SHRI ASHISH SHARMA , JAIPUR V. INCOME TAX OFFICER, WARD-6-3, JAIPUR

ITA 362/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3792 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANMOHAN KANDPAL ACITOSDDR DHK
• Keywords: Transactions in derivatives
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; DS LE{K BEFORE : SHRI RAMESH C.SHARMA, ACCOUNTA NT MEMBER VK;DJ VIHY LA-@ ITA NO. 362/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI ASHISH SHARMA 49, VIVEK VIHAR BAJAJ NAGAR, JAIPUR CUKE VS. THE ITO WARD- 6 (3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: BDFPS 7553 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI MANMOHAN KANDPAL, ACIT(OSD)-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/10/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31 /10/2019 VKNS'K@ ORDER PER RAMESH C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A), AJMER DATED 08-01-2019 FOR THE ASSESSMENT YEAR 2009-10, IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S. 147 OF THE I.T. ACT, 1961. 2.1 THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO A DDITION OF RS. 1,53,400/- MADE BY AO BY ALLEGING THAT ASSESSEE WAS INDULGED IN TRANSFERRING FICTITIOUS PROFITS/ LOSS TO THE OTHER CLIENT / BENEFICIARIES BY MISUSING THE CLIENT CODE MODIFICATION FACILITIES IN THE F&O SEGMENT. ITA NO.362/JP/2019 SHRI ASHISH SHARMA VS ITO, WARD-6(3) , JAIPUR 2 2.2 AT THE OUTSET OF THE HEARING, THE LD.AR OF THE ASSESSEE PLACED ON RECORD THE ORDER DATED 21-05-2019 OF THE COORDINATE BENCH IN THE CASE OF SHRI SANDEEP SHARMA VS ITO (ITA NO223/JP/2019 FOR T HE ASSESSMENT YEAR 2010-11) WHEREIN SIMILAR ADDITION WAS DELETED BY THE TRIBUNAL. 2.3 DURING THE COURSE OF HEARING, IT WAS FOUND FROM THE RECORD THAT ON THE BASIS OF INFORMATION FROM DIT, THE AO OBSERVED THAT ASSESSEE HAS SHIFTED PROFIT OF RS.1,53,400/- THROUGH CLIENT CODE MODIFICATION AND ACCORDINGLY MADE ADDITION FOR THE SAME FOR THE REAS ONS MENTIONED AT PARAS 4.3 TO 4.7 OF THE ASSESSMENT ORDER. HE ALSO M ADE ADDITION ON ACCOUNT OF 2% COMMISSION I.E., RS.3,068/- PAID ON S UCH TRANSACTION. 2.4 BY IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACT ION OF THE AO AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEF ORE THE TRIBUNAL. 2.5 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE DECISION OF C OORDINATE BENCH IN THE CASE OF SHRI SANDEEP SHARMA VS ITO (SUPRA). FROM TH E RECORD, I FOUND THAT THE ASSESSEE IS TRADING IN DERIVATIVES SEGMENT OF SHARES NOT IN THE CAPACITY OF BROKER BUT ON HIS OWN ACCOUNT. THE ASSE SSEE, ITSELF, IS A CLIENT OF M/S MAVERICK SHARE BROKERS PVT. LTD. WHICH CARRI ED OUT TRANSACTIONS ON BEHALF OF THE ASSESSEE. EVERY CLIENT IS ASSIGNED A UNIQUE CLIENT CODE WHICH IS PUNCHED IN AT THE TIME OF TRANSACTIONS. IN CASE OF ANY PUNCHING ERROR, A FACILITY KNOWN AS CLIENT CODE MODIFICATIO N (CCM) IS PROVIDED ITA NO.362/JP/2019 SHRI ASHISH SHARMA VS ITO, WARD-6(3) , JAIPUR 3 BY THE STOCK EXCHANGE TO RECTIFY THE ERROR IN PUNCH ING OF CLIENT CODE TILL 4:15 PM OF THE TRADE DAY ITSELF. THIS CAN BE DONE O N ONLY WRITTEN REQUEST OF THE CLIENTS. I ALSO FOUND THAT THE CLIENT CODE MODIFICATION IS IN RESPECT OF THE TRANSACTION DONE ON 17.03.2009. IN THIS TRAN SACTION ASSESSEE TRADED IN NIFTY FUTURE 3000. THE AMOUNT OF DERIVATIVES PUR CHASED ON THIS DAY IS RS.83,68,500/- WHEREAS THE SALE AMOUNT IS RS .82,15,100/- RESULTING INTO LOSS OF RS.1,53,400/-. ON THIS DATE, M/S MAVER ICK SHARE BROKERS PVT. LTD. HAS CARRIED OUT 710 TRANSACTIONS OF WHICH ONLY IN 9 TRANSACTIONS THERE IS CLIENT CODE MODIFICATIONS. THESE 9 TRANSACTIONS PERTAIN TO THE ASSESSEE WHEREIN CLIENT CODE WAS WRONGLY ENTERED OF SANDEEP STOCKS PVT. LTD. (CLIENT CODE - S109) INSTEAD OF THE ASSESSEES (CLI ENT CODE - CS 38). THESE TRANSACTIONS WERE SUBSEQUENTLY MODIFIED USING THE CCM FACILITY. THIS IS ONLY 1.26% OF THE TOTAL TRANSACTIONS ENTERE D BY M/S MAVERICK SHARE BROKERS PVT. LTD. ON THAT DATE WHICH IS WITHI N THE LIMIT OF 2% SPECIFIED BY THE NATIONAL STOCK EXCHANGE OF INDIA L IMITED. THE ASSESSEE HAS IN FACT DECLARED A PROFIT OF RS.3,89,429.38/- O N TRADING IN DERIVATIVES DURING THE YEAR. THEREFORE, IT IS INCORRECT ON PA RT OF THE LOWER AUTHORITIES TO ALLEGE THAT THE CLIENT CODE MODIFICATIONS IN RES PECT OF THIS TRANSACTION IS NOT GENUINE. I ALSO FOUND THAT ON SIMILAR FACTS AND CIRCUMSTANCES, ITAT JAIPUR BENCH IN THE CASE OF NOBLE SECURITIES VS. I TO IN ITA NO. 911/JP/2016 VIDE ORDER DATED 23.03.2017 BY RELYING ON THE DECISION OF ITA NO.362/JP/2019 SHRI ASHISH SHARMA VS ITO, WARD-6(3) , JAIPUR 4 ITAT, AHEMDABAD BENCH RENDERED IN CASE OF ACIT VS. KUNVARJI FINANCE PVT. LTD. 119 DTR 1 ALLOWED THE APPEAL OF THE ASSE SSEE WHEREIN CLIENT CODE MODIFICATION WAS FOUND TO BE WITHIN THE LIMIT OF 2% SPECIFIED BY NATIONAL STOCK EXCHANGE OF INDIA LIMITED. IN THE IN STANT CASE ALSO, THE MODIFICATION WAS ONLY TO THE EXTENT OF 1.26% OF TOT AL TRANSACTION. ACCORDINGLY, THERE IS NO MERIT IN THE ACTION OF THE LOWER AUTHORITIES IN NOT ACCEPTING THE CLAIM OF THE ASSESSEE. IN THIS VIEW O F THE MATTER, THE APPEAL OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/201 9. SD/- JESK LH 'KEKZ (RAMESH C. SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 /10/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI ASHISH SHARMA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6(3), JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.362/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR