SANJAY AIREN HUF,INDORE vs. ITO 3(1), INDORE
What did the Tribunal hold?
The Tribunal found that the reopening of the assessment was valid as there was information from SEBI indicating escapement of income and the assessee was given due opportunity. However, regarding the addition for alleged profit and loss shifted by client code modification, the Tribunal found the impact to be less than 1% and no evidence of deliberate modification, directing the deletion of the addition.
What were the facts?
The assessee's case was reopened based on a SEBI report alleging the shifting of a loss. The Assessing Officer made an addition of Rs. 11,65,887/- treating it as a shifted loss, which was upheld by the CIT(A).
What were the issues?
Whether the reopening of assessment was valid and whether the addition made on account of alleged profit and loss shifted by client code modification was justified.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE SMC BENCH, INDORE
Before: SHRI KUL BHARAT
आदेश / O R D E R
This appeal by the assessee is directed against order of the CIT(A)-I, Indore dated 19.4.2018 pertaining to the assessment year 2009-10. The assessee has raised following grounds of appeal:
[ Sanjay Airen HUF, Indore]
The facts in brief are that the case of the assessee was reopened on the basis of a report by the SEBI that the [ Sanjay Airen HUF, Indore] assessee had shifted a loss of Rs.10,89,467/-. The A.O. did not accept explanation of the assessee and made addition of Rs.11,65,887/- treating the same as loss shifted by the assessee.
3. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions and the material on record dismissed the appeal. Now the assessee is in appeal before this Tribunal.
Ground Nos.1 & 2 are against legality and violation of principles of natural justice. Ld. Counsel for the assessee submitted that there was no material to suggest that income has escaped assessment. Further, he submitted that the assessee was not given sufficient opportunity to represent his case.
Ld. D.R. opposed these submissions and submitted that the information received from the SEBI was sufficient
[ Sanjay Airen HUF, Indore] to form an opinion that the income has escaped assessment. Therefore, the assessment was validly reopened. There is no illegality into the reopening of the assessment. Ld. D.R. further submitted that from the report, it is evident that assessee was given sufficient opportunity to represent his case.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. So far the question of legality reopening is concerned, the assessing officer has information regarding escapement of income in the form of the SEBI report. Further, we find that the assessing officer as well as the Ld. CIT(A) has given due opportunity. The assessee was even allowed file explanation during the course of assessment. Therefore, both the grounds in assessee’s appeal are devoid of merit and the same are rejected. 4
[ Sanjay Airen HUF, Indore]
Ground No.3 is against making addition in respect of alleged profit and loss shifted by client code modification.
Ld. Counsel for the assessee reiterated the submissions as made in the written synopsis. The synopsis of the assessee is as under:
[ Sanjay Airen HUF, Indore]
[ Sanjay Airen HUF, Indore]
Per contra Ld. DR opposed the submissions of the Ld. Counsel for the assessee and supported the order of the authorities below.
We have heard the rival contentions. We find force into the contention that the impact by modification of client code is lesser than 1%. Moreover, the assessing officer has not brought anything on record suggesting that the client code was deliberately modified to shift the profit and loss.
Under these facts, we hereby direct the Assessing Officer to delete the addition. This ground of assessee’s appeal is allowed.
The appeal filed by the assessee is partly allowed.
Order was pronounced in the open court on 13 .03.2019.
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