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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY
बनाम Vs. M/s. Aarem Management Services Pvt. Ltd., 1219, Maker Chamber-V, Nariman Point, Mumbai 400 021 PAN: AADCA-0716F ..... ��तवाद�/Respondent अपीलाथ� �वारा/Appellant by : Shri Sushil Kumar Mishra ��तवाद� �वारा/Respondent by : Ms. Shefali सुनवाई क� �त�थ/ Date of hearing : 01/04/2021 घोषणा क� �त�थ/ Date of pronouncement : 15/06/2021 आदेश/ ORDER
These two appeals by the Revenue are directed against the order of Commissioner of Income Tax (Appeals)-8 Mumbai [in short 'the CIT(A)’] , for the assessment year 2009-10 and 2010-11, respectively. Both the impugned orders are of even date i.e. 04/06/2019. Since, the grounds raised by Revenue in both the appeals are identical, these appeals are taken up together for adjudication and are decided by this common order.
(A.Y 2009-10) (A.Y 2010-11)
Shri Sushil Kumar Mishra representing the Department submitted that the CIT(A) has erred in allowing assessee’s claim of loss Rs.2,00,195/- arising out of client code modification. The ld. Departmental Representative submitted that the information was received by the Director Income Tax (Intelligence & Criminal Investigation), Mumbai that fictitious profit and losses were created by brokers by misusing client code modification facility. The assessee is one of the beneficiaries of such fictitious loss entry provided by M/s. Infinity.com Financial Securities Ltd. The Assessing Officer in assessment order has detailed the modus operandi of the brokers and thereafter made addition of Rs.2,00,195/- by disallowing assessee’s claim of loss. In First Appellate proceedings, the CIT(A) has deleted the addition without appreciating the fact that the assessee has failed to establish genuineness of the transaction. The assessee in connivance with the broker has misused client code modification facility to reduce taxable income by claiming fictitious loss.
Ms. Shefali appearing on behalf of the assessee submitted that the assessee is engaged in trading/investment of shares, securities mutual funds, etc. In the return of income for assessment year 2009-10, the assessee has declared total income of Rs.18,37,850/- . The assessment in the case of assessee was reopened only for the reason that the assessee has allegedly benefited from client code modification through a broker. The ld. Authorized Representative of the assessee submitted that a perusal of assessment order would show that the Assessing Officer has made general discussion on client code modification. In any case the assessee is not authorised to make client code modification, the modification can only be made by the broker. The assessee is not a broker. The Assessing Officer has not specified as to how the loss claimed by assessee on account of client code modification is fictitious and there is no finding as to whom profit has been transfered. The addition has been made by the Assessing Officer merely on assumptions without there being any (A.Y 2009-10) (A.Y 2010-11)
specific finding on assessee’s involvement in alleged transactions of client code modification. The assessee has explained that the client code modification was done due to punching error. The Assessing Officer without any valid reasons has rejected contentions of the assessee. The ld. Authorized Representative of the assessee relied on the decision in the case of Coronation Agro Industries vs. DCIT, 390 ITR 464 (Bom.) to contend that client code modification done by assessee’s broker on account of genuine error cannot be a ground to believe that there has been any escapement of income by the assessee. The ld. Authorized Representative of the assessee strongly supported the order of CIT(A) and prayed for dismissing appeal of the Revenue.
Both sides heard, orders of authorities below examined. The solitary issue raised by the Revenue in appeal is against relief granted by the CIT(A) in deleting addition of Rs.2,00,195/- on account of client code modification. A perusal of assessment order reveals that the Assessing Officer has disallowed assessee’s claim of loss of Rs.2,00,195/- arising out of client code modification purely on surmises and conjectures. In assessment order, the Assessing Officer has comprehensively given modus operandi of brokers in generating non-genuine losses by misusing code modification facility. However, the Assessing Officer has failed to establish link between the loss claimed by the assessee on account of client code modification and non-genuine client code modification practices adopted by the brokers. The Assessing Officer has not given any cogent reason to reject explanation offered by the assessee on loss resulting from client code modification. The Assessing Officer in entire assessment order has not named the broker who was instrumental in providing bogus client code modification entry to the assessee. It is not emanating from the assessment order whether any search/survey or any other investigative enquiry was made on the broker from whom it is alleged that the assessee has obtained fictitious entry of loss arising from client code modification. The observations made by the Assessing Officer are generic and not specific to the assessee. The CIT(A) has deleted addition inter alia for the reasons: the Assessing
(A.Y 2009-10) (A.Y 2010-11)
Officer has made addition in the absence of cogent evidence against the assessee and no adverse finding with regard to fictitious losses incurred and claimed by the assessee.
I concur with the findings of CIT(A). The impugned order warrants no interference, hence, the same is upheld and appeal of the Revenue is dismissed, sans-merit.
ITA No.5628/Mum/2019-A.Y. 2010-11:
Both sides are unanimous in stating that the facts germane to the grounds raised in appeal are identical to assessment year 2009-10.
Since, the issue raised in this appeal is identical to the one adjudicated in assessment year 2009-10 and the facts giving rise to grounds are identical, the findings given while deciding appeal of the Revenue in assessment year 2009-10 would mutatis mutandis apply to the present appeal. The present appeal of Revenue is dismissed for parity of reason.
To sum up, appeal of the Revenue for assessment year 2009-10 and 2010-11 are dismissed.
Order pronounced in the open Court on Tuesday, the 15th day of June, 2021.