2019 (11) TMI 918 - AT - Income Tax

Reopening of assessment u/s 147 - rejection of claim of loss suffered by the assessee due to modification of Client Code by the stock broker - HELD THAT - As rightly submitted by assessee, on the basis of the information said to be received by the AO with regard to fictitious claim of loss by misusing the modification of Client Code facility offered by the Stock Exchange, the Assessing Officer reopened the assessment. Therefore, this Tribunal is of the considered opinion that the assessment has been validly reopened by the Assessing Officer. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Merit of the claim of disallowance made by the Assessing Officer, as rightly submitted by the Ld.counsel for the assessee, the transaction was made with M/s Inventure Growth Securities Ltd. by the assessee. In the list received by the Assessing Officer, the assessee s name is also found to be one of the beneficiaries who claimed bogus fictitious loss due to Client Code modification. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer as decided by this Tribunal in the case of Late Ugama Kavar 2019 (7) TMI 1536 - ITAT CHENNAI - Thus set aside to the file of the Assessing Officer. Appeal filed by the assessee is partly allowed.

Summary

Issues involved: Delay in filing appeal, reopening of assessment under Section 147, rejection of loss claim due to Client Code modification.

Delay in filing appeal: The appellant filed a petition for condonation of delay of 28 days in filing the appeal. The Tribunal found sufficient cause for the delay and admitted the appeal.

Reopening of assessment under Section 147: The appellant, a trader in shares, challenged the reopening of assessment under Section 147 of the Income-tax Act. The Assessing Officer reopened the assessment based on information received regarding the misuse of Client Code modification facility by brokers. The Tribunal upheld the validity of the assessment reopening, citing the information received by the Assessing Officer.

Rejection of loss claim due to Client Code modification: The appellant's claim of loss was disallowed by the Assessing Officer due to alleged misuse of the Client Code modification facility by the stock broker. The Tribunal decided that the matter needed re-examination, similar to a previous case, and remitted the issue back to the Assessing Officer for further review. The Assessing Officer was directed to re-examine the matter in accordance with the law and provide a reasonable opportunity to the assessee for presenting their case.

In conclusion, the appeal was partly allowed, with the Tribunal confirming the validity of the assessment reopening but remitting the issue of the loss claim back to the Assessing Officer for further examination.