JIGNYA DHANESH PADHYA,MUMBAI vs. ITO-33(2)(1), MUMBAI

O R D E R

PER PAVAN KUMAR GADALE JM:

1. Ex-Parte Order -Violation of principle of natural justice. 1On the facts and circumstance of the case, National Faceless Appeal Centre erred in dismissing the appeal without deciding the issue under appeal on merits.

Jignya Dhanesh Padhya, Mumbai. - 2 - 2 On the facts and circumstance of the case, National Faceless Appeal Centre failed to appreciate that though the assessee has not submitted the submission or attended in response to notice, National Faceless Appeal Centre ought to have decided on merits in accordance with law.

Without prejudice to the above, II. Addition of Rs.16,13,733/- as non-genuine losses shifted by using CCM (Client Code Modification)

4The Learned National Faceless Appeal Centre erred in confirming the addition of Rs.16,13,733/- on the basis of information received from the Investigation Wing stating that the Assessee by using CCM facility obtained accommodation entries and shifted non genuine losses, without appreciating the fact that the appellant has not Jignya Dhanesh Padhya, Mumbai. - 3 - claimed and loss in the computation of income, hence the addition is on notional basis and may be directed to be deleted.

5 The Learned National Faceless Appeal Centre failed to appreciate that, the Appellant has neither received any benefits nor gain due to client code modification by broker, hence addition cannot be made on notional basis in the hands of appellant.

III Addition u/s. 69C as Unexplained Expenditure of Rs.16.137/- as Commission paid for CCM (Client Code Modification)

6. The National Faceless Appeal Centre erred in confirming the estimated addition of Rs.16,137/- as unexplained expenditure for alleged commission paid, on the basis of information received from the DDIT (Inv.) stating that 1% value of the 16,13,733/- has been charged for shifting losses on F&O transaction, without appreciating the facts that appellant has not done any transaction. Hence, addition of Rs.16,137/- may be directed to be deleted IV. Natural Justice

Jignya Dhanesh Padhya, Mumbai. - 4 -

2. The brief facts of the case are that the assessee is engaged in the business. The Assessing Officer(AO) has received the information from the ADIT (Investigation), Ahmadabad that the assessee was engaged in obtaining loss in client code modification facility in sale and purchase of securities and derivates after the trades are conducted and is the beneficiary. The Assessing Officer(AO) has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act. The assessee has filed a letter dated 13.07.2016 to treat the return of income filed as due compliance. Subsequently the A.O has issued notice u/s 143(2) and 142(1) of the Act. In compliance to the notice, the assessee has filed the details. The AO has considered the submissions of the assessee and has dealt on the facts with respect to client code modification (CCM) facility and modus operandi of the transcations. Further the AO has issued a show cause notice stating that the non genuine loss was shifted to client code modification facility and the explanation were called, but there was no compliance

Jignya Dhanesh Padhya, Mumbai. - 5 - and therefore the AO has made addition of Rs.16,13,733/-. Similarly the A.O has estimated expenditure @ 1% on the disputed amount which worked out to Rs.16,137/- and assessed the total income of Rs.19,57,470/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 15.12.2016.

3. Aggrieved by the order the assessee has filed an appeal with the CIT(A). The CIT(A) considered the grounds of appeal and findings of the AO but there was no compliance to the notices and has confirmed the action of the AO and dismissed the assessee appeal. Aggrieved by the order the assessee has filed an appeal before the Tribunal.

4. At the time of hearing the Ld. AR submitted that the CIT(A) has erred in confirming the addition by the AO overlooking the factual information filed in the assessement proceedings. Further the Ld.AR submitted that the assessee has a good case on merits and has filed an application for admission of the additional evidence under Rule 29 of ITAT rules. Per contra, the Ld.DR submitted that the transactions were not Jignya Dhanesh Padhya, Mumbai. - 6 - established with evidences before the lower authorities and the Ld. DR supported the order of the CIT(A).