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TMI Blog2023 (2) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... be re-opened on the basis of reasons recorded that client code modification has been done for shifting of profit and loss by the assessee particularly when there is no material on record that such client code modification was done with malafide purpose of shifting of profit to evade the tax nor any such material was there before the AO. Initiation of reopening proceedings u/s 147/148 are bad in law and the subsequent assessment order framed by the AO is not sustainable in the eyes of law, hence ordered to be quashed without entering into the merits of the case and consequently impugned order passed by the CIT(A) is set aside. Decided in favour of asseessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... nge (NSE) and the assessee is one of the beneficiaries of the said client code modification, reopening proceedings were initiated against the assessee by invoking the provisions contained under section 147/148 of the Act. In response to the notice issued under section 148 of the Act the assessee opted that original return of income filed by her maybe treated as reply to the notice under section 148 of the Act. Reasons recorded were supplied to the assessee, notices under section 143(2) and 142(1) were served upon the assessee. It is brought on record by way of investigation and verification by ADIT (Inv.) that some of the brokers have confirmed that they have misused the facility of client code modification in order to create fictitious losses and profits resulting into tax evasion and they have been receiving commission at the rate of 0.5% to 2% on the amount of losses/profits transferred to their clients. It has also come on record that M/s. BP Equities Pvt. Ltd. provided a loss in share transactions of Rs.9,84,630/- and profit of Rs.1,41,056/- to the assessee. Declining the contentions raised by the assessee the Assessing Officer (AO) proceeded to hold that original code was 114 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SHARMILA PRAMODKU MAR JAIN ACYPJ45 48E PTC 28-JAN-10 11420 BP EQUITIES PRIVATE LIMITED MAYURI AJAY SHAH AAJPS1897A 27309 SHARMILA PRAMODKU MAR JAIN ACYPJ4548E SUZLON 28-JAN-10 11420 BP EQUITIES PRIVATE LIMITED MAYURI AJAY SHAH AAJPS1897A 27311 HASUMATI SHASHIKANTJHAVERI AADPJ0268Q TATAMOTORS 25-MAR-10 11420 BP EQUITIES PRIVATE LIMITED MAYURI AJAY SHAH AAJPS1897A 27311 HASUMATI SHASHIKANTJHAVERI AADPJ0268Q BANKNIFTY 29-APR-10 FINAL_DT BQTY BTOTAL SQTY STOTAL BASE_EQUIVALENT BASE_VALUE NET_ P_ L F.Y. 14-JAN-'10 , 2500 284875 2500 285500 2500 285500 625 2009-10 23-DEC-09 2350 267195 2350 271307.5 2350 271307.5 4112.5 2009-10 23-DEC-09 3000 257100 3000 260250 3000 260250 3150 2009-10 26-FEB-10 2550 1733660 2550 1817512.5 2550 1817512.5 83852.5 2009-10 26-MAR-10 500 4706895 500 4756212.5 500 4756212. 5 49317.5 2009-10 141058 8. It was categoric case of the assessee in reply to the show cause notice issued by the AO that loss of Rs.9,51,762/- claimed by the assessee is a genuine loss incurred by the assessee. Initially it was a punching error by the broker but the same was rectified by the broker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investigation agency to reach the conclusion that in case of assessee client code modification has been carried out by M/s. BP Equities Pvt. Ltd. is not there before the AO to apply his mind as already pointed out in the preceding para. Reasons were recorded by some different persons and notice under section 148 was issued by some other person. All these facts go to prove that the AO has no material whatsoever to form his opinion to carry out the re-opening. Even reasons recorded are undated which shows that the entire exercise as to reopening the assessment was carried out in a mechanical manner without applying his mind. 12. Honourable Bombay High Court in case of Pr. CIT vs. Shodiman Investments (P.) Ltd. by deciding the identical issue held that "reopening notice has to be issued by the AO on his own satisfaction and not on borrowed satisfaction". Here in this case it is proved on record that the AO was having no material whatsoever before him except the information sent by DIT(Inv.) by recording the fact that certain brokers, one such broker is M/s. BP Equities Pvt. Ltd., were carrying out non genuine profits and losses by misusing the client code modification in F&O segm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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