ASHOK GOYAL (HUF), MUMBAI V. ACIT 24(1), MUMBAI

ITA 4172/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71019 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY SHANKAR SR
• Assessee Lawyers: S C TIWARI; NATASHA MANGAT
• Keywords: Opportunity of being heard; Transactions in derivatives
• Section: 143(3); 133(6); 32; 131

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . , . , BEFORE SHRI D. MANMOHAN , VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, A M ./I.T.A. NO.4172/M/2012 ( / ASSESSMENT YEAR: 2008 - 2009 ) ASHOK GOYAL (HUF), B - 303/304 , SHAGUN BLDG , FILM CITY ROAD, GOREGAON (E), MUMBAI. / VS. ACIT - 24(1), MUMBAI. ./ PAN : AADHG 3444 H ( / APPE LLANT) .. ( / RESPONDENT ) / APPELLANT BY : S.C. TIWARI & NATASHA MANGAT / RESPONDENT BY : VIJAY SHANKAR, SR AR / DATE OF HEARING : 11.7.2013 / DATE OF PRONOUNCEMENT : 6.9 .2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 13.6.2012 IS AGAINST THE ORDER OF CIT (A) - 34, MUMBAI DATED 26.4.2012 FOR THE ASSESSMENT YEAR 2008 - 2009. THE ONLY EFFECTIVE RAISED BY THE ASSES SEE IN THE APPEAL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WHILE PASSING ORDER U/S 250 OF THE ACT DATED 26.4.2012 ERRED IN NOT ALLOWING THE LOSS INCURRED TO BE SET - OFF AGAINST OTHER INCOME BY AO TO THE T UNE OF RS. 56,85,860/ - . 2 . BRIEFLY STATED , RELEVANT FACTS FOR ADJUDICATION OF THE ABOVE GROUNDS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND DERIVATIVES AND REPORTED EARNINGS OF LONG - TERM AND SHO RT - TERM CAPITAL GAINS ON SALE OF IMMOVABLE PROPERTIES TOO . THE SHORT TERM AND LONG TERM CAPITAL GAINS ARE RS. 63,33,031/ - AND RS. 59,54,962/ - RESPECTIVELY AND THE TOTAL GAINS WORKS OUT TO RS. 1,22,87,993/ - 2 (PAGE 11 OF THE PAPER BOOK). FURTHER, THE A SSESSEE REPORTED THE BUSINESS LOSSE S ON ACCOUNT OF DERIVATIVES TRANSACTION AMOUNTING TO RS. 59,97,271/ - TOO. ASSESSEE CLAIMED SET OFF OF THESE LOSSES EARNED ON THE DERIVATIVES BUSINESS AGAINST THE OTHER INCOME OF THE ASSESSEE. IT IS THE ALLEGATION OF THE AO THAT THE SAID LOSSES GENERATED WITH THE ULTIMATE AIM OF REDUCING THE TAX LIABILITY. THUS, THE G ENUINENESS OF THE SAID BUSINESS LOSSES IS THE CORE DISPUTE DURING THE ASSESSMENT PROCEEDINGS AND AO HELD THAT THESE ARE NOT GENUINE LOSSES AND IN FACT, THE LOSSES DO NOT PERTAIN TO THE ASSESSE E. THUS, THE DERIVATIVE BUSINESS OF THE ASSESSEE IS THE FOCUS AND THE RELEVANT FACTS ARE NARRATED IN THE SUCCEEDING PARAGRAPHS. 3 . THE TURNOVERS OF THE DERIVATIVES PURCHASES AND SALES ARE RS 52.52 CR AND 51.95 CR RESPECTIVELY AND PAGE 39 OF THE PAPER BOO K CONTAINS THE RELEVANT DETAILS . THE GROSS LOSS CALCULATED ON THIS ACCOUNT IS RS 60,21,234/ - AND PARA 2 OF THE IMPUGNED ORDER CONTAINS THE WORKING . OUT OF THIS LOSS, LOSS OF RS 56,53,019/ - IS THE CYNOSURE OF THE DISPUTE AND THE REASONS ARE MANY . THIS LOSS IS EARNED BY THE ASSESSEE ON 28.3. 2008, A SINGLE DAY AND T HE CONSTITUTES THE DIFFERENCE BETWEEN DERIVATIVES PURCHASES AND SALES I.E. RS 19,82,16,270=50 ( - ) RS 19,25,63,349=50. TH E DERIVATIVES INVOLVED ARE NIFTY FUTURES 39,800 IN NUMBERS. ASSESSEE CLAIMED T O HAVE PURCHASED AND SOLD THEM WITH THE BROKERING OF A DELHI - BASED BROKER NAMED M/S. AADYA TRADING AND INVESTMENT PVT. LTD ., NEW DELHI. THE ASSESSEES CLIENT CODE NO. WITH THE SAID BROKER IS CM031 AND ASSESSEE PAID A SUM OF RS 100/ - BEING ACCOUNT OPENING C HARGES (PAGE 52/PB) . OTHERWISE, M/S EDELWEISS SECURITIES LTD IS THE BROKER, WHO NORMALLY RENDERS SERVICES TO THE ASSESSEE IN MATTERS OF BUSINESS OF SHARES AND DERIVATIVES. ON FI NDING THAT THE ASSESSEE CLAIMED SET OFF OF BUSINESS LOSSES WITH OTHER INCOME , A O INITIATED E NQUIRIES WITH REGARD TO THE GENUINENESS OF THE SAID LOSSES. 4 . AS PART OF THE VERIFICATION, THE AO ISSUED NOTICE U/S 133(6) OF THE ACT TO THE NATIONAL STOCK EXCHANGE (NSE) ON THE FOLLOWING ISSUES . 1. TO PROVIDE THE DETAILS FOR CLIENT CO DE MODIFICATION FOR SJ 17 & M 032. 3 2. NAMES & ADDRESSES, PAN, LEDGER ACCOUNT FOR THE PERIOD 1.4.2007 TO 31.3.2008 FOR ALL EXCHANGES FOR BOTH THE ABOVE CLIENTS. 3. MASTER SUMMARY OF THE ABOVE CLIENTS FOR FY 2007 - 2008. 4. COPIES OF KYC FORMS OF THE CLIENT. 