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TMI Blog2025 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... n both the appeals relates to deletion of additions made on account of Client Code Modification relating to commodity trading. 3. Briefly the facts, more or less common, in both the appeals are, the assessee is a resident corporate entity stated to be engaged in manufacturing and trading activities. For the assessment years under dispute, the assessee had filed its return of income under Section (u/s.) 139(1) of the Act, declaring income of Rs. 60,14,050/- and Rs. 2,84,14,510/- for the Assessment Years (A.Ys) 2012-13 and 2014-15 respectively. The returns filed for these assessment years were selected for scrutiny and assessments were completed u/s. 143(3) of the Act. Post completion of assessments as aforesaid, the Assessing Officer receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in AY 2014-15. Contesting the additions so made, assessee preferred appeal before learned First Appellate Authority. 5. After examining the contentions of the assessee in the context of facts and materials on record, learned First Appellate Authority found that all the transactions have taken place on NSEL platform. None of the transactions undertaken have resulted into losses and the income derived from such transactions have been offered to tax. On perusal of contract note, the purchase and sale transactions cannot be held to be non-genuine/bogus. Since, the assessee has offered the income from the disputed transactions there cannot be any escapement income. Assuming that client code modification was done by the broker there is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our notice the observations of the AO in the order passed u/s. 148A(d) of the Act for the AY 2013-14. 7. We have considered rival submissions and perused the materials on record. From the reasons recorded while reopening the assessments for both the years under consideration, it is the very clear that the basis of reopening is the report received from DDIT (Inv.) Wing which, in turn, is based on report of SFIO, which says that on an investigation conducted on NSEL, it was found that some brokers have made client code modification by using dummy/ghost client code to book trades commodities and later the client codes were modified. It is alleged, the investigation carried out by the SFIO found that no physical delivery goods took place at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the report with DGIT(Inv), Mumbai. In the report, the issue of client code modification has been discussed in cases of few brokers. During the course of investigation, the details of client code modification were called for from the NSEL and as per the data there are total 219 brokers who have made 51565 client code modification and the volume of sale and purchase transactions is 6311 crore. During the investigation, it is revealed that the brokers indulged in rampant client code modification where dummy/ghost client code were used to book trades and later the client codes were modified. The trading done in NSEL was in the form of paired contracts. The purchases and sales were executed on the same day. Contract note was received in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the working for net gain offered by the assessee is correct. Assessee has submitted documents like contract notes issued by Broker, Assessee company's own bank statement and ledger account of broker. From the documents submitted by the assessee it is verified that assessee has used its fund do the transaction at NSEL. Further, transactions made by the assessee are verified with the help of ledger account submitted by the assessee, contract noted issued by the broker and bank statement of assessee company. All the transactions reflected in ledger are matched with contract notes. Further with the help bank statements of assessee company it is verified that the sale proceed is deposited in the bank account of assessee which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L and offered the profit of Rs. 4,48,09,881 for taxation. There has been no specific allegation against the assessee company in the report of SFIO or DDIT(Inv) report. There has been no finding in the report that assessee's own fund has been brought back in the form of profits from the NSEL platform. Assessee with the help of documentary evidences has established that its own funds are utilized to conduct transactions on at NSEL platform. Since, assessee has already offered the profits earned form NSEL platform for taxation, I hold that there has been no escapement of income vis-à-vis transactions entered on NSEL platform. Therefore it is not a fit case for reopening. 8. In light of the above facts and on the basis of material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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