|The Tax Publishers2021 TaxPub(DT) 0598 (Mum-Trib)
INCOME TAX ACT, 1961
Where CIT(A) had pointed out that modifications carried out by the assessee works out to around 3% of the total transactions only and the said volume, in fact, vindicates the explanation of the assessee, further none of the clients was found to be bogus and all of them have complied with KYC norms, meaning thereby, the identity of all the clients stand proved, therefore, AO was directed to delete the addition made.
Accounting method - Suppression of profit made by way of client code modification - Estimation of income -
On the basis of information received from the Director of Income Tax that fictitious profits and losses were created by some brokers by misusing the client code modification facility in F&O Segment on National Stock Exchange (NSE) and that one of the beneficiaries was assessee having taken a loss, AO reopened assessment by issuing notice under section 148. During course of assessment proceedings, the assessee filed a copy of its ledger account, contract note and bank statement reflecting payment and receipt transactions with the stock broker M/s T. AO made an addition on account of bogus loss. Held: As decided in M/S Pat Commodity Services (P) Ltd. [ITA Nos. 3498 & 3499/Mum/2012 : 2015 TaxPub(DT) 3553 (Mum-Trib)] AO mainly relied upon the report given by MCX and had drawn adverse conclusions without bringing any material to support his view. CIT(A) has also pointed out that modifications carried out by the assessee works out to around 3% of the total transactions only and the said volume, in fact, vindicates explanation of assessee. Further, none of the clients was 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 income. Therefore, AO was directed to delete the addition made.
Followed:Asstt. CIT v. Amar Mukesh Shah (2016) 46 ITR (Ahd-Trib) 234 : 2016 TaxPub(DT) 1262 (Ahd-Trib).
FAVOUR : In assessee's favour.
A.Y. : 2010-11
IN THE ITAT, MUMBAI BENCH
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