TaxTMI 
TaxTMI 
2025 (3) TMI 1949
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....n relation to the quantum assessment proceedings, whereas the second appeal relates to penalty levied by the Assessing Officer for concealment of income/furnishing of inaccurate particulars of income. 2. First, we take up the appeal of the assessee in ITA No. 541/Mum/2025. The relevant grounds raised are reproduced as under: 1. "Whether on the fact and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 99,26,115/- made u/s 68 of the Income tax Act by the AO on account of profit through client code modification?" 2. "Whether on the fact and in the circumstances of the case and in law. the Ld. CIT(A) erred in allowing the carry forward of losses to the assessee holding the ea....
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....e assessment was completed treating the amount of Rs. 99,26,115/- as unexplained cash credit along with addition for the commission paid to brokers @ 2% for arranging the CCM transaction amounting to Rs. 1,98,522/- in the assessment order passed. On further appeal, the Ld. CIT(A) deleted the addition observing as under : "7. Ground No.1 to 4: All these grounds are raised against the action of the A.O in making an addition of Rs. 99,26,115 by treating the profit earned from F&O transactions as fictious profit on account of Client Code Modification(CCM) and treating the same as unexplained cash credits. 7.1 From the assessment order it is seen the assessment was reopened on the basis of the information received from the DGIT....
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....ut by the assessee were in fact manipulated by using the modality of CCM. There are no material facts which have been brought on record by the A.O to prove that the broker had changed the client code at the directions of the appellant in any of the transactions on the F&O segment. I am in agreement with the appellant that in the case of CCM, there has to be active involvement and connivance of multiple clients spearheaded by the broker since the fictitious profit is required to be shifted from one client to another. And that in this case there is nothing on record to show that the appellant along with other clients, masterminded by the broker were actively involved in the practice of shifting the profit or loss from one to the other for the....
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....CM to earn these profits in contradiction to the conclusions in the assessment order is accepted. 7.3 For the aforementioned reasons, it is held that that the transactions in the F&O segment of Rs 99,26,115/- were carried out by the assessee in the regular course and hence the addition of this amount by the A.O is deleted. The carried forward of losses is also required to be allowed to the appellant in accordance with law holding the earning of profits to be genuine. The Grounds of Appeal are Allowed." 4. We have heard rival submissions of the parties and perused the relevant materials on record. The Assessing Officer made addition of Rs. 99,26,115/- treating the profit earned from the Future & Options transaction as fictitious ....