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TMI Blog2022 (12) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has raised following grounds of appeal: "1. The action of the Assessing officer in initiating proceedings u/s 147 and issuing notice u/s 148 based on information of DIT Ahmedabad is unjust, illegal, arbitrary, illusory & may directed to be quashed. 2. The action of the Assessing officer in making an addition of Rs. 24,19,643/- by treating as profit of company shifted to clients is unjust, illegal, arbitrary, illusory & uncalled for. 3. That his action in treating the transactions of Rs. 24,19,643/- entered into through clients code modification as deliberate and planned shifting of profits of appellant company to other clients is unjust, illegal, arbitrary, illusory & uncalled for. 4. The action of the CIT(A) in not accepting the explanations given by the appellant company and the broker company M/s Narayan Securities Limited regarding the transactions of Rs. 24,19,643/- and adding the same to the income of the appellant company is unjust, illegal, arbitrary, illusory & uncalled for. 5. Appellant craves leave to add, alter, modify or delete any ground of appeal either before or at the time of hearing of the appeal." 2. At the time of hearing no one att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 148 after analysing the details of information received with the information is available in the return of income (pages 10 to 16 of the paper book). 4.1.2 It is an admitted fact that the return filed earlier was merely processed under section 143(1). In the case of Indu Lata Rangwala vs DC1T [(2016) 384 ITR 337 (Delhi)], the Hon'ble Delhi High Court have held that where initial return of income is processed under section 143(1), it is not necessary' in such a case for the AO to come across some fresh tangible material to form 'reasons to believe' that income has escaped assessment. It has also been held that whereas in a case where the initial assessment order is under section 143(3), and it is sought to be reopened within four years from the expiry of the relevant assessment year, the AO has to base his 'reasons to believe' that income has escaped assessment on some fresh tangible material that provides the nexus or link to the formation of such belief. In a case where the initial return is processed under section 143(1) of the Act and an intimation is sent to the assessee, the reopening of such assessment no doubt requires the AO to form reasons to beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated based on the information received from DIT (Investigation), Ahmedabad. From the reasons recorded for issue of notice under section 148 (pages 14 to 16 of the paper book) it is seen that the said notice was issued only after analysing the details as given in thp information. In view of the discussion above, the facts of the case and the position of law, it is held that there is no infirmity in the initiation of reassessment proceedings. Ground of appeal NLo. 1 is dismissed. 4.2 Grounds of appeal Nos. 2, 3 and 4 challenge the addition of Rs. 24,19,643/- on account of transactions entered into through client code modification. Since these grounds of appeal are interlinked, these are being adjudicated together. 4.2.1 The AO after a detailed discussion on the modus operandi relating to client code modification and the facts of the case and also based on the transactions entered into by the appellant held that profit of Rs. 24,19,643/- had been shifted out by the assessee and the same was added back to the total income of the assessee. The appellant has submitted that the client code modification entries were punched and by the broker and tire assessee has no hold over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Samir Hemendrakumar Popat SU334 39. Pratiksha Samir popat SU345 40. Amitkumar Shreebhagwan Mor D79 41. Prabhu Dayal Agarwal SU273 42. Rajnikant Mohanbhai Kathrotiya SU348 43. Mohanbhai Ramjibhai kathrotiya SU351 44. Sanjaybhai Jerambhai Viramgama SU60 45. Anjuben babulal Agrawal SU282 46. Shravan Kumar Basantilal Agarwal SU284 47. Rupesh Kumar Gupta SU354 48. Agarwal Anilkumar Basantilal Su283 49. Radhey Shyam Gupta SU357 50. Manju Anil Bansal SU312 4.2.3 On perusal of all the facts and details of the parties with whom the client code was modified, two important facts are noted. First is that many of the transactions out of the 451 transactions involving client code modification are with a few parties who also are parties related to the appellant and/or represent a specific group. For instance, transactions have been entered into with Guardian Portfolio Consultants (P) Ltd and.Panchsheel Securities (P) Ltd where the director is Shri Ashish Saraf who also happens to be the Director of the appellant company and also with Ashish Saraf F1UF. Sandeep Saraf also appears to be a related party'. Similarly, transactions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s more than one digit has been changed and, in some cases, the entire code has been changed with numbers being added to the code. For instance, "NC" (the original code) has been changed to "BK", "CAG23", "CDP11", "SU202", "CDD07", "CDH04", etc. This is a clear indication that the code was not wrongly typed and that it has been completely replaced. Further, since more than one digit has been changed in all the transactions as noted above, it is a clear indication that it was a deliberate change. 4.2.5 From the facts as noted above it is seen that the client code has been changed with a few clients which pertain to groups which are apparently related to each other and in one case related to the appellant also cannot be a mere coincidence. Such transactions cannot be held to be genuine as they fail the test of human probabilities. 4.2.6 In view of the discussion above and the facts of the case, the addition made is upheld. Grounds of appeal Nos. 2, 3 and 4 are dismissed." 6. The above finding of the learned CIT(Appeals) is not rebutted by the assessee by placing any contrary material on record. Therefore, I ..... 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