JAGADEESAN CHANDRAMOULI , CHENNAI V. ITO NON CORPORATE W-5(1) CHENNAI, CHENNAI

ITA 297/CHNY/2023

AI Insights

The case involves an appeal by Shri Jagadeesan Chandramouli against the order of the Commissioner of Income Tax (Appeals), which confirmed the AO's decision disallowing a business loss claimed by the assessee due to client code modifications. These modifications were alleged to have created fictitious losses during the financial year 2009-10 relevant to the assessment year 2010-11. The Tribunal noted that the assessee was not given a fair opportunity to present his case and decided to restore the matter to the AO for a fresh examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132722 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-06-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 07-03-2023
• Other Referred Cases: Rakesh Gupta vs. CIT, [2018] 93 taxmann.com 271
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ीमहावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 297/CHNY/2023 िनधाᭅरण वषᭅ /Assessment Year: 2010-11 Shri Jagadeesan Chandramouli, A5, No.43, Srivatsam Thirumalai Pillai Road, T.Nagar, Chennai – 600 017. PAN: ADHPC 9237F v. The Income Tax Officer, Corporate Ward 5(1), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : None ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri D. Hema Bhupal, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 26.06.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 26.06.2023 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.CIT(A), Chennai- 2/10399/2016-17 dated 13.01.2023. The assessment was framed by the Income Tax Officer, Non-Corporate Ward-1(5), Chennai for 2 I.T.A. No.297/Chny/2023 the assessment year 2010-11 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.03.2016. 2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in not allowing business loss claimed by assessee on Client Code Modification and disallowed by holding the same as fictitious loss of Rs.69,01,036/-. 3. At the outset, it is noticed that the AO noted that a complaint was received by the Directorate that fictitious profit and/or losses were created by some brokers by misusing the Client Code Modification facility in F & O segment on NSE during March, 2010. Accordingly, the Directorate of Income-tax, Mumbai has sent a list of client code modification beneficiaries, which includes the assessee Shri Chandramouli. In the list sent through a CD the name of the assessee Shri J. V. Chandramouli, comes under both categories viz., ‘Original Client name’ (10 occasions) and ‘Modified Client Name’ (5 occasions) and the broker’s name is M/s. Twenty First Century Shares & Securities Ltd. In total, there are 15 occasions where the client names and codes were modified. The AO noted that due to the above said client code modifications the assessee Shri J.V. Chandramouli had made a fictitious loss of Rs.69,01,036/- during 3 I.T.A. No.297/Chny/2023 the financial year 2009-10 relevant to assessment year 2010-11. In the F & O segment, the total number of trade modified in the name of the assessee was 2146, the quantity of shares modified was Rs.26,80,228 and the value of trade modified was Rs.87,02,64,801. The resultant loss due to client code modification was Rs.69,01,036/-. When this was pointed out to the assessee although the assessee’s counsel Shri R. Viswanathan appeared but could not furnish any explanation or any evidence with regard to the above loss claimed. As the assessee has not furnished any explanation with regard to the client code modification nor file any evidence to establish the genuineness of loss, the AO treated this loss as fictitious loss and disallowed a sum of Rs.69,01,036/-. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) fixed the appeal on four occasions as under:- Sl.No. Date of issue of hearing notice Date of hearing fixed Date of response / Remarks Status of notice issued on Income- tax Portal (ITBA) 1 26/12/2020 31/12/2020 No response Delivered to [e-mail] 2 04/03/2021 19/03/2021 No response 3 09/12/2022 16/12/2022 No response 4 06/01/2023 12/01/2023 No response Since there was no response, the CIT(A) decided ex-parte just simpliciter confirmed the action of the AO by following the decision of Hon’ble Punjab & Haryana High Court in the case of Rakesh 4 I.T.A. No.297/Chny/2023 Gupta vs. CIT, [2018] 93 taxmann.com 271. Aggrieved, assessee is in appeal before the Tribunal. 4. Now before us, assessee in his grounds of appeal has claimed as under:- “Further during the period of notice sent by the Ld CIT(A) Faceless to for the Appeal proceedings I could not reply to the notice, as from 2016 to 2021 I was incarcerated hence could not file particulars in Appeal hearing, the fundamental issue loss on account of client code modification was not claimed as Return filed belatedly. 5. We noticed that the order of CIT(A) is ex-parte for the reason that the appeal was fixed during Covid-19 period except on two occasions i.e., 09.12.2022 & 06.01.2023. We noticed that although the assessee has not availed opportunity but in any case, in the interest of justice, we should allow one more final opportunity to the assessee to furnish explanation with regard to the client code modification or file evidence to establish the genuineness of loss. Hence, in term of the above, we restore this matter back to the file of the AO, who will allow reasonable opportunity of being heard to the assessee and assessee will also file the complete detail in regard to share transactions and reason for client code modification. The AO will consider those reasons and will decide the issue on merits and as per law. In term of the above, we restore this issue back to 5 I.T.A. No.297/Chny/2023 the file of the AO and the appeal of the assessee is allowed for statistical purposes. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 26 th June, 2023 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 26 th June, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.