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TMI Blog2019 (12) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... the broker was all through regular channels and was at the rates as prescribed by the stock exchange. AO failed to also note these punching errors occurred in seriatim only in the month of January of that year whereas the assessee's trading in share transactions was spread over the entire year. The fact that the error which occurred could be the product of a novice's mistake at the broker's end has been completely lost sight of by the AO. Commissioner (Appeals) while deciding the issue was overtaken by the decision of the Apex Court in SEBI vs. Rakhi Trading Pvt. Ltd. [ 2018 (2) TMI 580 - SUPREME COURT] . CIT(A) in his enthusiasm to apply the ratio of the case appears to have overlooked the indispensible conditions spelt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 (in short Act ). Subsequently, information was received from the office of the Pr. Director of Income Tax (Inv.), Ahmedabad that some brokers were diverting profits/losses through adopting Client Code Modification facility. The case of the assessee was reopened u/s. 147 of the Act and the notice u/s. 148 of the Act was issued on 15.03.2017 to the assessee. The AO passed the order u/s. 147/143(3) of the Act on 14.12.2017, assessing the total income at ₹ 34,24,510/- after addition of ₹ 2,31,804/- on account of accommodation entry. Aggrieved by the aforesaid assessment order, the assessee has filed the appeal before the Ld. CIT(A), who vide his impugned order dated 16.10.2018 has dismissed the appeal of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. It is noted that the Assessing Officer, while carrying out reassessment, did not even pause to consider as to what activities were pursued by the Company. He was obsessed to give effect to a report admittedly received by him from the DI (Investigation), Ahmedabad in respect of Client Code Modification cases in some share transactions. The Assessing Officer listed the modus operandi of cases generally involved in Client Code Modification cases. Thereafter he states that the assessee in response to a query raised by him he had no knowledge of the Client Code Modification for he had no access to the change/modification of codes. The Assessing Officer also issued notices to the broker of the assessee M/s OJ Financial Services Ltd who sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2,31,804/-. While doing so, the reasons stated by the Assessing Officer are as under:- 4.3 I have considered and examined the reply filed by the assessee, and the same is not found to be acceptable for following reasons:- i. Specific information was received' from the office of DGIT (Inv.) describing modus operandi of the brokers misusing client code modification facility which clearly established that the assessee has reduced its taxable income through misuse of CCM; ii. On the basis of analysis of data received, following patterns/features were noticed; a. Trades have been modified to unrelated parties indicating that they are non-genuine; b. Most of CCM was done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the AO in taxing the income sought to be shifted out using the route of client code modification is valid and hence the addition of ₹ 2,31,804/- is sustained. The ground of appeal is ruled against the appellant. 5.4 Before doing so the Ld. CIT(A) cited the following Para from the judgement and order of the Apex Court:- Conclusion - 46 - Considering the reversal transactions, quantity, price and time and sale, parties being persistent in number of such trade transactions with huge price variations, it will be too naive to held that the transactions are through screen-based trading and hence anonymous. Such conclusion would be over-looking prior meeting of minds involving synchronisation of buy and sell ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in this case CCM had not been done in the last two months of the year as opined by him. The corrections as effected in the CCMs were of a most nominal amount of ₹ 2 Lakhs plus which could not lie in the realm of manipulation. The broker of the assessee on enquiry had confirmed that the modifications were all genuine. The Assessing officer had not found any evidence of any under-hand commission having been paid to the broker for manipulations. Whatever was paid to the broker was all through regular channels and was at the rates as prescribed by the stock exchange. The Assessing Officer failed to also note these punching errors occurred in seriatim only in the month of January of that year whereas the assessee's trading in share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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