DHARMISHTHABEN SHAILESHBHAI PATEL,AHMEDABAD vs. THE ITO, WARD-3(3)(6), AHMEDABAD

The brief facts of the case are that assessee is engaged in the share broking business and dealing in various segments of the National Stock Exchange (NSE). During the course of assessment proceedings, the Assessing Officer found that the assessee had resorted to client code modifications (CCM) in multiple segments, specifically in the F&O (Futures and Options) segment. Upon investigation, the Assessing Officer observed that the data from the NSE showed that the assessee modified client codes systematically with the intention of avoiding taxes. This was done by shifting profits and losses between clients with a view to avoid payment of taxes. A detailed analysis by the Assessing Officer showed that the majority of client code modifications were done by the assessee between December 2008 and March 2009, particularly in the last quarter of the financial year. The Assessing Officer noted that CCMs were done deliberately by the assessee more particularly in the months of February and March with a view to manipulate profits and losses. This pattern was also consistent with the findings from the Securities and Exchange Board of India (SEBI) in its own investigation. The Assessing Officer noted that the CCMs were not due to errors but were carefully planned by the assessee, to shift profits from one client to another and to shift losses to the assessee’s account. The Assessing Officer noted that a significant loss of ₹15,11,253/- was transferred by the assessee from his clients accounts, through these CCM manipulations to his own account. These manipulations were carried out with a view to allow the assessee to reduce his taxable income artificially. Therefore, the Assessing Officer held that these modifications were not done to correct any errors but were used as a tool to evade taxes. The Assessing Officer also observed that the assessee also failed to provide evidence that the income reported was its true income, and the adjustments were likely made after netting off the artificial losses. Accordingly, the sum of ₹15,11,253/-, being the loss booked by the assessee, was treated as income of the assessee by the Assessing - 3– Officer, and the total income was revised to ₹19,30,810/- after adding the artificial losses back to the income of the assessee.

In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee, with the following observations:

Before us, the counsel for the assessee submitted that Ld. CIT(Appeals) while passing the appellate order has dismissed the appeal of the assessee on ex-parte basis by passing a non-speaking order, without taking into consideration the detailed statement of facts and the grounds of appeal raised by the assessee. The counsel for the assessee submitted that Ld. CIT(Appeals) has dismissed the appeal of the assessee, without considering the merits of the assessee’s arguments and without giving any opportunity for a hearing to the assessee. Accordingly, it was requested that the matter may be restored to the file of Ld. CIT(Appeals) to pass appropriate orders, after giving due opportunity of hearing to the assessee.

On going to the facts of the case and the contents of the order passed by Ld. CIT(Appeals), we observe that he has passed a non-speaking order, without either discussing the detailed submissions relating to the facts of the assessee’s case (as given by the assessee the statement of facts) and neither did Ld. CIT(Appeals) discuss the grounds of appeal raised by the assessee. We also observe that the assessee had filed written submissions before Ld. CIT(Appeals) which were not considered by him while passing the appellate order, summarily dismissing the appeal of the assessee, without discussing the individual grounds of appeal as well. Further, the counsel for the assessee also submitted that the assessee had placed a request for videoconferencing, but the same was not granted to the assessee, which in our view, is clearly against the principles of natural justice since the assessee was denied an opportunity of hearing, to present it’s case on merits. Accordingly, in our considered view, it is a fit case where the matter may be restored to the file of Ld. CIT(Appeals) for de-novo consideration, with the direction to take into consideration the various grounds of appeal raised by the assessee before him and to pass appropriate orders, after giving due opportunity of hearing to the assessee to present its case on merits and to place supporting documents/evidences before him.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 27/02/2025 (ANNAPURNA GUPTA) JUDICIAL MEMBER Ahmedabad; Dated 27/02/2025 TANMAY, Sr. PSITA No. 2008/Ahd/2024 - 5–

""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER,