ASHARI AGENCIES LTD,GHAZIABAD vs. DCIT, CIRCLE-1, GHAZIABAD

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ITA 7958/DEL/2018Status: DisposedITAT Delhi23 November 2022AY 2009-104 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision that the Assessing Officer was justified in making the addition. The Tribunal found no reason to interfere with the order, considering the evidence of fictitious losses through client code modification.

What were the facts?

The assessee reported a business loss, but the revenue received information about tax evasion through client code modification. Investigations revealed the assessee obtained fictitious losses of Rs. 10,92,899/- through a broker by modifying client codes for share transactions.

What were the issues?

The validity of reassessment proceedings and whether the addition of Rs. 10,92,899/- as fictitious losses was justified based on client code modification.

Which sections of the Income-tax Act were involved?

Section 133A,Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI

Before: Sh. C. N. PrasadDr. B. R. R. Kumar

Hearing: 12.09.2022Pronounced: 23.11.2022

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the assessee against the order of ld. CIT(A), Muzaffarnagar dated 14.09.2018.

2.

The notices issued by the Tribunal have returned with the remarks that “no such person in the address”. It is the responsibility of the assessee to inform the postal authorities with regard to the change of address and also to notify the Tribunal about the new address. Since, the assessee fail to do so, the matter is decided to be adjudicated based on the facts available on record.

3. Following grounds have been raised by the assessee:

1. That the Ld. CIT(A) erred both on facts and in law in holding that the re-assessment proceedings u/s 147/148 of I.T. Act are valid, when the conditions

2 Ashari Agencies Ltd. present for invoking these provisions were totally lacking in the present case.

2. That the addition of Rs. 1092899 is wrong, as no income was escaped assessment and the addition deserves to be deleted.

3.

That the business loss incurred was a genuine loss on the facts and should have been allowed.

4. That the addition made is bad as no opportunity was given to rebut the case of the broker, which forms the basis of the addition.”

4.

The assessee filed original return of income on 24.08.2009 declaring total business loss of Rs. 51,50,042/-. Information was received from Assistant Director of Income Tax (Investigation), Unit-1(3), Ahmadabad, regarding tax evasion through Client Code Modification during F.Y. 2008-09 pertaining to A.Y. 2009-10. The report gave not only the name of the beneficiaries, which also included the name of the assessee, it also provided detailed modus operandi of creating fictitious loses and gains.

5.

The ADIT(Investigation), Ahmadabad has carried out investigation in the case of 12 brokers and as a result of investigation, it has been found that the assessee has obtained fictitious losses of Rs. 10,92,899/- through M/s Composite Securities Limited by modification of client code in dealing with shares. The AO after considering the said information and confronting the specific details to the assessee has inferred that the assessee has misused the client code modification and has got fictitious losses of Rs. 10,92,899/- and has made the addition accordingly. The ld. AR during the appellate proceedings before the ld. CIT(A) has argued that the addition

3 Ashari Agencies Ltd. made by the AO was without any basis and no cross- examination has been allowed by the AO. It was stated that the transactions in future derivatives have been carried out only from 20.03.2009 to 26.03.2009, therefore, such loss has occurred during the month of March only. Before the ld. CIT(A), the ld. AR has argued that there was no relation of Smt. Uma Agarwal with the assessee, in whose name transactions have been initially carried out in the Exchange by the broker but subsequently modified in the name of the assessee.

6.

It is noted that the assessee has got losses of Rs. 10,92,899/- through M/s Composite Securities Ltd. (Broker) in FY 2008-09. These losses have occurred on account of 19 transactions carried out in the last week of March, 2009 through the Exchange. The all 19 transactions have been initially carried out through the Exchange in the name of Smt. Uma Agarwal but later the client code was modified and name of the assessee was entered by the broker as a client. It is also relevant that on all such 19 instances, losses have occurred. Not even a single- transaction has resulted into profit from transaction in the securities. The specific information relevant to the assessee has been confronted by the revenue to the assessee. The modus operandi has been unearthed during the Survey u/s 133A of the Act conducted by the Investigation Wing, Ahmadabad. These observations when seen in totality and by following the principle of preponderance of probability corroborate the inference of the AO that the assessee has received fictitious losses as above through the misuse of client code modification.

4 Ashari Agencies Ltd. 7. In view of the facts and discussion as above, the ld. CIT(A) held that the AO was justified in making addition ofRs.10,92,899/-. Having gone through the record before us, in the absence of any material contra, we find no reason to interfere with the order of the ld. CIT(A).

8.

In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 23/11/2022.

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