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Facts
The assessee appealed against orders of the CIT(A) for AY 2010-11 & 2011-12, concerning additions made by the AO for alleged contrived losses through client code modification. The assessee admitted fault for non-participation in hearings but argued that the AO's case was based on surmises and the investigation report was not confronted.
Held
The Tribunal held that while the assessee was at fault for not participating in hearings, the CIT(A) had not correctly appreciated the facts and had confirmed additions without confronting adverse materials. Therefore, the issue was restored to the CIT(A) for fresh adjudication.
Key Issues
Whether the additions made by the AO and confirmed by CIT(A) are valid when the assessee was not confronted with the material relied upon and whether the CIT(A) erred in dismissing the appeal for non-prosecution without considering the merits.
Sections Cited
250, 148, 143(3), 147, 156
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
ORDER PER ANNAPURNA GUPTA, AM: Both appeals relate to the same assessee and are against separate orders passed by the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi both dated 28.04.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2010-11 & 2011-12.
& 1080/Ahd/2025 [Maruti Brokerage House Pvt. Ltd. vs. ITO] A.Ys. 2010-11 & 2011-12 - 2 – 2. Issues involved in both the appeals are same and they were taken up together for hearing and are being disposed of by this common order for the sake of convenience.
For the sake of convenience we shall be dealing with the appeal of the assessee in and our decision rendered therein will apply pari passu to the other appeal of the assessee.
ITA No.1079/Ahd/2025 A.Y 2010-11
The grounds raised by the assessee are as under:
“01. Notice issued u/s 148 dated. 30.03.2017 is bad in law for want of acquiring valid jurisdiction and consequently re-assessment order passed u/s 143(3) r.w.s 147 dated. 18.12.2017 along with demand notice issued u/s 156 dated. 18.12.2017 are equally bad in law.
Ld. CIT(A) erred in law and on facts in dismissing the appeal of the appellant for non-prosecution and thereby erred in confirming addition of Rs. 82,26,525/- made by assessing officer to returned income without appreciating facts and law the case properly.
3. Ld. CIT(A) erred in law and on facts in confirming finding of the assessing officer that appellant has obtained contrived loss through client code modification and thereby reduce the profits of the business.
4. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.”
5. At the outset itself, Ld. Counsel for the assessee stated that the order passed by the Ld. CIT(A) was without hearing the assessee, though he admitted that the assessee was at fault in not participating in the hearing. He stated that in both the years the assessee was found to have booked contrived losses by mis- & 1080/Ahd/2025 [Maruti Brokerage House Pvt. Ltd. vs. ITO] A.Ys. 2010-11 & 2011-12 - 3 – utilising the NMCE platform through client code modification. The quantum of loss, he pointed out, disallowed in A.Y. 2010-11 amounting to Rs.82,26,525/- and in A.Y. 2011-12, amounting to Rs.22,71,615/-. Ld. Counsel for the assessee contended that the assessee had a good case against the aforestated addition made to its income, since, the entire case of the Revenue was based merely on surmises and conjunctures with no direct evidence in their possession against the assessee. He drew our attention to the assessment order passed in both the years pointing out that the addition had been made relying merely on a report of investigation conducted by the Investigation Wing of the Department revealing brokers to have indulged in client code modification so as to benefit assessee who required profits to be shifted so as to avoid payment of taxes. Ld. Counsel for the assessee contended that the said report was not confronted to the assessee. He pointed out that the assessee, on the other hand, had discharged onus of proving genuineness of the transactions entered into by it. He, therefore, pleaded that the assessee be granted one more opportunity of hearing before the Ld. CIT(A).
6. We have considered the pleadings of the Ld. Counsel for the assessee. The assessee admittedly has given no plausible reason for not participating in the proceedings before the Ld. CIT(A) though ample opportunity of hearing was given to it. However, the Ld. Counsel for the assessee has demonstrated that while confirming the order of the AO, the Ld. CIT(A) has not correctly appreciated the facts of the case and has not considered the fact & 1080/Ahd/2025 [Maruti Brokerage House Pvt. Ltd. vs. ITO] A.Ys. 2010-11 & 2011-12 - 4 – that the addition was made in its case without confronting all adverse materials available with the department pertaining to the assessee having availed the benefit of CCM from brokers for shifting the profits earned by it on sale of share in the F&O segment. In the light of the same, we consider it fit to restore the issue back to the Ld. CIT(A) to adjudicate it afresh after giving due opportunity of hearing to the assessee. The assessee is directed not to abuse the trust imposed on it and participate in the hearing before the Ld. CIT(A). In the light of the above, both the appeals of the assessee are allowed for statistical purposes.
In the result, both appeals filed by the assessee are allowed for statistical purposes.
This Order pronounced on 17/10/2025
Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 17/10/2025 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,