Amigo Finstock Pvt. Ltd., Ahmedabad V. The ITO, Ward-1(1)(1), Ahmedabad

MA 44/AHD/2023

AI Insights

The case revolves around the assessee, Amigo Finstock Pvt. Ltd., challenging the Tribunal's earlier decision which relied heavily on the Investigation Wing's report regarding Client Code Modifications (CCM) linked to the assessee's transactions. The assessee argued that the Tribunal and lower authorities did not independently verify the Investigation Wing's findings and that similar cases had been treated differently. The Tribunal dismissed the application, emphasizing that the specific CCM in question was directly related to the assessee's Client Code and was not a typographical error, thereby supporting the original findings of tax evasion.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300012 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 08-06-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2023
• Other Referred Cases: CIT vs. Odeon Builders Pvt. Ltd., Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II, ACIT vs. Saurashtra Kutch Exchange Ltd., Chintan Jaswantibhai Shah vs. ITO, DCIT vs. Kaizen Stock Trade Pvt. Ltd., ACIT vs. Amar Mukeshkumar Shah, ACIT vs. Kunvarji Finance Pvt. Ltd., Reliance Communications Ltd. vs. Deputy Director of Income Tax-2(1), Mumbai, DLF Universal vs. Commissioner of Income Tax, Honda Siel Power Products Ltd. vs. Commissioner of Income Tax, C.I.T. vs. Quality Steel Tubes Ltd., Deepak Dalela vs. I.T.O., Banas Security & Personal Force vs. Com. Central Excise, Perfetti Van Melle India Pvt. Ltd. vs. CIT
• Laws Referred To: CIT vs. Odeon Builders Pvt. Ltd. 110 taxmann.com 64, Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II 62 taxmann.com 3, ACIT vs. Saurashtra Kutch Exchange Ltd., Chintan Jaswantibhai Shah vs. ITO, DCIT vs. Kaizen Stock Trade Pvt. Ltd. 130 taxmann.com 236, ACIT vs. Amar Mukeshkumar Shah 81 taxmann.com 450, ACIT vs. Kunvarji Finance Pvt. Ltd. 61 taxmann.com 52, Reliance Communications Ltd. vs. Deputy Director of Income Tax-2(1), Mumbai 88 taxmann.com 812, DLF Universal vs. Commissioner of Income Tax 172 taxmann.com 107, Honda Siel Power Products Ltd. vs. Commissioner of Income Tax 165 taxmann.com 307, C.I.T. vs. Quality Steel Tubes Ltd. 33 taxmann.com 571, Deepak Dalela vs. I.T.O., Banas Security & Personal Force vs. Com. Central Excise 45 taxmann.com 84, Perfetti Van Melle India Pvt. Ltd. vs. CIT 20 taxmann.com 756
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Transactions in derivatives
• Section: 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER M. A . N o. 44 /A h d /2 0 2 3 ( In I TA N o. 1 03 7/ A h d/ 20 18 ) ( A s se ss m e nt Y e a r : 20 09- 1 0 ) A m ig o Fi ns toc k Pv t . L td . P- 2, C i t y C e n tr e, N e ar S w a s t ik C h ar R a st s , C . G . R oad , Ah me da bad - 3 80 00 9 V s . I nc o me Ta x O f f ic er , War d - 1 ( 1) ( 1 ) , A h mj e da ba d [ P AN N o. A A BC A 9 9 7 8R ] (Appellant) .. (Respondent) Appellant by : Shri Bhavik Nagori, A.R. Respondent by : Shri Mukesh Jain, Sr. D.R. D a t e of H ea r i ng 09.06.2023 D a t e of P r o no u n ce me nt 14.06.2023 O R D E R This Miscellaneous Application is filed by the assessee in respect of the order dated 31.10.2022 passed by the Tribunal. 2. The Ld. A.R. submitted that the Tribunal brushed aside the case of the assessee merely by relying on Investigation Wing Report as per Para 7 of the order stating that ADIT (Investigation) has detailed out the modus operandi of assessee his broker which is not permissible as per Hon’ble Supreme Court decision in case of CIT vs. Odeon Builders Pvt. Ltd. 110 taxmann.com 64 wherein the orders of Tribunal & Delhi High Court wherein it was held that the entire disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the Assessing Officer who has not provided the copy of such statements to the M.A No.44/Ahd/2023 (in ITA No. 1037/Ahd/2018) Amigo Finstock Pvt. Ltd. vs. ITO Asst.Year– 2009-10 - 2 - assessee, thus denying opportunity of cross-examination to the assessee, who has prima facie discharged the initial burden of substantiating furnishing the requisite purchase documents and hence addition was deleted. The Ld. A.R. submitted that in the present case also assessee has discharged his onus by proving contract notes of F&O transactions which are still paid & duly reflected in NSE, ledger accounts, copy of financials etc. The addition is confirmed by the Tribunal CIT(A), & AO only on the basis of Investigation Wing Report only without conducting any independent inquiry by Assessing Officer. Also there is specific