Time Media & Entertainment Llp (Earlier ... vs Income Tax Officer 16(1)(5), Mumbai on 18 June, 2019

(g) This is absolutely very strange on part of any broker or an employee of a broker to so many human errors within a span of just 9 trading sessions in a particular pattern and timing involving such huge money and stakes in crores of rupees without the connivance of the broker and the client.

(h) A list of transactions as reported in the NSE with regard to the above stated client code modifications are enclosed and forming part of this order as annexure -A to this order.

The finding of learned CIT(A) that SEBI and NSE has not taken any action against the assessee is also not supported by any material on record as no such enquiry was conducted by AO and/or CIT(A) . It was only in response to initial enquiry conducted by DIT(I&CI) based on newspaper reports from NSE that NSE confirmed that there was a spectacular rise in client code modifications in March 2010 which indicates towards tax evasion, which information was passed on by DIT(I&CI) to the AO. No enquiry could be conducted by AO during assessment proceedings nor in response to directions of Addl. CIT dated 22-03-2013 . The learned CIT(A) also did not conducted any enquiry nor directed AO to conduct any enquiry during appellate proceedings. The powers of learned CIT(A) are co-terminus with the powers of the AO including power of assessment. When the powers are granted by statute, the same need to be exercised in a manner to achieve the mandate of the 1961 Act to compute correct taxes in the hands of tax-payer. The powers cannot be used in an arbitrary manner otherwise the orders passed in pursuance of such arbitrary use of powers will enter the arena of perversity. The learned CIT(A) was fully aware that the AO could not comply with directions of learned Addl. CIT issued u/w 144A to conduct relevant enquiry, examination and verification as was directed by learned Addl. CIT due to matter getting time barred on 31-03-2013 as direction were issued only on 22-03- 2013, it was incumbent on the learned CIT(A) to conduct the necessary enquiry , examination and verifications as were directed by learned Addl. CIT or should have directed AO to conduct such enquiry and furnish remand report to the learned CIT(A) before any relief could be granted by learned CIT(A)). The AO after relying on large number of judicial precedents held the transactions to be collusive and sham with an intent to evade taxes. The learned CIT(A) whose powers being co- terminus with the powers of the AO entered into blame game by blaming the AO for not following the directions of the learned Addl. CIT in complete disregard of the fact that the directions of the learned Addl. CIT u/s 144A were issued only on 22-03-2013 while the assessment was getting time barred on 31-03-2013 as provided u/s 153 of the 1961 Act. The learned CIT(A) in exercise of powers granted u/s 251(1)(a) of the 1961 Act ought to have got the said directions complied with by persuing the same at its own end to bring it to logical conclusions or ought to have directed the AO to complete the enquiries and verifications as are necessary for the said purposes and submit remand report to learned CIT(A). The intent being to compute correct taxes in the hands of the assesse as per mandate of the 1961 Act instead of entering into blame game. If such powers are not used by learned CIT(A) to achieve the mandate of the 1961 Act to compute correct tax liability of the tax-payer, then the power of learned CIT(A) being co-terminus with the powers of AO will be reduced to dead words, which is not the intention of the legislature in granting such powers as there has to be effective use of powers by authorities who are vested with said powers directed to achieve the mandate of the Page | 35 I.T.A. No.6534/Mum/2017 1961 ACT. In our considered view, the appellate order of learned CIT(A) is perverse and cannot be sustained keeping in view factual matrix of the case . The AO based on material on record on the touchstone of preponderance of human probabilities surrounding the case has come to conclusion that these losses are not genuine and are sham and collusive to evade taxes. The AO based hus decision on large number of judicial precedents which found mention in the assessment order at page 20-24. There is per-se no perversity in the assessment order of the AO as the facts surrounding the case clearly and strongly suggests and points to a collusive action on the part of the assessee and brokers who were acting in concert to avoid and evade taxes, which needed further probe to come to definitive conclusions as was rightly directed by learned Addl CIT vide directions dated 22-03-2013 u/s 144A of the 1961 Act. The huge magnitude of client code modifications in the last month of the previous year as well in the case of the assessee all the client code modifications being accorded and ascribed to punching errors cannot be mere chance to say that it is in the realm of suspicion or speculation .Rather the circumstances seen cumulatively takes it to a higher pedestal than being mere a suspicion. We are conscious of the fact that suspicion howsoever strong cannot take the place of proof. The liability to tax under the provisions of the 1961 Act is required to be fastened on the touchstone of preponderance of human probabilities , and strict proof / evidences as required under Indian Evidence Act, 1872 may not be pressed to fasten the tax-liability. No-doubt the assessee has placed on record broker confirmations but perusal of these conformations to suggest that such a large magnitude of client code modifications were carried out in the last month of the previous year i.e. March 2010 and that too in 9 trading sessions and all being ascribed to punching errors do not inspire confidence rather it clearly suggest a collusive, manipulative rigged action by persons acting in concert to evade and avoid taxes which needed further probe to fasten tax-liability on the assessee. We have also gone through brokers confirmation which are part of the paper book/page 37-67 and we have observed that client code is changed from 4403 to 61495 on 04-03- 2010 by Wellworth Share and Stock Brokers Limited(pb/page 37), client code is changed from 31495 to 61495 on 08-03- 2010 by Wellworth Share and Stock Brokers Limited(pb/page 38),client code changed from 7416 to 61495 by Wellworth Share and Stock Brokers Limited on 15-03-2013 (pb/page 39) , client code changed from 61495 to 7744 by Wellworth Share and Stock Brokers Limited on 08-03- 2010(pb/page 49) , client code changed from 61495 to 10057 by Wellworth Share and Stock Brokers Limited on 08-03-2010(pb/page

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