The Anil Dashore, Indore V. Shri ACIT, 5(1), Indore

CO 105/IND/2012

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1936 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: MANISH VAIDYA CAS
• Keywords: Transactions in derivatives
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 551/IND/2012 A.Y. : 2007-08. ACIT, SHRI ANIL DASHORA, 5(1), VS. INDORE INDORE APPELLANT RESPONDENT PAN NO. ABGPD0156P C.O.NO.105/IND/2012 (ARISING OUT OF I.T.A.NO. 551/IND/2012) A.Y. 2007-08 SHRI ANIL DASHORA, ACIT, INDORE VS. 5(1), INDORE CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI R. A. VERMA, DR ASSESSEE BY : SHRI AJAY TULSIYAN AND SHRI MANISH VAIDYA, CAS DATE OF HEARING : 08 . 10 .2016 DATE OF PRONOUNCEMENT : 05 .01.2016 ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 2 2 O R D E R PER D.T.GARASIA, J.M. APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-I I, INDORE, DATED 25.07.2012 FOR THE ASSESSMENT YEAR 2007-08. 2. THE COMMON GROUND OF DEPARTMENTAL APPEAL AND ASSESSEES CROSS OBJECTION IS GROUND NO. 2 TAKEN BY THE REVENUE, WHICH READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 28,76,138/- FOR LOSSES ON FUTURE & OPTIONS WHERE ONE SIDED CODE MODIFICATION WERE MADE AND THE ASSESSEE COULD NOT JUSTIFY THE REASON OF CODE MODIFICATION. 3. THE ASSESSEE IS A DOCTOR BY PROFESSION. A SURVEY OPERATION U/S 133A WAS CARRIED OUT IN THE CASE OF T HE ASSESSEE ON 03.08.2006, WHERE THE ASSESSEE SURRENDERED AN AD DITIONAL INCOME OF RS. 1,38,74,989/-. THE ASSESSEE HAS FILED THE RETURN ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 3 3 OF INCOME DECLARING INCOME OF RS. 87,36,560/-. THE ASSESSEE HAS OFFERED INCOME FROM SHORT TERM CAPITAL GAIN ON SALE OF SHARES AND INTEREST INCOME. THE ASSESSEE HAS ALSO T AKEN THE ACTIVITY OF TRADING IN FUTURE & OPTION SEGMENT OF C APITAL MARKET IN WHICH HE HAS SUFFERED A NET LOSS OF RS 5 4,47,393/-. THE ASSESSMENT WAS REOPENED U/S 148 AND ASSESSMENT WAS COMPLETED WHEREIN THE AO HAS DISALLOWED LOSS OF RS. 40,71,837/- WHEREIN THE ASSESSEE HAS DISALLOWED LOS S IN TRANSACTION WHEREIN THE CHANGE WAS MADE IN ONE SIDE D TRANSACTION WAS RS. 28,76,138/- AND LOSS IN TRANSAC TION WHERE THE CHANGE WAS MADE IN BOTH SIDED TRANSACTION WAS R S. 11,19,919/-. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS PARTLY ALLOWED THE APPEAL. THE LD. CIT(A) HAS D ELETED THE ADDITION OF RS. 28,76,138/- FOR THE LOSSES ON FUTUR E & OPTIONS WHERE ONE SIDED CODE MODIFICATION WAS MADE AND DEPA RTMENT IS IN APPEAL AGAINST THAT DELETION AND THE ASSESSEE IS IN APPEAL WHERE THERE IS ADDITION OF RS. 11,19,919/- ON ACCO UNT OF LOSS ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 4 4 IN TRANSACTIONS WHERE CHANGE WAS MADE IN BOTH SIDED TRANSACTIONS. 