5 . DETAILS AS TO WHO EXECUTED THE TRANSACTIONS. 6. WHETHER THERE IS ANY TRADE OF THESE TWO CLIENTS HAVE BEEN TRANSFERRED TO CLIENT CODE MODIFICATION M 031. 5 . THE NSE SUPPLIED REQUISITE DETAILS TO THE AO IN A COMPACT DISC ( CD ) FORM. AO ANALYSED THE SAID DETAILS AND FOUND THAT THE ASSESSEE OPENED AN ACCOUNT VIDE CLIENT CODE NO. CM - 031 WITH M/S. AADYA TRADING & INVESTMENT PVT LTD . ASSESSEE PAID A SUM OF RS 100/ - ON 23 - 3 - 2008 TOWARDS THE ACCOUNT OPENING CHARGES . FURTHER, AO NOTED THAT ASSESSEE PURCHASED 39, 800 NOS OF NIFTY FUTURES ON 23.3.2008 ( SINGLE DAY ) DURING THE BUSINESS HOURS FROM 12:07:30 TO 15:55:42 . THE PURCHASE VALUE OF THE SAME IS RS 19.82 CR . ASSESSEE CLAIMED TO HAVE ENTERED INTO 263 TRANSACTIONS AND HAS NOT KEPT ANY MARGIN MONEY WITH THE SAID BR OKER. THE BIFURCATION OF THESE 263 INCLUDES 128 TRANSACTIONS ON SELL SIDE AND 1 35 TRANSACTIONS ON BUY SIDE OF THE TRADES. ANOTHER OBSERVATION OF THE AO RELATES TO THE CLIENT CODE MODIFICATION . UNDISPUTEDLY, THESE 263 TRANSACTIONS WERE DONE INVOLVING TW O CLIENT CODES NAMELY SJ 17 AND M0 32 . THESE TRANSACTIONS WERE TRANSFERRED TO CM - 031 WHICH BELONGS TO THE ASSESSEE BY VIRTUE OF MODIFICATION PROCEDURES ALLOWED BY THE NSE. WITH THIS FACTUAL BACKGROUND, AO CAME TO THE CONCLUSION THAT THE LOSS IS NOT A GENU INE ONE AND IT ACTUALLY BELONGS TO SOME OTHER CLIENTS . FURTHER, I T IS THE ALLEGATION OF THE AO THAT THE SAID PURCHASE AND SALE TRANSACTIONS ARE ARRANGED FOR THE ASSESSEE FOR GENERATION AND PURCHASE OF LOSSES WITH AN ULTIMATE AIM TO REDUCE THE TAX LIABILITI ES OF THE ASSESSEE. IN RESPONSE TO THE AOS OBSERVATION COMMUNICATED TO THE ASSESSEE, ASSESSEE FILED A WRITTEN SUBMISSION DATED 29.11.2010. IN THE SUBMISSIONS, PER CONTRA, THE ASSESSEE MENTIONED THAT THE LOSS IS GENUINE AND IT BELONGS TO THE ASSESSEE. HOWE VER, HE PLEADED INNOCENCE WITH REGARD TO THE ISSUE OF CLIENT CODE MODIFICATION AND MENTIONED THAT THE BROKER SHOULD KNOW THE REASONS FOR THE MODIFICATION. IN THIS REGARD, ASSESSEE RELIED ON THE CONTRACT NOTES ISSUED BY THE BROKER , NEW DELHI AND ALSO SUBM ITTED THE LEDGER EXTRACTS SHOWING THE PAYMENT OF RS. 56,85,855/ - ON 1 ST , 17 TH AND 24 TH OF APRIL, 2008. ASSESSMENT ORDER IS SILENT ABOUT THESE PAYMENTS. IT IS SUBMITTED THAT THE ASSESSEE IS NOT AWARE OF THESE INTRICACIES 4 RELATING TO IMPUGNED CLIENT CODE MO DIFICATION AND REQUESTED THE AO TO SEEK CLARIFICATION IF ANY, FROM THE BROKER AT NEW DELHI . AO MADE AN ATTEMPT TO REACH THE BROKER BY ISSUE OF NOTICE U/S 131 OF THE ACT WITH AN INTENTION TO VERIFY FROM THE BROKER, THE DETAILS RELATING TO THE CLIENT DETAIL S SJ17 AND M032 AND THEIR KYC PARTICULARS. HOWEVER, THERE IS NO RESPONSE TO THE SAID NOTICE. SUBSEQUENTLY, AO MADE ANOTHER ATTEMPT FROM THE ASSESSEE FOR WANT OF THE SAID DETAILS AND INTIMATED THE ASSESSEE ABOUT THE NON - COOPERATION OF THE BR OKER. FINALLY, A S PER THE DISCUSSION GIVEN IN PARA 6.4 OF ASSESSMENT ORDER, AO CAME TO THE CONCLUSION THAT THE TRA NSACTIONS IN QUESTION ARE A COLORABLE DEVICE DESIGNED BY THE ASSESSEE - BROKER COMBINE IN ORDER TO CREATE A BUSINESS LOSS THEREBY TO EVA DE THE PAYMENT OF TAX TO THE EXTENT OF INCOME SET OFF WITH THE IMPUGNED BUSINESS LOSS. IN THIS REGARD, ASSESSING OFFICER RELIED ON THE APEX COURT JUDGMENT IN THE CASE OF MDDOWELL & CO. LTD. VS. C.T.O ( 154 ITR 148 ) . ACCORDINGLY, AO HELD THAT THE LOSS ON DERIVATIVE TRANSACTIONS IS A NON - GENUINE AND FICTITIOUS ONE AND THE CONTENTS OF PARA 6.6 OF THE ASSESSMENT ORDER ARE RELEVANT, WHICH IS AS UNDER: 6.6. IN VIEW OF ALL THE ABOVE, IT IS HELD TH A T THE LOSS ON DERIVATIVE TRADING IS A NON - GENUINE AND FICTITIOUS ONE WHICH HAS BEEN ACQU IRED BY THE ASSESSE E IN GROSS MISUSE OF ERROR ENTRY MODIFICATION ALLOWED BY THE STOCK EXCHANGES, WITH THE TACIT CONNIVANCE OF THE BROKER . THUS, THE CLAIM OF LOSS OF RS. 56,85,855/ - , INCLUSIVE OF RS. 32,736/ - OF STT AND RS. 100/ - OF SHARE TRANSACTION CHARG ES ON DERIVATIVE TRADING ARE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 6 . THUS, THE ASSESSED INCOME IS DETERMINED AT RS. 1,19,48,914/ - AGAINST THE RETURNED INCOME OF RS. 62,63,060/ - . AGGRIEVED WITH THE ABOVE CONCLUSIONS OF THE AO, ASSESSEE FIL ED AN APPEAL BEFORE THE CIT (A). 