9911796707
TMI Blog2016 (8) TMI 1488X X X X Extracts X X X X X X X X Extracts X X X X ..... mere presumption or suspicion. It is not the case of the Revenue that such alleged profit has actually been received by the assessee. In view of the totality of the above facts, we do not find any justification to interfere with the order of the CIT(A) in this regard and the same is sustained - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... have been transferred from one client to another i.e. purchase of losses/reduced profits. AO has erred in facts and in law in coming to the conclusion that there is a suppression of profits by adopting the methodology of Client Code modifications. 5. AO has erred in facts and in law and not accepting the references of the following details, which are very important in the appeal matter. During the Assessment proceedings CA Shri Ashok Gupta has drawn the attention of respected AO that Siddhi Beverages was Proprietorship concern of Smt. Meenaben Parikh upto 07.11.2005 and w.e.f 08.11.2005, it is a partnership firm having two partners namely Meena Parikh and Jay M. Parikh. AO-Deputy Commissioner of Income Tax Circle-1 Ahmedabad has assessed Smt. Meenaben Parikh for A.Y. 2006- 07 (F.Y.2005-06). Deputy C.I.T, Central Circle-l(l) Ahmedabad vide his order dt.29.12.2011 for A.Y.2006-07, In case of Smt. Meena Parikh, have added ₹ 3167986/-, addition on an account of suppressed profit. Smt. Meena Parikh has preferred an Appeal to C.I.T.(A)-1 Ahmedabad. C.I.T (A) vide his order dt. 18.01.2011 has deleted the addition of ₹ 3167986/- on account of suppressed profit. This facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of ITAT Rules, 1963 but the prayer in the grounds raised be treated as the effective ground. She further submitted that assessee does not wish to press ground No.2 with respect to challenging the assessment order framed u/s.153C r.w.s. 153A of the Act and therefore the ground No.2 be treated as not pressed. In view of AR's submission, Ground No.2 is dismissed as not pressed. 3.1. We now proceed to dispose of other ground of assessee. 3.2. AO noticed that the proprietorship-firm Siddhi Beverages (Proprietor Meenaben M.Parikh) was converted into partnership-firm w.e.f. 08/11/2005 with Meenaben M.Parikh and Shri Jay Markand Parikh as its partners with profit sharing ratio of 60% and 40% respectively. It was noticed that assessee was engaged in commodity transactions through its broker Kunwarji Commodity Brokers Pvt.Ltd. AO noted that discreet enquiries conducted by Investigation Wing revealed that M/s.Kunwarji Commodity Brokers Pvt.Ltd. (KCBPL) had done client code modification for an unusually very high number of times with malafide intention and for the purpose of transferring the profits/losses from one client to another. AO noted that Meenaben Parikh, Proprietor of Siddhi Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted in this case also. The appellant has also argued that the Assessing Officer has not considered communications made by M/s.KCBPL. The arguments put forth by the appellant have been examined in detail and have been found to be devoid of any meritorious consideration. 6.2. The appellate order bearing number CIT(A)-I/CC.1(1)/301/2009/10 dated 12.01.2011 of CIT(A)-1, Ahmedabad have been examined. It has been noted that while deleting the additions made by DCIT Circle-1(1) Ahmedabad, Learned CIT(A)-1, Ahmedabad has placed reliance on his own order passed in the case of KCBPL. A perusal of the said order shows that learned CIT(A)-1, Ahmedabad has based his findings, inter alia, upon following:- * the mismatch has been worked out by the Assessing Officer only on account of assumption of notional profit being embedded in client code modifications. * the profits accrued to the clients match with the books of accounts * the number of client code modifications is minuscule when compared with total transactions undertaken by the broker * a large number of planned code modifications were actually done by clients of KCBPL themselves * that the commodity exchanges permit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal before us. 5. Before us, Ld.AR reiterated the submissions made before AO and ld.CIT(A) and further submitted that the issue is covered in favour of assessee by the decision of Coordinate Bench (ITAT "A" Bench Ahmedabad) in assessees' case (M/s.Kunvarji Finance Pvt.Ltd. & Others), order dated 19/03/2015. On the other hand, ld.Sr.DR supported the orders of the AO & ld.CIT(A). 6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to addition on account of suppressed income due to client code modifications. We find that the Coordinate Bench of Tribunal in a consolidated order dated 19/03/2015 in the case of Kunvarji Finance Pvt.Ltd. in IT(ss)A Nos.615 to 618/Ahd/2010 for AYs 2005-06 to 2008-09 & Others (where the assessee by way of IT(SS)A No.301/Ahd/2011 for AY 2006-07 was also one of the party), had decided the issue in favour of assessee by holding as under:- "8. We have carefully considered the arguments of both the sides and perused the material placed before us. The Assessing Officer believed the client code modification to be malafide because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ensure strict compliance." From the above, it is evident that client code modification is permitted intra-day, i.e. on the same day. As per Commodity Exchange, if client code modification is upto 1% of the total orders, there is no penalty and if it is greater than 1% but less than 5%, the penalty is ₹ 500/-. If it is greater than 5% but less than 10%, penalty is ₹ 1000/- and if it is greater than 10%, then penalty is ₹ 10,000/-. From the above, the only inference that can be drawn is that as per MCX, the client code modification upto 1% is absolutely normal and therefore, the broker is permitted to modify the client code upto 1% without paying any penalty. Even client code modification upto 5% is not considered unusually high because that is also permitted with the token penalty of ₹ 500/-. In the context of the circular issued by Commodity Exchange, let us examine whether the client code modification done by the broker i.e. KCBPL is unusually high. At page No.16 on paragraph No.4.3, the CIT(A) has given the number of transactions entered into by the assessee for the period 2004-05 to 2007-08 and the number of client code modification and percentage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the assessee. 11. The ld. CIT(A) in paragraph 4.13 of his order has also recorded the findings that "all transactions at the Commodities Exchanges have been duly accounted in the books of account maintained by the concerned parties. Such profits/loss has been duly accounted whenever the transactions have been closed. Thus, whatever profits have been generated or accounting of actual trade, have been offered and brought to the charge of tax in the cases of concerned assessees." These findings of fact recorded by the ld. CIT(A) has not been controverted by the Revenue at the time of hearing before us. When the transaction has been duly accounted for and the profit/loss has accrued to the concerned parties in whose names transactions have been closed, there cannot be any basis or justification for considering those profit/loss in the case of the assessee on the basis of mere presumption or suspicion. It is not the case of the Revenue that such alleged profit has actually been received by the assessee. In view of the totality of the above facts, we do not find any justification to interfere with the order of the CIT(A) in this regard and the same is sustained; and Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
