of M/s. BP Equities Pvt. Ltd. on the basis of which entire case/reopening has been....

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....ing out non genuine profits and losses by misusing the client code modification in F&O segment. Merely on the basis of this information the AO hurriedly proceeded to reopen the assessment which is not sustainable in the eyes of law. 13. Identical issue as to the reopening on the basis of client code modification has been decided by the co-ordinate Bench of the Tribunal in case of M/s. Stratagem Portfolio (P.) Ltd. vs. Dy. CIT in ITA No.7878/Del./2019 in favour of the assessee by returning following findings: "5.4 On perusal of the above reasons, it is evident that the material suggests that client code modification has been carried out by the broker in the case of the assessee. According to the information available in the reasons recorded, client code modification is allowed to the brokers by the stock exchange, within a limited window of time after business hours, for rectification of any mistakes in punching of the client code while carrying out transaction of purchase and sale on behalf of the customers. The Learned Assessing Officer, however has alleged in the reasons recorded that client code modification has been done for shifting of the profit or loss by the ass....