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TMI Blog2019 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... , originally occurred while punching the trade. The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income. Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment. We are of the view that the impugned notice is without jurisdiction as it lacks reason to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee. - ITA NO. 1664/MUM/2018 - - - Dated:- 3-12-2019 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest u/s 234D amounting to ₹ 22,623/-. 3. Apropos issue of reopening. The Assessing Officer s observation on reasons for reopening are as under :- Assessee e-filed its return of Income on 29.09.2010 declaring total loss at Rs(-) 4,831/-. Subsequently, the case was re-opened u/s 147 of the I.T. Act after taking due approval of the Higher Authorities and accordingly notice under section 148 of the Act dated 30.03.2016 was issued after recording reasons for re-opening as under :- This office is in receipt of information from ADIT Unit-1(3), Ahmedabad that the assessee has benefitted from Client Code Modification ( CCM ) whereby the Profit is either shifted out or the Loss is shifted in resulting in to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trades are conducted. While it is legally permitted to rectify inadvertent errors in punching order, such modification have also been misused for manipulative activities in the market. SEBI conducted a probe into Modification of client codes by brokers, pursuant to observations by the Finance Ministry about many such modifications taking place in derivatives transactions at the National Stock Exchange during 2010. The survey report provided by the ADIT(Inv) unit 1(3), Ahmedabad on the basis of data received from National Stock Exchange (NSE) contains elaborate details of the same. After analysis of data received from NSE and after considering the contention of brokers, it has been concluded that CCM has been us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts necessary for its assessment for A.Y. 2010-11 within the meaning of Sec 147 of Income-tax Act, 1961. Accordingly, notice u/s 148 dated 30.03.2016 was issued and truly served upon the assessee. In response to this notice, the assessee filed a letter dated 06.04.2016 requesting to treat its e-return of income filed u/s 139(1) of Income-tax Act, 1961 on 22.09.2010 as return filed in response to notice u/s 148 of the Act. Subsequently, the assessee was provided vide this office letter dated 08.06.2016 the reasons recorded for reopening of the assessment proceedings u/s 148 of the Act. 4. Upon assessee s appeal, learned CIT(A) upheld the Assessing Officer s action by holding as under :- I have considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the stage of issue of notice, only question is whether there was relevant material on which the AO could have formed requisite belief. In case of M/s. Coronation Agro Industries Ltd. v/s DCIT 6(2)(1), as brought out by the Hon'ble Bombay High Court, the A.O did not have the requisite information like date of transaction, nature of transaction and detail of counter party. However, in the case of appellant, the A.O. possessed the nature and details of transaction. Other details can be extracted by using available information. Therefore the A.O is within jurisdiction and acted in accordance with the provisions of the I.T. Act. This ground of appeal is therefore dismissed. 5. Against this order, assessee is in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed the order in regular assessment proceedings. 4. We note that the reasons in support of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and /or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the Assessing Officer to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine error, originally occurred while punching the trade. The material available is that there is a client code mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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