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2021 (4) TMI 817 - AT - Income Tax


Issues:
1. Jurisdiction of the CIT(A) in quashing the reassessment order passed by the AO.
2. Addition made by the AO on account of shifting of profit due to alleged share trading loss/transactions.
3. Charging of interest under section 234D of the Income Tax Act, 1961.

Jurisdiction of CIT(A) in Quashing Reassessment Order:
The appeal was filed against the order passed by CIT(A) for the assessment year 2010-11. The appellant contended that the reassessment order passed by the AO under sections 147/143(3) lacked jurisdiction and did not comply with the mandatory conditions of sections 147 to 151 of the Act. The appellant argued that the CIT(A) erred in not quashing the reassessment order. The tribunal noted that the appellant had claimed a loss in the return of income, and the Assessing Officer incorrectly found otherwise. The tribunal observed that the appellant was not aware of any Client Code Modification done by the broker and relied on the broker's statements for profit or loss incurred. The tribunal found no evidence implicating the appellant in any Client Code Modification to evade assessment. Additionally, M/s Century Finvest Pvt. Ltd. confirmed that no client code modification occurred in the appellant's account during the relevant financial year. Relying on legal precedents, the tribunal held that the CIT(A) was wrong in confirming the addition, and the appeal of the assessee was allowed.

Addition of Profit Due to Share Trading Loss:
The AO made an addition of ?1,75,600 on account of shifting of profit due to alleged share trading loss/transactions using client code modification. The appellant contended that the addition was made without providing all adverse material used against the assessee and without following principles of natural justice. The tribunal noted that the appellant had declared a loss in the return of income, and there was no evidence to suggest the appellant was involved in any profit-shifting activities. The tribunal found that the broker, not the appellant, was responsible for any Client Code Modification. The tribunal emphasized that the Assessing Officer and the Investigation wing failed to provide any evidence linking the appellant to profit-shifting through Client Code Modification. Relying on a relevant court decision, the tribunal held that the CIT(A) erred in confirming the addition, and the appeal was allowed.

Charging of Interest under Section 234D:
The appellant challenged the charging of interest under section 234D of the Income Tax Act, 1961. The tribunal did not provide detailed analysis or discussion on this issue in the judgment, indicating that this ground of appeal might not have been substantiated adequately or was deemed irrelevant based on the facts and circumstances presented. Consequently, the tribunal did not reverse the action of the AO in charging interest under section 234D.

In conclusion, the tribunal allowed the appeal of the assessee, setting aside the additions made by the AO and the CIT(A) regarding profit-shifting due to share trading loss/transactions through Client Code Modification. The tribunal emphasized the lack of evidence implicating the assessee in any wrongdoing and highlighted the reliance on broker statements for financial transactions. The judgment showcases the importance of proper assessment procedures and adherence to legal principles in tax matters.

 

 

 

 

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