mention of statement of assessee’s broker is recorded and no copy of the same is provided if any & opportunity to cross-examine the same is not given which is again against the principle of natural justice as per law laid down by Hon’ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II 62 taxmann.com 3. The law laid down by Hon’ble Supreme Court is binding on all the courts within the territory of India as per Article 141 of the Constitution. As per the judgment of Hon’ble Supreme Court of India in the case of ACIT vs. Saurashtra Kutch Exchange Ltd. non-consideration of judgment of Jurisdictional High Court or Supreme Court of India whether or not is mistake apparent from record. The Ahmedabad Bench of the Tribunal in case of Chintan Jaswantibhai Shah vs. ITO on the identical facts as of assessee wherein as per Investigation Wing Report it was found that broker of assessee was involved in Client Code Modification (in short “CCM”) activity and Client Code Modification were done by the broker in assessee’s case, held that Investigation Wing Report needs to be further examined by the Assessing Officer by examining the other party and other corroborative M.A No.44/Ahd/2023 (in ITA No. 1037/Ahd/2018) Amigo Finstock Pvt. Ltd. vs. ITO Asst.Year– 2009-10 - 3 - evidenced needs to be brought on record. In another identical case of Ahmedabad Bench of the Tribunal of DCIT vs. Kaizen Stock Trade Pvt. Ltd. 130 taxmann.com 236 took the same view. The Ahmedabad Bench of the Tribunal in case of ACIT vs. Amar Mukeshkumar Shah 81 taxmann.com 450 and ACIT vs. Kunvarji Finance Pvt. Ltd. 61 taxmann.com 52 held that all the Client Code Modification of 1% is absolutely normal and negligible number since it is also permitted by circular. Thus, the Ld. A.R. submitted that the order does not defect at least prima facie how those decisions are not applicable and how facts and circumstances of assessee’s case is different from these judgments. The case of the assessee on the facts is identical it was also pointed out during the course of hearing. The Ld. A.R. further submitted that it is a well settled principle that if on identical issue the Co-ordinate Bench has taken a view it becomes binding precedent for another bench and if another view is to be taken by bench for not following the same then it must record the reasons for not following the same and it must request the president of Tribunal to constitute a large bench to decide the difference of view on the issue. However, the same is not followed is mistake apparent from record in view of below judgments:- 1. ITAT Mumbai in Reliance Communications Ltd. vs. Deputy Director of Income Tax-2(1), Mumbai 88 taxmann.com 812 2. High Court of Delhi in the case of DLF Universal vs. Commissioner of Income Tax 172 taxmann.com 107 M.A No.44/Ahd/2023 (in ITA No. 1037/Ahd/2018) Amigo Finstock Pvt. Ltd. vs. ITO Asst.Year– 2009-10 - 4 - 3. Supreme Court in the case of Honda Siel Power Products Ltd. vs. Commissioner of Income Tax 165 taxmann.com 307 The Ld. A.R. further submitted that decisions quoted are not considered in correct perspective. Thus, as held in the following decisions that there is mistake apparent from record: 1. Allahabad High Court in the case of C.I.T. vs. Quality Steel Tubes Ltd. 33 taxmann.com 571 2. Deepak Dalela vs. I.T.O. 3. Gujarat High Court in the case of Banas Security & Personal Force vs. Com. Central Excise 45 taxmann.com 84. The Ld. A.R. further submitted that no enquiry is made with broker or country party with whom modification are taken place there was proper facts finding and no allegation of exchange of cash. There was no cross- examination of statement recorded if any of the broker. Transactions are related on exchanges and STT is also paid on the same and transactions were not in dispute. There were 9 transactions out of 507 transactions in respect of which Client Code Modification is done and hence it comes to negligible 1.77% transaction for which CCM is done which is within the permissible limits as per SEBI / NSE circular. The Ahmedabad Bench of the Tribunal in case of Kunwarji Finance Pvt. Ltd. & Amar Mukeshkumar Shah wherein it is held that transactions are carried out during trading window and all transactions were carried out only during trading hours only M.A No.44/Ahd/2023 (in ITA No. 1037/Ahd/2018) Amigo Finstock Pvt. Ltd. vs. ITO Asst.Year– 2009-10 - 5 - as duly reflected in contract notes. Scrip trading in F&O are high volume shares where fluctuation arises within fraction of seconds leading practically impossible to determine gain / loss at the end of day. The Ld. A.R. submitted that this is not inquired whether the counter party with whom client code modification is carried out comes within same tax bracket or not. Further it appears that alternative submissions regarding the transactions being less than 2% are not addressed and points 2 to 5 are missed out. In view of the Hon’ble Supreme Court decision in case of Perfetti Van Melle India Pvt. Ltd. vs. CIT 20 taxmann.com 756, if alternative contention raised is not considered it is a mistake. 4. The Ld. D.R. submitted that at this juncture the assessee is adjudicating for review of the order which is not permissible. 5. Heard both the parties and perused all the relevant material available on record. After going through the decision of the Tribunal, the Tribunal has categorically given observations of the Assessing Officer on the points related to ADIT (Investigation) report and annexure enclosed therein are directly related to original Client Code and the other Client Code which was totally different from the assessee’s Client Code and therefore, there was a specific mention of the assessee’s case in the investigation report which has been verified by the Assessing Officer while passing the assessment order. Observations made by the Assessing Officer as well as CIT(A) regarding modification not found genuine in assessee’s case in all respect not only relied upon investigation report after verifying the investigation report both the Revenue authorities as well as appellate authorities has come to the said M.A No.44/Ahd/2023 (in ITA No. 1037/Ahd/2018) Amigo Finstock Pvt. Ltd. vs. ITO Asst.Year– 2009-10 - 6 - conclusion. In the present assessee’s case the Client Code Modification was not a punching / typographical error but in fact is a proper mechanism used by the broker and the assessee by arranging such modification for assessee’s benefit. The plea of the assessee that the Client Code Modification was only for 1.77% has to be allowed as per Circulars issued by SEBI / NSE will be applicable in those cases which are found to be genuine and not in the cases where there is a specific record mentioning the Client Code which is totally different from the assessee’s Client Code. The Ld. A.R’s. contention that the decision of Hon’ble Apex Court has not been taken into consideration is also not applicable in the present case as the factual aspect in the cases cited by the assessee during the hearing of the appeal as well as at the time of hearing of this Miscellaneous Application are factually not identical as in the present assessee’s case the investigation report and the verification of the investigation report clearly set out that original Client Code was A2402 and A1240 which are totally different from the assessee’s Client Code i.e. AB227. Thus, the assessee’s case has been pointedly referred the deliberation of Client Code Modification which should not be permissible under any circumstances as the assessee has clearly taken a benefit of the same. The other decisions of the Ahmedabad Benches of the Tribunal will also not be applicable in the present case as the factual aspect and the modus operandi mentioned in those cases in relation to those assessee’s case were not properly set out either by the Assessing Officer or by the CIT(A). But in the present assessee’s case that is Amigo Finstock Pvt. Ltd. the Assessing Officer as well as the CIT(A) has taken cognizance of the factual aspect in respect of wrong Client Code Modification and the benefit of tax evasion taken by the assessee. The Ld. A.R’s. contention that M.A No.44/Ahd/2023 (in ITA No. 1037/Ahd/2018) Amigo Finstock Pvt. Ltd. vs. ITO Asst.Year– 2009-10 - 7 - the alternate contention of the assessee was not taken into account also does not stand when the clear factual aspect has been pointed out both by the Assessing Officer as well as CIT(A). Thus, the Miscellaneous Application filed by the assessee is dismissed. 6. In result, the Miscellaneous Application filed by the assessee is dismissed. This Order pronounced in Open Court on 14/06/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 14/06/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 12.06.2023 2. Date on which the typed draft is placed before the Dictating Member 12.06.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 13.06.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .06.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 14.06.2023 7. Date on which the file goes to the Bench Clerk 14.06.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................