5. THE LD. AUTHORIZED REPRESENTATIVE HAS FILED THE WRI TTEN SUBMISSIONS IN RESPECT OF ASSESSEE AND DEPARTMENTAL APPEAL, WHICH READS AS UNDER :- DEPARTMENTS APPEAL GROUND NO. 1 THE FIRST GROUND OF APPEAL IS GENERAL IN NATURE. GROUND NO.2.1 AND 2.2 THE NEXT TWO GROUNDS OF APPEAL ARE IN RESPECT OF THE DELETION OF DISALLOWANCE OF RS. 28,76,138/- IN RESPECT OF TRADES IN F&O WHERE ONE SIDED CLIENT CODE MODIFICATION WAS THERE. THE TOTAL LOSS SUFFERED BY THE ASSESSEE WAS RS. 54,90,840/-. THE ASSESSING OFFICER DISALLOWED LOSS OF RS.40,71,837/- AFTER ALLOWING LOSS IN RESPECT OF TRADES WHERE NO CLIENT NO CLIENT CODE MODIFICATION WAS THERE ON ONE SIDED ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 5 5 TRANSACTIONS OF RS. 14,18,653/-. THE BREAKUP OF THE AMOUNTS DISALLOWED BY THE AO OF RS.40,71,837/- IS AS UNDER : LOSS IN TRANSACTIONS WHERE CHANGE WAS MADE IN ONE SIDED TRANSACTIONS RS.28,76,138/- LOSS IN TRANSACTIONS WHERE CHANGE WAS MADE IN BOTH SIDED TRANSACTIONS RS.11,19,919/- TOTAL RS.39,96,057/- THE ENTIRE CASE OF THE LEARNED AO IS BASED ON ASSUMPTIONS AND SURMISES THAT THE LOSS CLAIMED BY THE ASSESSEE IS IN-GENUINE. THE LETTER & A CD RECEIVED FROM NSE AND THE DETAILS FURNISHED BY IT ARE ENCLOSED AT PAGE NO. 41 TO PAGE NO. 42 OF THE PAPER BOOK. WITH ITS LETTER DATED 31.03.2010, NSE HAS ALSO PROVIDED ANNEXURES WHICH ARE PLACED AT PAGES 44 TO 63 OF THE PAPER BOOK. ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 6 6 THE NSES LETTER NOWHERE STATES THAT THE LOSS SUFFERED BY THE ASSESSEE IS IMPROPER OR IN- GENUINE. FURTHER THE TRANSACTIONS, WHICH HAVE BEEN GIVEN BY WAY OF ANNEXURE IN A CD, DO NOT IN ANY MANNER SPECIFY THE LOSS WHICH HAS ACCRUED TO THE ASSESSEE ON ACCOUNT OF ALLEGED SHIFTING OF CLIENT CODES. THE TRANSACTIONS WERE MODIFIED BY THE BROKER. SUCH MODIFICATION IS PERMISSIBLE WITHIN A SPECIFIED LIMIT. THE MODIFICATIONS IN THE ASSESSEES CASE WERE WITHIN THESE LIMIT WHICH IS ESTABLISHED BY THE FACT THAT SUCH MODIFICATIONS WERE ACCEPTED BY THE STOCK EXCHANGE. THE NSE HAS NOT REPORTED ANYTHING ADVERSE IN THEIR LETTER. THE ASSESSEE HAS TRANSACTED IN F & O WITH THE SOLE INTENTION OF EARNING PROFIT, HOWEVER DUE TO WRONG AND UNINFORMED DECISIONS, ADVERSE RESULTS WERE ACHIEVED. ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 7 7 IT WOULD BE ALSO APT TO MENTION THAT IF AT ALL THE ASSESSEE HAS SUFFERED LOSS ON TRANSACTION; COROLLARY TO SAME, ANOTHER PERSON HAD EARNED PROFIT ON THE TRANSACTION. IN ALL THE TAX WHICH WAS LIABLE TO BE PAID ON SUCH INCOME HAS BEEN PAID. IT WOULD BE WORTH MENTIONING THAT THE BROKERS, THROUGH WHOM THE ASSESSEE HAS TRANSACTED, ARE OF REPUTE AND ARE THE MAIN BROKERS OF NSE LIMITED. THE BROKERS HAVE A GOOD STANDING IN THE MARKET. THE ASSESSEE IS OF THE BELIEF THAT NONE OF THESE BROKERS HAVE EVER BEEN SUBJECT TO ANY ENQUIRY ETC. FURTHER, AS STATED EARLIER THE BROKERS WITH WHOM THE ASSESSEE HAS TRANSACTED ARE OF REPUTE AND HAVE SUBSTANTIAL CLIENTS AND VOLUME. THEY ARE REQUIRED TO DEAL AND EXECUTE ORDERS FOR VARIOUS CLIENTS. AT TIMES IT MAY HAPPEN THAT AN ORDER IS PUNCHED IN THE CODE IN WHICH THE ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 