The assessee is a member of Multi Commodity Exchange of India Ltd (MCX) and National Commodity and Derivative s Exchange of India. The assessee is carrying on trading activities both on derivatives and delivery based transactions on its own account as well as on behalf of various clients. AO has added the entire amount of doubtful transactions by way of assessee’s additional income on the basis of client code modification.  CIT (A) deleted the addition on the ground that all the clients are having PAN and regularly filing their returns and profits were taxed in their hands.  Clients are not related parties. Modification was around 3% of the total transactions. All of them were complied with KYC norms. Tribunal affirmed the order of CIT(A) ). On appeal by the revenue , dismissing the appeal the Court held that ,even if the Revenue’s theory of the assessee having enabled the clients to claim contrived losses is correct, the Revenue had to bring on record some evidence of the income earned by the assessee in the process, be it in the nature of commission or otherwise. Adding the entire amount of doubtful transactions by way of assessee’s additional income is wholly impermissible. The fate of the individual investors in whose cases the Revenue could have questioned the artificial losses is not known. Accordingly the appeal of the revenue is dismissed. (ITA No.1257 of 2016, dt.15.01.2019)(AY. 2006 -07)

(Editorial: Order of Mumbai Tribunal in ITO v. Pat Commodity Services P. Ltd (ITA No. 3498/3499/Mum/2012 dt.07/08/2015)(AY. 2006 07, 2007-08) is affirmed.