7 . DURING THE PROCEEDINGS BEFORE THE CIT(A), THE FIRST APPELLATE AUTHORITY, THE SOLITARY ISSUE RAISED BEFORE THE CIT (A) RELATES TO THE DISALLOWANCE OF BUSINESS LOSS TO THE TUNE OF RS. 56,85,855/ - . BEFORE THE CIT (A), AS SESSEE MADE WRITTEN SUBMISSIONS WHICH ARE REFERRED IN PARA 1.2 OF THE IMPUGNED ORDER . IT IS THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS ARE GENUINE, THE CLIENT CODE MODIFICATIONS WERE EXECUTED ON 263 TRANSFERS ON 28.3.2008 BY THE BROKER AND THE ASSESSE E HAS NOT ROLE. FURTHER, HE MENTIONED THAT THE ASSESSEE PURCHASED 39 , 800 UNITS OF NIFTY FUTURES USING THE SAID 5 BROKER AND RELIED ON THE CONTRACT NOTES AS WELL AS THE COPIES OF THE LEDGER ACCOUNTS . FURTHER, ASSESSEE RELIED ON THE PAYMENTS RS. 56,85,855/ - M ADE TO THE BROKER THROUGH BANKING CHANNELS. IT IS THE ARGUMENT OF THE ASSESSEE THAT THE AFORESAID CLIENT CODE MODIFICATIONS ARE POSSIBLE MISTAKES WHICH SHOULD BE ATTRIBUTABLE TO THE HUMAN ERROR . IN RESPONSE , CIT (A) CONSIDERED THE ABOVE SUBMISSIONS OF TH E ASSESSEE AND EXAMINED THE ISSUE RELATING TO THE TEST OF HUMAN PROBABILITIES (PARA 6.6 OF THE IMPUGNED ORDER) AND DISCUSSED THE TAKING CUE FROM THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) AND IN TH E CASE OF SUMATI DAYAL VS. CIT REPORTED IN 214 ITR 801 (SC) AND OBSERVED THAT THE TAXING AUTHORITIES ARE REQUIRED TO PUT ON THE BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY ARE ALSO ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMS TANCE S TO FIND OUT THE REALITY ... REGARDING THE ONUS , CIT (A) OBSERVED THAT THE ASSESSEE FAILED TO PROVE THAT THE CLAIM OF SET OFF QUA THE BUSINESS LOSS IS GENUINE. FURTHER, CIT (A) DISTINGUISHED THE DECISIONS FILED BEFORE HIM IN CASES OF CIT VS. GOKULDAL H UKUMCHAND, 11 ITR 462 (BOM); DHAKESHWAR COTTON MILLS VS. CIT, 26 ITR 775 (SC) AND CIT VS. R.Y. DURLABHJI, 211 ITR 178 (RAJ). FINALLY, CIT (A) CONFIRMED THE ACTION OF THE AO IN DISALLOWING THE LOSS. PARA 1.9 OF THE IMPUGNED ORDER IS RELEVANT IN THIS REGARD AND THE SAME IS REPRODUCED HERE UNDER: 1.9. HAVING REGARD TO FACTS OF THE CASE, THE CONDUCT OF THE APPELLANT AND HIS NON - REBUTTAL AS WELL AS OTHER MATERIAL ON THE RECORD AN INTERFERENCE COULD REASONABLY BE DRAWN THAT THE TRANSACTIONS IN QUESTION ARE DEF INITELY A COLOURABLE DEVICE AS HELD BY THE AO. IN VIEW OF THE ABOVE, THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE LOSS IS SUSTAINED. THE GROUND OF APPEAL IS DISMISSED. 8 . AGGRIEVED WITH THE SAID ORDER OF THE CIT (A), ASSESSEE FILED THE PRESE NT APPEAL BEFORE THE TRIBUNAL BY RAISING THE GROUNDS EXTRACTED ABOVE. BEFORE THE TRIBUNAL 9 . DURING THE PROCEEDINGS BEFORE US, SHRI S.C. TIW ARI & NATASHA MANGAT, LD COUNSELS FOR THE ASSESSEE NAR RATED THE ABOVE MENTIONED FACTS AND REITERATED THE ARGUMENTS MADE BEFORE THE LOWER AUTHORITIES OF THE DEPARTMENT. BRINGING OUR 6 ATTENTION TO THE PAGES 53 TO 62 OF THE PAPER BOOK, LD COUNSEL MENTIONED THAT THE ASSESSEE DULY OPENED AN ACCOUNT WITH M /S. AADYA TRADING & INVESTMENT PVT. LTD VIDE CLIENT NO. CM031 AND MENT IONED THAT THE FACTS RELATING TO PURCHASES AND TRADING OF 39800 NIFTY FUTURES ON A SINGLE DAY IE 28.3.2008 INVOLVING 263 TRANSACTIONS ARE UNDISPUTED . HE ALSO MENTIONED THAT THERE IS NO MARGIN MONEY KEPT BY THE ASSESSEE WITH THE SAID BROKER AT DELHI. BRIN GING OUR ATTENTION TO PAGE 63 OF THE PAPER BOOK, LD COUNSEL MENTIONED THAT ASSESSEE WAS REQUIRED TO PAY THE DIFFERENCE AMOUNT BETWEEN THE PURCHASE VALUE AND THE SALE VALUE AS ON 1.4.2008. THE BALANCE PAYABLE TO BROKER IS RS. 56,85,855/ - AND THE SAME WAS P AID BY THE ASSESSEE VIDE CHEQUE N O.811268 DATED 1.4.2008 (RS. 25,00,000/ - ); VIDE CH. NO.811270 DATED 17.4.2008 (RS. 10,00,000/ - ) AND VIDE CH. NO.811271 DATED 24.4.2008 (RS. 20,00,000/ - ) AND FOR THE BALANCE OF RS. 1,85,855/ - , A JOURNAL ENTRY WAS PASSED ON 31.10.2008 . REGARDING THE ISSUE RELATING TO CLIENT CODE MODIFICATION, LD COUNSEL STRONGLY MENTIONED THAT THE ASSESSEE IS INVOLVED AND IT IS THE ISSUE BETWEEN THE BROKER AND THE NSE . THEREFORE, IT IS THE AOS RESPONSIBILITY TO OBTAIN THE DETAILS RELATING TO THE CIRCUMSTANCES LEADING TO THE SAID CLIENT CODE MODIFICATIONS INVOLVING THE TRANSFER OF THE TRANSACTIONS FROM CLIENT CODE SJ17 TO M032. REGARDING THE AOS OBSERVATIONS ON (I) WHY THE ASSESSEE HAS NOT ROUTED THE DERIVATIVE TRANSACTIONS WITH HIS REGUL AR BROKER IE EDELWEISS SECURITIES LTD ; (II) HOW THE BROKER LOCATED IN DELHI OBLIGE TO AFFECT THE TRANSACTIONS WORTH RS. 52.53 CRS WITHOUT KEEPING ANY MARGIN MONEY ; (III) WHY THE BROKER IN DELHI WAS NOT COOPERATING W ITH THE AO BY NOT RESPONDING TO THE QUER IES RAISED AND THE TO THE NOTICES ISSUED U/A 131 , LD COUNSEL MENTIONED THAT IT IS FOR THE SAID BROKER TO EXPLAIN AND THE ASSESSEE IS NOTHING TO SAY ON THIS ISSUE. ON THE ISSUE OF HUMAN PROBABILITIES BY THE CIT (A), LD COUNSEL IS OF THE OPINION THAT AO AC TED MERELY ON THE BASIS OF SUSPICION AND SURMISES. OTHERWISE, HE DOES NOT HAVE ANY INFORMATION OR INCRIMINATING MATERIAL TO DISALLOW THE CLAIM OF THE ASSESSEE. AS PER THE LD COUNSEL, THE SUSPICION, HOWEVER STRONG IT MAY BE, IS NOT A GROUND FOR DENYING TH E SET OFF OF BUSINESS LOSS AGAINST THE CAPITAL GAINS. REGARDING THE ONUS, LD COUNSEL HAS NOTHING TO SAY. AS SUCH, LD COUNSEL HAS NOT FILED ANY JUDGMENTS EXCEPT RELYING ON THE CASE LAWS CITED BEFORE THE LOWER AUTHORITIES. 7 10 . PER CONTRA, SHRI VIJAY SHA NKAR, LD SR A R HEAVILY RELIED ON THE ORDERS OF THE AO AND THE CIT (A). ON THE ISSUE OF SHOW CAUSE NOTICES ISSUED BY THE AO, LD DR MENTIONED THAT THE ASSESSEES REPLIES ARE VERY GENERAL IN NATURE. ON THE ISSUE OF ASSESSEES SELECTION OF M/S. AADYA TRADING & INVESTMENT PVT. LTD, AS A BROKER FOR THESE CONTROVERSIAL 263 TRAN S ACTIONS , LD DR MENTIONED THAT ASSESSEE HAS NO EXPLANATION EXCEPT SAYING THAT THE ASSESSEE IS FREE TO SELECT ANY BROKER . THE QUESTION RELATING TO WHY SAID BROKER WAS PICKED UP FOR A DAY IE 28.3.2008 AND WHY THE TRANSACTIONS WERE NOT ROUTED THROUGH THE REGULAR BROKER IE EDELWEISS SECURITIES LTD AND HOW THE BROKER OBLIGED TO AFFECT 263 TRANSACTIONS OUT OF WHICH 135 PURCHASE TRANSACTIONS ENTERED FROM 12.07.30 HRS TO 15.55.42 HRS, WHOSE VALUE IS DETERMINED AT RS. 56,53,019/ - WITH MERELY RS. 100/ - KEPT BY THE ASSESSEE , ARE NOT ANSWERED SATISFACTORILY EITHER TO THE REVENUE OR TO THE TRIBUNAL. ON THE ISSUES RELATING TO DISCHARGING OF THE ONUS , LD DR MENTIONED CATEGORICALLY STATING THAT THE ASSESSEE , WHEN CLAIMED THE DEDUCTION OF BUSINESS LOSS OF RS. 56,85,855/ - AND SUBSEQUENT SET OFF AGAINST THE OTHER INCOME, THE ONUS IS ON THE ASSESSEE TO DEMONSTRATE COMPLETELY BY NOT ONLY BY FILING RELEVANT DOCUMENTS IE THE CONTRACT NOTES AND LEDGER EXTRACTS BUT AL SO BY PRODUCING THE RELATED BROKER ALONG WITH THEIR BOOKS OF ACCOUNT IN SUPPORT OF THE GENUINENESS OF THE CLAIM. FURTHER, LD DR COMMENTED BY STATING THAT, CONSIDERING THE PECULIAR FACTS OF THE TRANSACTIONS, THE ASSESSEE SHOULD DEMONSTRATE AS TO HOW THE BRO KER OBLIGED TO ACCOMMODATE THE TRANSACTIONS WORTH RS 19.82 CRORES WITHOUT ANY SECURITY AMOUNT RECORDED IN BOOKS. THUS, IT IS THE CASE OF NON DISCHARGE OF THE ONUS BY T HE ASSESSEE AND THEREFORE, AO IS JUSTIFIED IN DRAWING THE OBVIOUS CONCLUSIONS AGAINST THE ASSESSEE. FURTHER, LD DR ARGUED THAT IT IS NOT THE CASE OF MERE SUSPICION . ON THE ISSUE OF HUMAN PROBABILITY, LD DR RELIED HEAVILY ON TH E SUPREME COURT JUDGMENTS IN THE CASES OF DURGA PRASAD MORE (SUPRA) AND SUMATI DAYAL VS. CIT (SUPRA) AS RELIED ON BY T HE CIT (A). REGARDING CLIENT CODE MODIFICATIONS, LD DR ARGUED STATING THAT THESE MODIFICATIONS ARE EFFECTED AFTER TRADIN G HOURS OF THE STOCK EXCHANGE. IN THIS CASE, THE BROKER HAS TRANSFERRED THE BUSINESS LOSS OF CLIENT NO.SJ17 AND M032 AND THE SAID LOSS, IF ANY, PERTAINS TO THESE CLIENTS ONLY AND NOT OF THE ASSESSEE. REGARDING THE GENUINENESS OF THE PAYMENT MADE BY THE ASSESSEE TO THE BROKER AT DELHI, LD DR MENTIONED THAT THIS ISSUE WAS 8 NEVER DEALT WITH BY THE AUTHORITIES BELOW AND THEREFORE , HE RELIED ON THE ORDER OF THE AO AND CIT (A). 