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Income Tax Appellate Tribunal, DELHI BENCH: ‘I(2
Before: MS SUCHITRA KAMBLE, & SHRI PRASHANT MAHARISHI
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 27/12/2018 passed by CIT(A)-13, New Delhi for Assessment Year 2010-11.
The grounds of appeal are as under:-
“Based on the facts and circumstances of the case, Mr. Pradeep Sonawat (hereinafter referred to as “the appellant'’) respectfully craves leave to prefer an appeal against order passed by the Commissioner of Income Tax (Appeals) - 13, New Delhi (hereinafter referred to as the "Ld.CIT(A)") for Assessment Year 2010-11 under Section 250 of the Income-tax Act, 1961 ("Act"), on the following grounds: 1. That Ld.CIT(A) has grossly erred both in law and on facts in confirming the additions made by the Income Tax Officer, Ward 37(4), New Delhi (hereinafter referred to as the “Ld. AO") in the assessment order and that the order passed by the Ld. CIT(A) is bad in law.
2. That the Ld. CIT(A) has erred both in law and on facts in upholding the addition of Rs. 4,19,839/- made by the Ld. AO on the basis of information received from ADIT(lnv) Unit 1(3), Ahmedabad. The Ld. AO re-opened assessment proceedings by issuing notice U/S 148 on the basis of information received from above source. However the information received from above source was not enough to conclude whether any income has escaped assessment and Ld. AO had no valid reason to believe that any income has escaped assessment in the case of the appellant assessee. 2.1 That the Ld. CIT(A) has failed to appreciate that the appellant had no role in modification of client codes and the power to modify client code could be exercised by the broker of his authorized staff only. The appellant used to give trade orders on phone and rarely visited broker's office physically. There were hundreds of transactions in the account of the appellant but client code was modified in respect of very few transactions which was due to rectification of genuine mistake made by the broker. The Ld. AO should have enquired from the concerned broker about the true facts and circumstances leading to changes of client codes but the Ld. AO neither made any effort in this regard nor granted opportunity to the appellant to cross examine the broker though the appellant had made written request to the Ld. CIT(A) to this effect. Therefore the addition has been made on the basis of unsubstantiated facts and without providing any opportunity to the appellant to prove his case. 2.2 The reasons given by the Ld. Assessing Officer in support of the impugned notice accepts the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and /or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the Assessing Officer to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine error, originally occurred while punching the trade. The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment. 2.3 That the Ld. C1T(A) has failed to appreciate that the addition has been made mechanically, arbitrarily in disregard of the facts and position of the law and therefore untenable. 2.4 That various adverse findings recorded in the order of assessment are contrary to facts and law and, have been recorded without granting any opportunity much less valid and proper opportunity and therefore, vitiated, untenable and, unsustainable.
That the Ld. C1T(A) has erred both in law and on facts in not appreciating that the impugned assessment has been passed by the Ld. AO without properly considering the submissions made by the appellant from time to time and without granting any fair and proper opportunity of being heard and the same is contrary to the principles of natural justice. All of the above grounds of appeal are independent and are without prejudice to each other. The appellant respectfully craves leave to add. alter, omit or substitute any or all of the above grounds of appeal, at any time before or at the time of appeal, to enable the Hon’ble Income Tax Appellate Tribunal to decide the appeal in accordance with law.”
3. An information was received from ADIT Investigation Unit 1(3), Ahmedabad in respect of Client Code Modification (CCN) and the dissemination of beneficiary client who have taken contrive losses and shifted out profit during the Financial Year 2009-10. The assessee was one of the beneficiaries who contrived losses of Rs. 4,19,839/- by shifting out a certain profit of Rs. 4,19,839/- in the Financial Year 2009-10. Hence, the proceedings u/s 147 of the Income Tax Act was initiated after recording the reasons that the income of Rs.4,19,839/- has escape assessment for the Assessment Year 2010-11. The statutory notice u/s 148 was issued on 31/3/2017. In response to the said notice, the assessee filed ITR on 22/8/2017 declaring total income of Rs. 4,59,833/- stating that ITR filed on 14/2/2011 may be treated as ITR in response to the notice u/s 148 of the Act. The Assessing Officer held that the assessee is in default and has used CCN with malafide intention and loses of Rs. 4,19,839/- was disallowed and added to the return income.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
None appeared on behalf of the assessee and there is no adjournment application on behalf of the assessee. The notice has been duly served to the assessee. Therefore, we are taking the submissions of the assessee before the CIT(A) as well as before the Assessing Officer as contentions/arguments before us.
The Ld. DR submitted that the Assessing Officer was right in making the addition and the CIT(A) rightly confirmed the same. The CIT(A) held that during the appellate proceedings, the assessee did not produce any evidence to controvert the finding of the Assessing Officer except saying that the Assessing Officer had no credible material available with him at the time of issue of notice u/s 148. The Ld. DR further submitted that in fact, from the perusal of the assessment order also, it can be seen that the assessee has not discharges its onus of identity, credibility and genuineness of the transaction. Thus, the Ld. DR relied upon the decision of the Tribunal in case of Vijay Kumar Goel & Sons vs. ITO (ITA No. 7222/Del/2017 Assessment Year 2010-11 dated 30/11/2018).
We have heard the Ld. DR and perused the material available on record. It is pertinent to observe that the Assessing Officer observed that there were 28 transactions involving Client Code Modification (CCM). The losses were taken from Shri Dalchand Sonawat, Mohit Mittal, Pradeep Sonawat HUF, Shiv Shankar Aggarwal HUF, Smt. Anita Sonawat and M/s Comfort Buildwell Pvt. Ltd. All the characters of Code of both the clients were totally different. Hence, the Assessing Officer concluded that it was not a punching/typographical error and in fact is a colorable device by arranging such modifications for his benefit. Information was received from the office of the Assistant Director of Income Tax (Investigation) Ahmedabad in respect of Client Code Modification and the dissemination of beneficiary clients who have taken losses and shifted out profits during the FY 2008-09. This list was specifically including name of the assessee who is one of the beneficiaries of this scheme. Thus, the Assessing Officer has given an elaborate finding with the explanation as to why the said transaction is not justified and rightly made additions. Before the CIT(A) also, the assessee has not demonstrated the genuineness, identity and creditworthiness of the transaction. Thus, there is no need to interfere with the finding of the CIT(A). Hence, the appeal of the assessee is dismissed.
In result, the appeal of the assessee is dismissed.
Order pronounced on this 12 th Day of May, 2020.