HASMUKHBHAI JAGJIVANRAM CHAUDHARI,AHMEDABAD vs. THE DY.CIT, CIRCLE-2(1)(1), AHMEDABAD

As per the note of the Registry, there is a delay of 43 days in filing the present appeal. A separate application for condonation of delay has

The assessee in this appeal is aggrieved by the action of the CIT(A) in confirming the addition made by the Assessing Officer (in short “the AO”) by disallowing loss incurred in F&O transaction alleging Client Code Modification (CCM). The AO observed that the broker of the assessee was involved in Client Code Modification to distribute bogus profit/losses among its clients. He observed that the assessee was the beneficiary of the loss of Rs. 35,30,468/- in respect of F&O Transactions through Client Code Modification by his broker, which means that the broker had diverted the losses of some other client into the accounts of the assessee by mentioning wrong code. The AO held that the aforesaid loss shown by the assessee was bogus and disallowed the same and added the said amount into the income of the assessee.

Before the Ld. CIT(A) the assessee furnished certain additional evidences to show that the assessee was not beneficiary of bogus loss of Rs. 35.30 lakhs. The assessee furnished confirmation from his broker and submitted that the loss shown by the assessee from F&O transaction was amounting to Rs. 1.92 lakhs only due to the alleged Client Code Modification. The Ld. CIT(A) called for Remand Report from the AO in this respect. In the meantime, there was a change in the procedure for hearing of appeals and the physical hearing was substituted with faceless/online hearing. The assessee out of abundant caution again filed an application for admission of additional evidences, which, in fact, stood already admitted by the Ld. CIT(A). However, this time, in

Being aggrieved by the said order of the CIT(A), the assessee has come up in appeal before us.

At the outset, the Ld. Counsel for the assessee has submitted that the additional evidences furnished during physical hearing before the Ld. CIT(A) were already admitted and a Remand Report was called for. He has further placed reliance upon Page 21 to 23 of the Paper Book, which is the copy of the Remand Report of the AO on the additional evidences furnished by the assessee. The assessee has submitted that as per the said Remand Report, the alleged loss was of Rs. 1.92 lakh only on account of alleged Client Code Modification by the broker and not of Rs. 35,00,000/-. However, the AO in the conclusion part of the Remand Report has mentioned that it was not a case of bona fide error in mentioning client code rather, the Client Code Modification was done by the broker intentionally to allocate profit/losses of one client to the other client as per their need.

After hearing the Ld. Representative of the parties, we are of the view that the matter needs to be examined at the end of the AO. The AO will duly consider the evidences furnished by the assessee, the Remand Report thereof of the AO and other details and will pass a speaking order on the issue. Accordingly, the order of the CIT(A) is set-aside. The matter is restored to the file of the AO for decision afresh.