11 . WE HAVE HEARD LABORIOUS ARGUMENTS PUTFORWARDED BY SHRI S.C. TIWARI LD COUNSEL FOR THE ASSESSEE AS WELL AS SHRI VIJAY SHANKAR, SR A R FOR THE REVENUE. THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED BY THE ASSESSEE ARE ALSO PERUSED . AT THE OUTSET WE FIND THE RE IS NO DISPUTE ON THE FACTS RELATING T O THE FIGURES MENTIONED ABOVE. THE LIMITED ISSUE LEFT FOR OUR ADJUDICATION RELATES TO (I) WHETHER THE BUSINESS LOSS BELONGS TO THE ASSESSEE OR NOT AND IF THE SAME C ONSTITUTES A GENUINE LOSS OF THE ASSESSEE OR NOT ; (II) WHETHER THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS COMPLETELY WHEN HE MA DE A CLAIM OF BUSINESS LOSS AND ITS SET OFF AGAINST THE OTHER INCOME, WHICH HAS THE EFFECT OF REDUCTION OF THE TAX LIABILITY ; A ND (III) THE ISSUES RELATING TO HUMAN PROBABILITIES . THE GROUND OF APPEAL REVOLVES AROUND THESE SUB - ISSUES . 1 2 . THE PECULIAR FACTS LEADING TO THE CLAIM OF BUSINESS LOSS OF RS. 56,53,019/ - ARE MANY AS MENTIONED ABOVE. OUT OF THEM , SOME OF THEM ARE (I) ASS ESSEE DIGRESSED FROM M/S EDELWEISS SECURITIES LTD , MUMBAI ( REGULAR BROKER ) AND ENGAGED M/S. AADYA TRADING AND INVESTMENT PVT. LTD ., NEW DELHI; (II) WITH NO SECURITY OR MARGIN MONEY RECEIVED FROM THE ASSESSEE, M /S. AADYA TRADING AND INVESTMENT PVT. LTD MADE PURCHASES WORTH RS. 19,82,16,280/ - FOR THE ASSESSEE AND EXECUTED 263 TRANSACTIONS ON 28.3.2008 ; SHOULD THESE CLAIM OF LOSS CONSTITUTES THE YEAR - END ADJUSTMENTS FOR TAX EVASION? (III) RS. 56,53,019/ - OF LOSS WAS PAID TO THE BROKER BY THE ASSESSEE IN SUBSEQU ENT YEAR ; (IV) ALL THESE 263 TRANSACTIONS WERE EXECUTED INVOLVING THE CLIENT CODE SJ17 AND M032, WHICH DO NOT BELONG TO THE ASSESSEE AND THE IMPUGNED TRANSACTIONS ARE MODIFIED TO THE ASSESSEE ACCOUNT UNDER INTIMATION TO THE NSE; NORMALLY SUCH MODIFICATIONS ARE PERMITTED BY NSE TO TAKE CARE OF THE HUMAN ERRORS IF ANY; (V ) AADYA TRADING AND INVESTMENT PVT. LTD ., NEW DELHI HAS NOT RESPONDED TO THE ENQUIRIES INITIATED BY THE AO AND NOT COME FORWARD TO EXPLAIN THE CONTROVERSIAL HUMAN ERRORS AND THE DETAILS OF THE QUESTIONABLE CLIENTS PARTICULARS; (VI) ASSESSEE HAS NOT TAKEN ANY INITIATIVE TO PRODUCE AADYA TRADING AND 9 INVESTMENT PVT. LTD OR THE DETAILS OF TWO CLIENTS BEARING THE CLIENT CODE SJ17 AND M032; (VI) AO HAS NOT PURSUED THE INVESTIGATION WITH THE SAID DELHI BASED BROKER AND CONCLUDED THE ASSESSMENT ABRUPTLY. (VII) WHAT IS THE IDENTITY OF THE CLIENT CODE BEARING CC NO SJ17 AND M032 AND WH O THE THESE ACCOUNT HOLDERS? ARE THEY AWARE THAT THEIR ACCOUNTS INVOLVES IMPUGNED MODIFICATIONS FOR 263 TRANSACTIONS A ND THE TRANSFER OF LOSS WORTH RS. 56,53,019/ - FROM THEIR ACCOUNT TO THE ASSESSEE. W HO SHOULD DISCHARGE THE ONUS WITH REGARD TO MODIFICATION THE TRANSACTIONS FROM THESE ACCOUNTS TO THE THAT OF THE ASSESSEE ? IN VIEW OF THE SAID PECULIAR FACTS OF THE CASE, WE NEED TO DECIDE IF THE DISALLOWANCE OF LOSS OF RS. 56,53,019/ - IS JUSTIFIED HOLDING THAT THE SAME IS NON GENUINE LOSS AND NOT ELIGIBLE FOR SET OFF AGAINST THE OTHER INCOME. 1 3 . FURTHER , WE FIND THAT T HERE IS NO DISPUTE ON THE FACTS THAT M/S. AADYA TRADING & INVESTMENT PVT. LTD, IS THE DELHI - BASED SHARE BROKER WITH NSE WITH THE ASSESSEE AND OTHER TWO CLIENTS SUCH AS ASSESSEE WITH CLI ENT CODE CM031, SJ17 AND M032. REGARDING OTHER TWO CLIENTS, THERE ARE NO KYC DETAILS AT ALL. WHAT ARE THEIR NAMES AND ADDRESSE S AND IF THEY HAVE NOT PLACED ORDERS WITH THE BROKER OR OTHERWISE. HOWEVER, IT IS SUBMITTED THAT T HE BROKER UNDISPUTED LY CONTRACTED 263 TRANSACTIONS INITIALLY IN THE CLIENTS NUMBERS OF NO.SJ17 AND CM031 AND NOT THE ASSESSEE. SUBSEQUENTLY, AFTER MARKET HO URS, THESE TRANSACTIONS WERE TRANSFERRED TO THE ASSESSEE S ACCOUNT WITH CLIENT CODE NO.CM031 AND THE SAID MODIFICATION WAS DONE WITH INTIMATION TO THE NSE. THEREFORE, THIS IS AN UNDISPUTED FACT THAT THE BUSINESS LOSS WAS ORIGINALLY GENERATED WITH THE CLIE NT CODE NO.SJ17 AND M032 , WHICH DO NOT BELONG TO THE ASSESSEE, BEFORE THE LOSS IS TRANSFERRED TO THE ASSESSEES ACCOUNT . IT IS NOT KNOW IF THE PERSONS HOLDING THE SAID CLIENT CODES NO. SJ17 AND M032 ARE AWARE OF THIS MAJOR DECISION. THEREFORE, THE ISSUE I S WHETHER THE SAID MODIFICATION TO THE CLIENT CODE QUA THE 263 TRANSACTIONS WAS DONE WITH A MALA FIDE INTENTION