8 8 PREVIOUS TRADE WAS DONE. IN ORDER TO RECTIFY THE SAID ERROR ON THE PART OF THE BROKER, THE SAME MAY HAVE BEEN CORRECTED. THE ACT OF RECTIFYING THE ABOVE ERROR CAN NOT BEEN TERMED AS CLIENT CODE MODIFICATION WHICH HAS BEEN ALLEGEDLY USED BY THE ASSESSEE TO LOWER HIS TAX BURDEN. THE ACT OF CLIENT CODE MODIFICATION IS VERY MUCH LEGAL AND HAD TO BE RESORTED TO BY THE BROKERS DUE TO CERTAIN CIRCUMSTANCES SUCH AS THE ORDER BEING PLACED IN THE SAME CODE, AS WAS MENTIONED IN THE PREVIOUS ORDER. BOTH NSE/ BSE, CLOSELY MONITOR THE TRANSACTION UNDERTAKEN BY BROKERS AND PENALIZE THEM IF THERE IS SUBSTANTIAL ALTERATION IN THE CLIENT CODE. AS FAR AS KNOWLEDGE OF THE ASSESSEE IS CONCERNED, NO SUCH PENALTIES HAVE BEEN LEVIED BY STOCK EXCHANGES ON THE BROKERS. THIS IN ITSELF ESTABLISHES THE FACT THAT THERE WAS SOME HUMAN ERROR ON THE PART OF PERSONS APPOINTED BY THE ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 9 9 BROKERS WHILE RECORDING THE TRANSACTION WHICH HAS BEEN MADE GOOD AND THERE WAS NO MALA FIDE INTENTION ON THE PART OF THE BROKER OR THE ASSESSEE. IT HAS BEEN ALLEGED BY THE AO THAT THE ASSESSEE HAS MISUSED THE FACILITY OF CLIENT CODE MODIFICATION. IN THIS RESPECT THE ASSESSEE AGAIN REITERATES THAT THE CODE MODIFICATION CAN NEVER BE DONE BY THE ASSESSEE AND HE IS NOT AWARE OF ANY MODIFICATION CARRIED OUT BY THE BROKERS. THERE IS NOTHING ON RECORD TO SUPPORT THIS ALLEGATION. THE AO HAS TABULATED CERTAIN TRANSACTIONS ON PAGE 6 TO 9 OF THE ORDER AND TRIED TO MAKE OUT A CASE THAT THERE WERE MODIFICATIONS AFTER THE ACTUAL TRADE HAD TAKEN PLACE. A PERUSAL OF THE TRADES ANALYSED BY THE AO WILL SHOW THAT THESE ALL HAVE BEEN ALLEGED TO HAVE BEEN MODIFIED FROM ONE CODE TO OTHER. FOR EXAMPLE ON PAGE 6 ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 10 10 OF THE ORDER ALL NIFTY TRADES, BOTH BUY AND SELL WERE INITIALLY IN CLIENT CODE INB001, WHICH WERE LATER TRANSFERRED TO INA542. THIS COULD VERY WELL BE EXPLAINED BY THE CONCERNED BROKER ONLY BUT SUCH AN OBSERVATION IS INTERESTING. AS PER THE AO THE ASSESSEE HAS SUFFERED A LOSS OF RS 49,485/- IN THIS TRANSACTION, MEANING THEREBY THAT THE PERSON HAVING CODE INB001 HAS GAINED SIMILAR AMOUNT OF PROFIT. FURTHER, THESE TYPES OF MODIFICATION MAY HAVE BEEN CARRIED OUT FOR THE REASON THAT THE DEALER (PERSON WHO PUNCHES THE ORDERS IN THE SYSTEM) ERRONEOUSLY PUNCHED ALL THE TRANSACTION OF THE ASSESSEE ON THAT PARTICULAR DAY IN SOME OTHER CODE AND LATER ON CORRECTED HIS MISTAKE. SIMILAR IS THE POSITION OF THE TRANSACTIONS ENUMERATED ON PAGE 7 AND 8 WHERE THE OTHER CLIENT CODE IS INK129. HOWEVER THIS CAN BE BEST EXPLAINED BY THE BROKER ONLY. BUT NO EFFORT WAS MADE TOWARDS THIS END AND ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 11 11 SIMPLY AND VERY EASILY IT HAS BEEN ASSUMED THAT THE LOSS SUFFERED BY THE ASSESSEE IS NOT GENUINE. THIS IS SO IN SPITE OF THE FACT THAT ALL THE BROKERS HAVE CONFIRMED THE TRANSACTIONS OF THE