9911796707
TMI Blog2021 (1) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... t'). 2. The grounds of appeal filed by the Revenue read as under : 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made on account of suppression of profit made by way client code modification amounting to Rs. 1,60,53,332/-. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made without appreciating the fact that the stock broker who carried out the client code modification was a group concern of the assessee and therefore the contention that there occurred a punching error in large scale entering the trade is remote. 3. Briefly stated, the facts of the case are that the assessee filed its return of income for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) v. M/s Pat Commodity Services P. Ltd. (I.T.A. Nos. 3498 and 3499/Mum/2012) deleted the addition of Rs. 1,60,53,332/- made by the AO. 5. Before us, the Ld. Departmental Representative (DR) submits that the AO has rightly made an addition of Rs. 1,60,53,332/- on the basis of information received from the Director of Income Tax (I&CR), Mumbai that fictitious profits and losses were created by some brokers by misusing the client code modification facility in F&O segment on NSE during March 2010 and the assessee was one of the beneficiaries of such fictitious losses. Thus the Ld. DR submits that the order passed by the AO be restored. 6. On the other hand, the Ld. counsel for the assessee submits that the assessee is assessed to tax for ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has met each and every point raised by the assessing officer. The Ld CIT(A) has pointed out that the AO has not brought on record any material to show that the client code modification made by the assessee was not genuine one. It was further noticed that none of the clients examined by the tax authorities has disowned the transactions carried on by the assessee. As noticed by the Ld CIT(A), the MCX, the stock exchange, is very much aware about client code modifications and hence in order to discourage frequency of modifications, it has brought in penalty mechanism. Even under the penalty mechanism also, no penalty shall be leviable if the modification was less than 1% of the total transactions, meaning thereby, the MCX is also accepting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has carried out the transactions on behalf of its clients only. Such kind of transactions shall usually be sporadic transactions, where as in the instant case, the clients have carried out the transactions continuously. Further, it is pertinent to note that none of the clients, with whom the assessing officer has carried out the examination, has disowned the transactions. Further, all the clients have duly disclosed the profits arising from the transactions as their respective income. Though the AO has alleged that the said profits have been used to set off the past brought forward losses, yet the Ld CIT(A) has made a detailed analysis of this matter and has given a clear finding that the same was not true in all the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding amount equivalent to the amount of profit claimed to have been shifted to the clients. The AO has mainly relied upon the report given by the MCX and has drawn adverse conclusions without bringing any material to support his view. 15. The Ld CIT(A) has also pointed out that modifications carried out by the assessee works out to around 3% of the total transactions only and in our view, the said volume, in fact, vindicates the explanation of the assessee. Further none of the clients has been found to be bogus and all of them have complied with KYC norms, meaning thereby the identity of all the clients stand proved. None of them has disowned the transactions and all of them have also declared the income in their respective returns of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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