TO GENERATE BUSINES S LOSS FOR THE ASSESSEE BY THE COLLUSIVE ARRANGEMENT WITH THE BROKER. THIS MODIFICATION TO THE CLIENT CODE HAS MANY ANGLES F OR VERIFICATION. UNLESS THESE QUESTIONS ARE FULLY ADDRESSED IN PROPER ENQUIRY BY THE AO AND THE ASSESSEE PROVIDES THE EXPLANATIONS , THE TRUTH WILL NOT EMERGE. THE SAID BROKER HAS TO BRING 10 RELEVANT DOCUMENTS OF CLIENT NO.SJ17 AND AND M032 AND COME FORWARD WITH THE FACTS BE FORE THE AO IN THE INTEREST OF THE JUSTICE QUA THE IMPUGNED BUSINESS LOSSES. NSE CAN BE THE OTHER SOURCE OF INFORMATION FOR THE CLIENTS HOLDING CLIENT CODE NO.SJ17 AND M032 AND THE AO MAY EXPLORE IN TIMES OF NON COOPERATION OF THE BROKER. EVENTUALLY, IT IS NEEDED THAT THE AO HAS TO ESTABLISH THE GENUINENESS OF THESE CLIENTS AND ALSO OF THE TRANSACTIONS . FOR SOME REASON OR THE OTHER, THE SAID DETAILS WERE NOT MADE AVAILABLE TO THE AO AND IN OUR OPINION, HE NEEDS TO INVOKE VARIOUS PROVISION S AVAILABLE IN THE STATUTE TO GARNER RELEVANT EVIDENCES TO MAKE THE INVESTIGATION COMPLETE. IN CASE, WHEN THE CLIENT CODE NO.SJ17 AND M032 ARE GENUINE ACCOUNTS AND THE IMPUGNED LOSS IS CLAIMED BY THEM IN THEIR BOOKS OF ACCOUNT, FOR WHATEVER THE REASONS, T HE MALA FIDE INTENTIONS OF THE ASSESSEE AS WELL AS THE BROKER ARE EXPOSED AS IT BECOMES CLAIM OF LOSSES IN THE HANDS OF MANY PERSONS . IT IS THE MATTER OF INVESTIGATION, WHICH AO SHOULD HAVE DONE BEFORE CONCLUDING THE ASSESSMENT. IN CASE OF REVERSE SITUATI ON, CONSIDERING THE FACT THAT THE ASSESSEE MADE THE PAYMENTS I . E ., THE DIFFERENCE BETWEEN THE PURCHASE AND SALE TO THE BROKER, THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED OUTRIGHT. IT IS NOT THE CASE OF THE AO THAT THE SAID SUM OF RS 56,85,855/ - HAS REACH ED THE POCKETS OF THE ASSESSEE EVENTUALLY AND IN SUCH CASE, WHERE IS THE REDUCTION OF TAX LIABILITIES TO THE ASSESSEE. OTHER ASPECTS RELATING TO USING THE SERVICES OF M/S. AADYA TRADING & INVESTMENT PVT. LTD FOR DERIVATIVE TRANSACTIONS ON 28.3.2008 WITHOUT KEEPING MARGIN MONEY ETC , IN OUR OPINION, THESE ISSUES FALL IN THE ZONE OF SUSPICION AND SURMISES AS THINGS STAND AT THE TIME MAKING OF THE ASSESSMENT . AS SUCH, THE AO DOES NOT HAVE ANY INCRIMINATING INFORMATION TO SUPPORT THE SAID SUSPICION. THERE CAN BE MANY REASONS WHY SOME BROKERS ENTERTAIN SOME CLIENTS ON THEIR OWN RISK. IT IS THEIR COMMERCIAL RISK. IN THE PRESENT CASE, NEITHER THE ASSESSEE NOR HIS BROKER ARE COMING FORWARD WITH THE FACTS AND DETAILS NOR THE AO IS ATTEMPTING TO DIG OUT THE HIDDEN IN FORMATION. THEREFORE, ON THIS ASPECT, IT IS PREMATURE TO COME TO THE CONCLUSION THAT THE IMPUGNED LOSS GENERATED CONSTITUTE S NON - GENUINE OR OTHERWISE . ON THESE FACTS, IF CONFIRM THE CONCLUSIONS OF THE CIT(A), IT AMOUNTS TO CONFIRMING THE IPSE DIXIT (UNPROV EN ASSERTIONS) OF THE AO, WHICH IS NOT SUPPORTED BY ANY CONCLUSIVE EVIDENCES. IT IS NOT IN THE INTEREST OF THE JUSTICE. THEREFORE, I N OUR OPINION, THERE IS 11 NEED FOR BRINGING MORE BASIC FACTS RELATING TO THE IMPUGNED CLIENT CODES NO.SJ17 AND M032 TO THE REC ORDS AND THE MANNER OF TREATMENT TO THE SAME IN THEIR BOOKS AND RETURNS . FURTHER, AO NEEDS TO ANALYSE AND CONCLUDE ON THE END DESTINATION OF THE PAYMENTS MADE BY THE ASSESSEE TO DELHI - BASED BROKER. 1 4 . REGARDING THE ISSUE OF DISCHARGING OF THE ONUS BY T HE ASSESSEE, IT IS ADMITTED POSITION THAT THE ASSESSEE SUPPLIED THE DETAILS OF THE M/S AADYA TRADING AND INVESTMENT PVT. LTD . , DELHI - BASED BROKER AND THE AO DULY ATTEMPTED TO OBTAIN THE DETAILS ABOUT THE IMPUGNED TRANSACTIONS AND THE CONTROVERSIAL CLIENT A CCOUNTS AND THE ATTEMPTS HAVE FAILED. THERE ARE NO DETAILS IN RECORD ABOUT THE REASONS FOR THE FAILURE. BUT THE FACT IS THAT THE AO IMMEDIATELY SHIFTED THE ONUS TO THE ASSESSEE AND REQUIRED THE ASSESSEE TO PRODUCE THE BROKER AND HIS RECORDS. ON FAILURE OF THE ASSESSEE, AO CONCLUDED THE ISSUE AGAINST ASSESSEE. IT IS TRUE THAT THE ASSESSEE MADE A CLAIM OF DEDUCTION OF BUSINESS LOSS OF RS. 56,85,855/ - AND ALSO CLAIMED SET OFF OF THE SAID LOSS AGAINST THE OTHER INCOME FOR ULTIMATE REDUCTION OF TAX LIABILITIES OF THE ASSESSEE . IN THAT SITUATION, NORMALLY THE ONUS IS CERTAINLY