SHRI GHANSHYAMDAS D. SHAH, CHENNAI V. DCIT, NCC - 10, CHENNAI

ITA 2345/CHNY/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6210 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 19-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: S SRIDHAR
• Keywords: Reopening of assessment; Set aside
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ! ' # , % #& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.2345/CHNY/2019 ) *) / ASSESSMENT YEAR : 2010-11 SHRI GHANSHYAMDAS D. SHAH, NO.4, AGASIYA APARTMENTS, NEW NO.32, OLD NO.82, 2 ND CROSS STREET, COLLECTOR COLONY, AMINJIKARAI, CHENNAI - 600 029. PAN : AAIPG 7702 K V. THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 10, CHENNAI - 600 034. (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ./,- 0 1 / RESPONDENT BY : MS. R. ANITHA, JCIT 2 0 3% / DATE OF HEARING : 04.09.2019 45* 0 3% / DATE OF PRONOUNCEMENT : 11.10.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -12, CHENN AI, DATED 26.04.2019 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. THERE WAS A DELAY OF 28 DAYS IN FILING THIS APPE AL BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FOR CO NDONATION OF 2 I.T.A. NO.2345/CHNY/19 DELAY. WE HAVE HEARD THE LD. COUNSEL FOR THE ASSES SEE AND THE LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR N OT FILING THE APPEAL BEFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THERE ARE TWO ISSUES ARISE FOR CONSIDERATION I N THIS APPEAL. ACCORDING TO THE LD. COUNSEL, THE FIRST ISSUE IS WI TH REGARD TO REOPENING OF ASSESSMENT AND THE SECOND ISSUE IS WIT H REGARD TO REJECTION OF CLAIM OF LOSS SUFFERED BY THE ASSESSEE TO THE EXTENT OF 45,11,128/- DUE TO MODIFICATION OF CLIENT CODE BY T HE STOCK BROKER. 4. REFERRING TO THE FIRST GROUND OF APPEAL WITH REG ARD TO REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT'), THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE IS A TRADER IN SHARES. ON THE BASIS OF COMMUNICATI ON SAID TO BE RECEIVED FROM ITO, NON CORPORATE WARD 7(2), THE AS SESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SEC TION 148 OF THE ACT. ACCORDING TO THE LD. COUNSEL, REOPENING O F ASSESSMENT IS NOT JUSTIFIED. REFERRING TO THE SECOND GROUND OF A PPEAL, THE LD.COUNSEL SUBMITTED THAT SOME OF THE BROKERS APPEA R TO BE MISUSING THE CLIENT CODE MODIFICATION FACILITY IN F & O SEGMENT ON 3 I.T.A. NO.2345/CHNY/19 NATIONAL STOCK EXCHANGE. BASED UPON THE GENERAL AL LEGATION SAID TO BE RECEIVED BY THE ASSESSING OFFICER, ACCORDING TO THE LD. COUNSEL, THE CASE WAS REOPENED AND WITHOUT FURNISHI NG THE DETAILS OF SUCH INFORMATION, THE ASSESSING OFFICER DISALLOW ED THE LOSS CLAIMED BY THE ASSESSEE. ACCORDING TO THE LD. COUN SEL, THE ASSESSEE IS IN NO WAY CONNECTED WITH THE MODIFICATI ON OF CLIENT CODE AND IT IS THE DUTY OF THE STOCK BROKER. THERE FORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. REFERRING TO THE O RDER OF THIS TRIBUNAL IN LATE UGAMA KAVAR V. ACIT IN I.T.A. NO.2 649/CHNY/2018 DATED 26.07.2019, THE LD.COUNSEL SUBMITTED THAT ON IDENTICAL SITUATION, IN RESPECT OF TRANSACTION WITH M/S INVEN TURE GROWTH & SECURITIES LTD., THE ISSUE WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. IN THIS CAS E ALSO, ACCORDING TO THE LD. COUNSEL, THE TRANSACTION WAS MADE THROUG H THE STOCK BROKER M/S INVENTURE GROWTH & SECURITIES LTD. THER EFORE, THE LD. COUNSEL SUBMITTED THAT THE MATTER MAY BE REMITTED B ACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION ON MERIT. 5. WE HEARD MS. R. ANITHA, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. AS RIGHTLY SUBMITTED BY THE L D.COUNSEL FOR THE 4 I.T.A. NO.2345/CHNY/19 ASSESSEE, ON THE BASIS OF THE INFORMATION SAID TO B E RECEIVED BY THE ASSESSING OFFICER WITH REGARD TO FICTITIOUS CLAIM O F LOSS BY MISUSING THE MODIFICATION OF CLIENT CODE FACILITY OFFERED BY THE STOCK EXCHANGE, THE ASSESSING OFFICER REOPENED THE ASSESS MENT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE ASSESSMENT HAS BEEN VALIDLY REOPENED BY THE ASSESSI NG OFFICER. HENCE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. 6. NOW COMING TO THE MERIT OF THE CLAIM OF DISALLOW ANCE MADE BY THE ASSESSING OFFICER, AS RIGHTLY SUBMITTED BY T HE LD.COUNSEL FOR THE ASSESSEE, THE TRANSACTION WAS MADE WITH M/S INV ENTURE GROWTH & SECURITIES LTD. BY THE ASSESSEE. IN THE LIST REC EIVED BY THE ASSESSING OFFICER, THE ASSESSEES NAME IS ALSO FOUN D TO BE ONE OF THE BENEFICIARIES WHO CLAIMED BOGUS FICTITIOUS LOSS DUE TO CLIENT CODE MODIFICATION. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER AS DECIDED BY THIS TRIBUNAL IN THE CASE OF LATE UGAMA KAVAR (SUPRA). ACCORDINGLY, THE ORDERS OF BOTH THE AUTHO RITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE WITH REGARD TO DISAL LOWANCE OF THE CLAIM MADE BY THE ASSESSING OFFICER IN SHARE TRADIN G TRANSACTION IS 5 I.T.A. NO.2345/CHNY/19 REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER IN ACCORDANCE W ITH LAW AS IN THE CASE OF LATE UGAMA KAVAR (SUPRA) AND THEREAFTER DEC IDE THE ISSUE AFRESH, AFTER GIVING A REASONABLE OPPORTUNITY TO TH E ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11 TH OCTOBER, 2019 AT CHENNAI. SD/- SD/- ( ! ' # ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 11 TH OCTOBER, 2019. KRI. 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A)-12, CHENNAI 4. PRINCIPAL CIT- 3, CHENNAI 5. 9< .3 /DR 6. ) = /GF.