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TMI Blog2020 (2) TMI 1455X X X X Extracts X X X X X X X X Extracts X X X X ..... cer 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 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. - Decided in favour of assessee. - ITA No. 7003/MUM/2018 - - - Dated:- 28-2-2020 - SHRI RAJESH KUMAR AND SHRI RAM LAL NEGI, JJ. Appellant by : Shri Gaurav Kabra (AR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of statement of trading and copy of Form No. 10-DB. The AO made addition of ₹ 80,83,149/- on account of income obtained through CCM u/s 68 of the Act and ₹ 1,65,205/- as unproved expenditure and determined the total income of the assessee at ₹ 83,92,300/-. In the first appeal, the Ld. CIT (A) dismissed the appeal and upheld the action of the AO. 3. The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- 1. On the facts and circumstances of the case as well as in law, the Learned CIT (A) has erred in confirming the action of the Learned Assessing Officer in reopening the case u/s 147 of the Income Tax Act, 1961, without considering the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income. The Ld. counsel further submitted that the material available with the AO was that there was a client code modification done by the assessee s broker but there was no link to conclude that it was done to escape assessment of a part of its income. The Ld. counsel placing reliance on the judgment of the Hon ble Bombay High Court in the case of M/s Coronation Agro Industries Ltd. vs. DCIT in Writ Petition No. 2627 of 2016, submitted that the Hon ble High Court has dealt with the identical issue and held that the reasons recorded by the AO appears to be a case of reason to suspect and not reason to belief that the income chargeable to tax has escaped assessment. The Ld. counsel further pointed out that even on merits this issue is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit to other clients. As per the information received by the DIT (I CI), Mumbai from NSE, Client Code Modification (CCM) data for F.Y. 2009-10, and the CCM transactions received from NSE were further analysed and the mapping of data was done to ascertain the exact amount of fictitious profits/losses in each case. On detailed analysis by the DIT (I CI), Mumbai, it was established that the brokers has misused client code modification facility and created non-genuine losses and profits. These losses and profits were given to different clients/beneficiaries according to their requirement. The clients have taken fictitious losses to set off against their profits with a view to reduce their tax liability. Some of the Client have confirmed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961. The impugned notice seeks to reopen the assessment for Assessment Year 2009-10. The regular assessment proceedings were completed on 28th December, 2011 under Section 143 (3) of the Act. 3. The reasons in support of the impugned notice relies upon the information received from the Principal Director of Income Tax that the petitioner has benefitted from a client code modification by which a profit of ₹ 22.50 lakhs was shifted out by the petitioner s broker resulting in reduction of the petitioner s taxable income. The only basis for forming the belief is the report from the Principal Director of Income Tax and the application of mind to the report of the Assessing Officer along with the record available w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew, prima facie, 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. 8. The legal ground raised by the assessee is covered by the ratio laid down by the Hon ble High Court discussed above. As per the law laid down by the Hon ble Court, the material available with the AO was not sufficient to form a belief that income chargeable to tax has escaped assessment. Hence, respectfully following the ratio laid down by the Hon ble Court, we hold that the notice issued by the AO is bad in law. Since we have held the notice issued by the AO as without jurisdiction, the appellate proceedings has also become bad in law. Hence, we allow this ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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