ON THE ASSESSEE TO SUBSTANTI ATE THE CLAIM IN ALL RESPECTS. FURTHER, IT IS A TRAIT LAW THAT THE ONUS SHIFTS DEPENDING ON THE QUALITY OF INFORMATION SUPPLIED BY THE ASSESSEE AND IT SHIFTS FR OM TIME TO TIME. IN THIS INSTANT CASE, IT IS KNOWN IF THE ADDRESS IS WRONG, THE NOTICE HAVE REACHED THE AADYA TRADING AND INVESTMENT PVT. LTD ETC. FURTHER, IN OUR OPINION, THE A SSESSEE IS REQUIRED TO FURNISH BASIC INFORMATION RELATING TO THE TRANSACTIONS ( I) WHY THE ASSESSEE CHANGED THE REGULAR BROKER FOR THE DERIVATIVES TRANSACTIONS FOR THE SINGLE DAY ON 28.3.08; (II) HOW THE SAID BROKER ENTERTAINED HIM FOR EFFECTING HUGE TRANSACTIONS IN A SINGULAR DAY ON 28.3.2008 WITH MERE RS. 100/ - MARGIN MONEY AS ADVA NCE ; (II) IN WHAT CIRCUMSTANCE, THE SAID BROKER ACCOMMODATED THE ASSESSEES PURCHASES TO THE TUNE OF RS 19.82 CR WITH OUT ANY SECURITY . AO NEEDS TO INVESTIGATE INTO THE CIRCUMSTANCES THAT LED TO THE TRANSFER OF 263 TRANSACTIONS INVOLVING THE PURCHASES OF 39800 NIFTY FUTURES AMOUNTING TO RS. 19,82,16,280/ - AT THE END OF THE DAY , TO THE ACCOUNT OF THE ASSESSEE AND HOW IT CONSTITUTES THE HUMAN ERROR. IN THIS REGARD, THE ONUS IS ON THE ASSESSEE. WE CANNOT UNDERSTAND AS TO WHAT PREVENTED THE AO TO SEND COMMI SSION TO HIS COUNTER PARTS AT DELHI OR INVESTIGATION WING OF THE DEPARTMENT IN DELHI TO PROBE INTO THE SUSPICIOUS TRANSACTIONS BROKERED BY THE 12 SAID AADYA TRADING AND INVESTMENT PVT. LTD . REVENUE NEEDS TO ANALYSE WHY SHOULD THE ASSESSEE SUFFER FOR THE MISTA KE IF ANY OR NONCOOPERATION OF THE BROKER QUA THE NOTICE OF THE AO? HAS THE INITIATED ANY PENALTY PROCEEDINGS AGAINST THE BROKER FOR THE SAID NON COOPERATION? IT DOES NOT MEAN WE ARE NOT GIVING ANY CLEAN CHIT TO THE ASSESSEE. ULTIMATELY, WHAT IS IMPORTANT IS THE UNEARTHING OF THE BASIC FACTS , SUPREMACY OF THE TRUTH AND THE INTEREST OF THE JUSTICE. OTHERWISE, I T IS NOT PROPER THAT THE AO SHOULD DEMAND FROM THE ASSESSEE THE ENFORCEMENT OF THE ATTENDANCE OF M/S AADYA TRADING AND INVESTMENT PVT. LTD , WHEN THE A O HAS BLESSED WITH PLENTY OF POWERS GRANTED IN THE STATUTE IE SECTION S 131, 133(6), 133A, 132 OF THE ACT ETC. WE ARE OF THE STRONG VIEW THAT THE REVENUE MUST ENFORCE THE ATTENDANCE OF THE SAID BROKER IN THE REMAND PROCEEDINGS TO DELVE THE ISSUE TO THE LOGI CAL CONCLUSIONS. OTHERWISE, TAXING THE ASSESSEE BY HOLDING THE IMPUGNED LOSS AS NON - GENUINE AMOUNTS TO GRANTING PREMIUM TO THE BROKER, WHO IS NOT COOPERATING WITH THE PROCEEDINGS BY THE AO. THEREFORE, IN OUR VIEW, THE IMPUGNED ASSESSMENT WAS MADE PREMATURE LY CONCLUDING THE INVESTIGATION S INITIATED BY THE AO AND AT THE END, WITHOUT BRING THE RELEVANT BASIC FACTS TO THE RECORDS. 15 . REGARDING THE ISSUE S RELATING TO THE THEORY OF HUMAN PROBABILITIES , THE ASSESSEE CLAIMS THA T IT IS MOST PROBABLE DUE TO HUMAN ERROR THAT THE 263 TRANSACTIONS ARE MISTAKENLY BOOKED IN THE ACCOUNTS OF THE OTHER CLIENTS OF THE AADYA TRADING AND INVESTMENT PVT. LTD AND SUBSEQUENTLY , MODIFIED OR TRANSFERRED TO THE ASSESSEES ACCOUNT. FURTHER, I T IS A PROBAB ILITY THAT THE SAID TRANSACT IONS EFFECTED ON THE SINGLE DAY OF 28.3.2008 YIELDED LOSS INVOLVING AADYA TRADING AND INVESTMENT PVT. LTD . ASSESSEE WOULD HAVE EARNED LOSS EVEN IF THE ASSESSEE EFFECT THE SAME TRANSACTION WITH THEIR REGULAR BROKER. THUS, IT IS THE CLAIM OF THE ASSESSEE AMI D ST THESE POSSIBILITIES, AO CANNOT DENY THE CLAIM OF DEDUCTION OF THE SAID LOSS OF RS. 56,85,855/ - . 16 . ON THE CONTRARY, FROM THE REVENUE POINT OF VIEW ALSO, IT IS POSSIBLE TO THINK THAT THE ASSESSEE HAS ENGINEERED THE IMPUGNED LOSSES OF RS. 56,85,855/ - W ITH THE COLLUSIVE UNDERSTANDING WITH THE BROKER, WHO IS ALLEGEDLY DEFIED THE NOTICE U/S 131 OF 13 THE AO AND NOT COOPERATED WITH THE AOS PROCEEDINGS. IT IS NOT KNOWN WHY THE DEPARTMENT LYING LOW TO TAKE ON THIS BROKER AND CONCLUDED THE ASSESSMENT BY ABRUPTLY ENDING THE INVESTIGATION AGAINST AADYA TRADING AND INVESTMENT PVT. LTD . IT IS ALSO POSSIBLE THE LOSS IN QUESTION IS BOGUS LOSS AND IT IS NOT RELATED TO THE ASSESSEE. FURTHER, FROM THE REVENUE POINT OF VIEW, IT IS ALSO POSSIBLE AADYA TRADING AND INVESTMEN T PVT. LTD MIGHT HAVE