ASSESSEE AS PROPER DURING THE REGULAR ASSESSMENT PROCEEDINGS. SIMILARLY THE TRANSACTIONS REPORTED ON PAGE 8 & 9 OF THE ASSESSMENT ORDER IN THE FUTURES OF TATA STEEL, IT HAS BEEN STATED THAT PURCHASE TRANSACTIONS WERE MADE CORRECTLY IN THE APPELLANTS CODE BETWEEN 16:05:17 TO 16:09:27 BUT SALE TRANSACTIONS WERE ALL MADE IN CLIENT CODE AIK001 BETWEEN 10:48:24 TO 10:54:44 AND MODIFIED BETWEEN 15:57:20 TO 16:12:14. IN THIS CASE THE MODIFICATION TIME OVERLAPS THE PURCHASE TRANSACTION TIME HENCE CONTRADICTS THE AOS OWN VERSION. ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 12 12 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AFTER CAREFULLY ANALYZING THE FACTS AND THE DOCUMEN TS ON RECORD, RECORDED A CATEGORICAL FINDING IN PARAS 4.2.4 TO 4.2.6 ON PAGE 17 TO 18 OF THE FIRST APPELL ATE ORDER, THAT THE ASSESSEE HAS BROADLY MET ALL THE OBSERVATIONS IN THE REASSESSMENT ORDER. THUS IT WOULD BE SEEN THAT THE FACTS OF THE CASES HAVE BEEN TWEAKED AND THE GENUINE TRANSACTIONS OF THE ASSESSEE HAVE BEEN TREATED AS SHAM MERELY ON ASSUMPTIONS AND PRETEXTS. THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE ARE ALL GENUINE AND PROPER TRANSACTIONS AND MAY VERY KINDLY BE ACCEPTED AS SUCH. THE APPELLANTS CASE IS SQUARELY COVERED BY A RECEN T DECISION OF THIS HONBLE BENCH IN THE CASE OF VIKRA M INFRASTRUCTURE PVT. LTD. VS. ADDL. CIT-I, INDORE VI DE ORDER DATED 22.07.2015, (COPY AT PAGE NO. 01 TO 28 OF CASE LAW PAPER BOOK), WHEREIN YOUR HONOURS PLACING RELIANCE ON THE DECISION OF THE HONBLE ITAT ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 13 13 AHEMEDABAD A BENCH IN THE CASE OF KUNVARJI FINANCE & OTHERS, (COPY AT PAGE NO. 38 TO 68 OF CAS E LAW PAPER BOOK) ALLOWED THE SAID APPEAL. THE ASSESSEES CASE IS ON A BETTER FOOTING AS THE BROKERS THROUGH WHOM THE ASSESSEE HAS TRANSACTED WERE NOT SUBJECT TO ANY SEBI ENQUIRY OR INVESTIGATI ON. THIS FACT FURTHER SUBSTANTIATE THE CREDENTIALS OF T HE BROKERS. FURTHER RELIANCE IS PLACED ON THESE DECISIONS ALSO WHICH HAVE ALSO BEEN REFERRED BY YOUR HONOURS IN THE ABOVE DECISION. 1. M/S SAMBHAVNATH INVESTMENT VS. ACIT ITAT MUMBAI (COPY ENCLOSED AT PAGES 29 TO 37) 2. ITO VS. E-NET INFOWAYS PVT. LTD. ITAT DELHI (COPY ENCLOSED AT PAGES 69 TO 74) ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 14 14 IN VIEW OF THE ABOVE THE ASSESSEE PRAYS THAT THE DEPARTMENTAL APPEAL MAY VERY KINDLY BE DISMISSED. 6. THE LD. DR RELIED UPON THE ORDER OF AO. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. THE ASSESSEE IS A DOCTOR BY PROFESSION. T HE ASSESSEE HAS OFFERED SHORT TERM CAPITAL GAIN ON SALE OF SHAR ES AND INTEREST INCOME. THE ASSESSEE HAS ALSO UNDERTAKEN T HE ACTIVITY OF TRADING IN FUTURE & OPTION SEGMENT OF CAPITAL MA RKET IN WHICH HE SUFFERED A NET LOSS OF RS 54,47,393/-.THE AO HAS ALLOWED THE LOSS OF RS. 14,18,653/-, WHILE THE BALA NCE OF RS. 39,96,057/- WAS DISALLOWED. WE FIND THAT THE AO HAS DISALLOWED THE LOSS ON THE GROUND AS PER