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The Tax Publishers2020 TaxPub(DT) 3439 (Jp-Trib) INCOME TAX ACT, 1961
Section 147
Reopening of assessment merely relying on information emanated from investigation wing without independent examination by AO was quashed as invalid.
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Reassessment - Under section 147 - AO made addition on the basis information received from investigation wing that assessee was involved in shifting out ascertained profits to and shifting in ascertained losses by way of client code modification -
Assessee was engaged in trading in shares and securities as well as doing trading in derivative segment. AO received information from investigation wing regarding fictitious profits and losses created by some brokers by misusing client code modification facility in F&O segment on NSE. Accordingly, AO reopened assessment and made addition of Rs. 10,29,830 on account of shifting of profits and F&O trading in the garb of client code modification. Assessee challenged this.Held: AO referred to report of investigation wing and general modus operandi. However, there was nothing on record in terms of any independent examination by AO of transactions undertaken by assessee during the year wherein it had reported gross profits of Rs. 1,66,00,661, summoning and examining the broker, i.e., M/s. C.M. Goenka Stock Brokers Pvt. Ltd. and determining any involvement of assessee in such transactions. M/s. C.M. Goenka Stock Brokers Pvt. Ltd. had also confirmed that there were certain inadvertent genuine punching errors which were modified as per guidelines laid down by SEBI vide Circular, dated 6-2-2003, therefore, purching errors happened at the broker end and not at the end of assessee and there was nothing on record to suggest any involvement of assessee or the fact that such punching errors were done at the behest of assessee. Accordingly, AO was not justified in making addition.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
IN THE ITAT, JAIPUR BENCH
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