FAVORED THE ASSESSEE IN PURCHASE OF THE IMPUGNED LOSS FOR ULTIMATE REDUCTION OF THE TAX LIABILITY . HOWEVER, THERE IS NO EVIDENCE WITH THE AO IN THIS REGARD. IT IS THE AOS PRESUMPTION THAT BOGUS BUSINESS LOSS WAS GENERATED WITH THE COLLUSION OF THE BROKER THEREBY REDUCING THE CAPITAL GAIN TAXES TO THE EXTENT OF THE BUSINESS LOSS SET OFF U/S 71 OF THE ACT. IN SUCH A CASE, AO IS UNDER OBLIGATION TO DIG OUT AS TO THE FINAL DESTINATION OF THE PAYMENT OF RS. 56,85,855/ - REPORTEDLY MADE B Y TO M/S. AADYA TRADING & INVESTMENT PVT. LTD ON VARIOUS DATES IN THE MONTH OF APRIL, 2008. SO LONG AS THE AO DOES NOT HAVE ANY INCRIMINA TING INFORMATION ON THIS ASPECT AGAINST THE ASSESSEE, AO IS UNDER OBLIGATION TO ACCEPT THE CLAIM OR EXPLANATION OF THE ASSESSEE . THEREFORE, THE REVENUE AUTHORITIES HAVE CONCLUDED THE INVESTIGATION ABRUPTLY QUA M/S AADYA TRADING AND INVESTMENT PVT. LTD AND ALSO THE END USE OR DESTINATION OF THE PAYMENTS MADE BY THE AS SESSEE. 1 7 . THUS, ORDINARILY THE ASSESSMENT IS MADE AS PER THE PROVISIONS OF SECTION 143(3) OF THE ACT AFTER CONSIDERING THE EVIDENCES, PARTICULARS PRODUCED BY THE ASSESSEE AND CERTAINLY NOT BASED ON THE THEORIES, SURMISES OR PRESUMPTIONS AS DONE IN THE INSTANT CASE . IN THIS CASE, THE INVESTIGATION INITIATE D BY THE AO IS NOT TAKEN TO THE LOGICAL END. IN OUR VIEW, THE AO PREMATURELY SHIFTED THE ONUS TO THE ASSESSEE. AT THE SAME TIME, THE ASSESSEE ALSO RELIED ON THE HUMAN PROBABILITIES WITHOUT DOING HIS PART BY OBTAINING THE INFORMATION ABOUT THE CORRECTNESS O F THE ADDRESS OF AADYA TRADING AND INVESTMENT PVT. LTD IF ANY . 18. REGARDING C LIENT CODE M ODIFICATION (IN SHORT CCM) RELATED ALLEGATIONS OF THE AO, WE FIND THAT THE NSE HAS A DEFINITE POLICY IN THIS REGARD. WE FIND THE AO MADE ENQUIRIES WITH THE NSE, WH O REPLIED TO THE AO VIDE THE LETTER DATED 3.11.2010. THE SAME IS EXTRACTED AT PARA 4.1 OF THE ASSESSMENT ORDER. ON PERUSAL OF THE SAME, WE 14 FIND THAT THE LANGUAGE USED IN THE LETTER VARIES WITH THE ONE USED AND NARRATED IN THE ACTUAL POLICY ADOPTED BY THE NSE ON THIS CCM. AS PER THE POLICY, THE MODIFICATION IF ANY IS NOT PERMITTED ACROSS THE BOARD AND THE SAME IS ALLOWED WITH RESTRICTIONS. ONLY THE FOLLOWING TYPES OF MODIFICATIONS ARE PERMITTED BY NSE NAMELY, I) SIMILARITY OF NAMES AND CODE NUMBERS - NON RE PETITIVE ONES AND (II) FAMILY CODES . MODIFICATIONS ARE NOT PERMITTED AS A RULE BUT ONLY AS EXCEPTION TO THE RULE. THEREFORE, THE ASSESSEE CANNOT SIMPLY DISTANCE HIMSELF FROM THIS MAJOR ALLEGATION BY STATING THAT THE CLIENT MODIFICATION IS THE INTERNAL MATT ER OF THE BROKER AND ASSESSEE HAS NOT CONTROL. THE FACT THAT LOSS IS TRANSFERRED TO CLIENT NO 31 IS TO THE BENEFIT OF THE ASSESSEE, THERE IS SOME AMOUNT OF RESPONSIBILITY ON HIS PART TO DO IN THE INTEREST OF THE JUSTICE. ASSESSEE BEING THE BENEFICIARY OF T HE IMPUGNED LOSS AND THE CLAIMER OF THE DEDUCTION BY WAY OF SET OFF AGAINST THE OTHER INCOME, OR THE BROKER, WHO IS PARTY TO SUCH GENERATION OF LOSS, NEEDS TO DEMONSTRATE ON WHAT BASIS THE CLIENT CODES NO.SJ17 AND M032 ARE SIMILAR TO THAT OF THE ASSESSEE. ARE THE NAMES ARE SIMILAR? ARE THESE THREE CLIENTS ARE PART OF THE ASSESSEES FAMILY? HOW THE SJ 17 OR MO32 ARE AKIN TO MO 31? THESE ARE THE LOGICAL QUESTIONS WHICH ARE REQUIRED TO BE ANSWERED BY THE CLAIMER OF THE DEDUCTION OR GENERATOR OF THE IMPUGNED LOS SES. 1 9 . THEREFORE, BASIS FACTS RELATING TO PECULIAR ISSUES ENLISTED ABOVE, ARE ESSENTIALLY REQUIRED FOR MEANING FUL ADJUDICATION OF THE GROUND RAISED BEFORE US. THUS, IN THE INTEREST OF THE JUSTICE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSU E TO THE FILES OF THE AO FOR FRESH ADJUDICATION AFTE R COMPLETING THE ENQUIRIES INITIATED IN THE REGULAR ASSESSMENT PROCEEDINGS . AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY , THE SOLITARY GROUND RAISED BY THE ASSESSEE I S SET ASIDE. 20 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PR ONOUNCED IN THE OPEN COURT ON 6 TH SEPTEMBER, 2013. SD/ - SD/ - (D. MANMOHAN ) (D. KARUNAKARA RAO ) / VICE P RESIDENT / ACCOUNTANT MEMBER MUMBAI ; 6.9 .2013 15 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI