S.143(3): Assessment – Business income: Client Code Modification -Alleged shifting of losses through CCM -Mere modification of client code by broker could not establish that resultant loss was fictitious or arranged for tax purposes -Assessee not being a stock-broker could not independently undertake CCM -No material to establish that assessee instructed broker to modify client codes or that any pre-arranged understanding existed -No evidence of exchange of money, cash consideration, commission or other benefit -General investigation regarding misuse of CCM could not automatically be applied to assessee without assessee-specific corroborative material -Suspicion, however strong, could not take the place of evidence -Addition of Rs.1,06,40,281 deleted.[ S.28(i)]
The Assessing Officer treated loss of Rs.1,06,40,281 arising from alleged Client Code Modification transactions as artificially shifted loss, relying principally on Investigation Wing material and the pattern and magnitude of the modifications. The Tribunal observed that CCM was a facility available to stock-brokers for correction of genuine errors and that mere modification of client codes could not, by itself, establish that the resultant loss was fictitious. The assessee was not a stock-broker and there was no material showing that it had instructed the broker to make the modifications or had entered into any pre-arranged arrangement for shifting taxable losses. There was also no evidence of exchange of money, cash consideration, commission or other benefit, nor any specific relationship or collusion with the concerned parties. The Revenue had not brought sufficient assessee-specific corroborative material to establish that the assessee deliberately participated in a colourable arrangement. The Tribunal held that general findings regarding misuse of CCM could not be mechanically applied to the assessee and directed the Assessing Officer to delete the addition of Rs.1,06,40,281/-. (AY. 2009-10) (ITA No. 3222/Mum/2026 dt. 18-08-2026)
Ganita Technologies & Services Pvt. Ltd. (Successor in interest to Vocation Invt. & Fin. Co. Pvt. Ltd.) v. ACIT (Mum.)(Trib.) [www.itatonline.org]
[Coram : Hon’ble Shri Om Prakash Kant, AM and Hon’ble Shri Pawan Singh JM]