THE LETTER RECEIVED FROM NSE. THE LD. CIT(A) HELD THAT NSES LETTER DOE S NOT STATE THAT THE LOSS HAS BEEN SUFFERED BY THE ASSESSEE. TH E ASSESSEE HAS NOT SUFFERED LOSS ON ACCOUNT OF SHIFTING OF CLI ENT CODE. THE TRANSACTION WAS MODIFIED BY THE BROKER AND SUCH MOD IFICATION WAS PERMISSIBLE WITHIN THE SPECIFIED LIMIT. THE MOD IFICATION IN ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 15 15 ASSESSEES CASE WAS WITHIN ITS LIMIT, WHICH IS ACCE PTED BY THE STOCK BROKER. THE ASSESSEE HAS TRANSACTED IN F & O WITH THE SOLE INTENTION OF EARNING PROFIT. HOWEVER, DUE TO W RONG AND UN- INFORMED POSITION ADVERSE RESULTS WERE ACHIEVED. TH E ASSESSEE HAD MADE TRANSACTION WITH MAIN BROKER OF NSE LIMITE D. THE BROKERS THROUGH WHOM THE ASSESSEE HAS TRANSACTED AR E OF REPUTE AND HAVE SUBSTANTIAL CLIENTS AND VOLUME. THE BROKERS REQUIRE TO DEAL AND EXECUTE THE ORDERS OF VARIOUS C LIENTS. AT A TIME, IT MAY HAPPEN THAT AN ORDER IS PUNCHED IN THE CODE IN WHICH THE PREVIOUS TRADE WAS DONE. IN ORDER TO RECT IFY THE SAID ERROR ON THE PART OF THE BROKER, THE SAME SHOULD HA VE BEEN CORRECTED. THE ACT OF RECTIFYING THE ABOVE ERROR CA NNOT BE TERMED AS CLIENT CODE MODIFICATION, WHICH HAVE BEEN ALLEGEDLY USED BY THE ASSESSEE TO LOWER HIS TAX BURDEN. THE A CT OF CLIENT CODE MODIFICATION IS VERY MUCH LEGAL AND HAD TO BE RESORTED TO BY THE BROKERS DUE TO CERTAIN CIRCUMSTANCES SUCH AS THE ORDER BEING PLACED IN THE SAME CODE, AS MENTIONED IN THE PREVIOUS ORDER. BOTH NSE & BSE, CLOSELY MONITOR THE TRANSACT ION UNDERTAKEN BY BROKERS AND PENALIZE THEM IF THERE IS ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 16 16 SUBSTANTIAL ALTERATION IN THE CLIENT CODE. AS FAR A S CODE OF THE ASSESSEE IS CONCERNED, NO SUCH PENALTY HAS BEEN LEV IED BY STOCK EXCHANGES ON THE BROKERS. WE FIND THAT THE A SSESSEE HAS NOT CARRIED OUT ANY MODIFICATION AND THERE IS N O EVIDENCE THAT THE ASSESSEE HAS CARRIED OUT ANY MODIFICATION. IN THE ASSESSMENT ORDER, THE AO HAS PERUSED THE TRADE ANAL YSIS AND THE AO HELD THAT THE ASSESSEE HAS MODIFIED ONE CODE TO ANOTHER. THE ASSESSEE HAD IN HIS TRADE ACCOUNT ONE CLIENT CODE AS INB001, WHICH WAS LATER TRANSFERRED TO INA542. T HIS CAN BE EXPLAINED BY THE CONCERNED BROKER ONLY. THE ASSESSE E HAS NO CONTROL ON THE BROKERS. SUCH MODIFICATION WAS UN-IN TENTIONAL. IN SOME OF THE TRANSACTIONS LIKE TATA STEEL, IT WAS STATED THAT THE PURCHASES WERE MADE IN ASSESSEES CODE, BUT THE SALE TRANSACTIONS WERE ALL MADE IN CLIENTS CODE AIK001, BUT THE MODIFICATION WAS DONE LATER ON. THEREFORE, SUCH MOD IFICATION WAS DONE BY THE BROKER. THEREFORE, THE ASSESSEE CAN NOT BE PENALIZED. WE FIND THAT THE SIMILAR ISSUE HAD COME UP BEFORE THIS TRIBUNAL IN THE CASE OF VIKRAM INFRASTRUCTURE PVT.LTD. VS. ADDL. CIT-I, WHEREIN THE TRIBUNAL HAS DISCUSSED VAR IOUS ISSUES ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 17 17 AND HELD THAT IF THERE IS ANY MODIFICATION IN CLIEN TS CODE AND IF THE BROKER HAS MADE ANY MODIFICATION IN THE CLIENT CODE, THE ASSESSEE CANNOT BE PENALIZED. THE NSE OR BSE, WHERE THE BROKERS CARRIED OUT THE TRANSACTION AND IF THE SAME MISTAKE IS UN-INTENTIONAL, THEN IT HAS TO BE ALLOWED. WE FIND THAT SIMILAR ISSUE WAS DECIDED BY THE DECISION OF INCOME TAX APP ELLATE TRIBUNAL, DELHI BENCHES, B NEW DELHI, IN I.T.A.NO . 2180/DEL/2012 DATED 14 TH DECEMBER, 2012, WHEREIN THE TRIBUNAL HAS HELD AS UNDER :- IT IS SEEN THAT AS FAR AS TRANSACTIONS ARE CONCERNED SAME ARE REFLECTED WITH NATIONAL STOCK EXCHANGE (NSE) AND SAME HAVE BEEN CARRIED OUT ON THE STOCK EXCHANGE. THERE IS NO DISPUTE ABOUT THE LOSS INCURRED ON SUCH TRANSACTIONS. THE NATIONAL STOCK EXCHANGE HAS CONFIRMED THAT THESE F&O TRANSACTIONS WERE CARRIED OUT IN THE NAME OF APPELLANT HOWEVER THERE WAS A CHANGE OF CLIENT CODE. IN THIS REGARD THE APPELLANT HAS SUBMITTED THAT THIS MISTAKE ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 18 18 HAS OCCURRED DUE TO WRONG PUNCHING OF CLIENT CODE BY THE STAFF OF THE BROKER AND THE SAME WAS LATER ON RECTIFIED WITH THE NATIONAL STOCK EXCHANGE. IT MAY BE MENTIONED HERE THAT EVEN THE NSE WAS AWARE OF THE FACT THAT CLIENT CODE WAS INITIALLY PUNCHED WRONG AND THEREAFTER IT HAS BEEN CORRECTED BY THE BROKER. THEREFORE NO INFORMATION WAS HIDE FROM THE NSE. THERE IS NO ILLEGALITY NOTICED IN THIS CHANGE OF CLIENT CODE. THIS IS A MERE HUMAN ERROR AND IT CAN HAPPEN IN EVERY SPHERE OF LIFE. THEREFORE THIS ERROR IS NOT S O IMPORTANT WHICH CAN LEAD TO DISALLOWANCE OF ENTIRE LOSS. IF THERE WAS ANYTHING WRONG ABOUT THE CHANGE OF CODE THE NSE AND SEBI WOULD HAVE TAKEN ACTION AGAINST THE BROKER AND WOULD HAVE MADE ENQUIRY AGAINST THE APPELLANT COMPANY. SINCE THERE WAS NOTHING WRONG IN F&O TRANSACTIONS AND CHANGE OF CLIENT CODE WAS DONE TO RECTIFY MISTAKE TAKEN PLACE DUE TO WRONG ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 19 19 PUNCHING OF CODES NO ACTION WAS CALLED FOR AGAINST THE BROKER AND AS WELL AS THE APPELLANT. SINCE THE LOSS HAS BEEN INCURRED IN THE NORMAL COURSE OF THE F&O TRANSACTIONS AND SUCH TRANSACTIONS ARE IN THE KNOWLEDGE OF NSE, THEREFORE THE LOSS INCURRED ON DERIVATIVE TRADING TRANSACTIONS HAS TO BE ALLOWED AND SUCH LOSS HAS ALLOWED SET OFF AGAINST THE INCOME FROM SHORT TERM CAPITAL GAIN. THE F&O TRANSACTIONS HAVE BEEN TREATED AS BUSINESS TRANSACTIONS IF THEY HAVE BEEN CARRIED OUT ON RECOGNIZED STOCK EXCHANGE. THESE TRANSACTIONS HAVE BEEN CARRIED OUT ON NSE WHICH IS RECOGNIZED FOR SUCH TRANSACTIONS. HENCE LOSS ON SUCH TRANSACTIONS IS A BUSINESS LOSS AND SAME HAS TO BE ALLOWED SET OFF. 8. WE, RESPECTFULLY FOLLOWING THE SAME, DISMISS THE DEPARTMENTAL APPEAL AND ALLOW THE ASSESSEES CROSS OBJECTION. ACIT VS. SHRI ANIL DASHORA, INDORE -I.T.A.NO.551/I ND/2012 AND C.O.NO. 105/IND/2012 A.Y. 2007-08 20 20 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COUR T ON 5TH JANUARY, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 5 TH JANUARY, 2016. CPU* 41