ACIT Vs Suman Gandhi (ITAT Mumbai)
The Income Tax Appellate Tribunal, Mumbai, considered the Revenue’s appeal and the assessee’s cross objection arising from the order of the National Faceless Appeal Centre dated 20.03.2025 for Assessment Year 2014-15. The principal issue in the Revenue’s appeal was the deletion of an addition of Rs.3,05,75,681 made under Section 68 of the Income Tax Act on account of Client Code Modification.
The assessee, a resident individual deriving income from salary, business, investments and dividends, had filed her return declaring income of Rs.21,34,700. Subsequently, the Assessing Officer received information based on a Serious Fraud Investigation Office (SFIO) investigation into the National Spot Exchange Ltd. (NSEL), alleging that certain brokers had manipulated commodity transactions through Client Code Modification. According to the report, the assessee had purchased shares amounting to Rs.3,05,75,681 during the relevant financial year and had allegedly booked fictitious profits through commodity trading. Based on this information, the assessment was reopened under Section 147.
During the reassessment proceedings, the Assessing Officer issued a show cause notice requiring the assessee to explain why the amount of Rs.3,05,75,681 should not be treated as unexplained cash credit under Section 68. Although the assessee furnished the required details and denied having booked any fictitious profits through Client Code Modification, the Assessing Officer relied upon the SFIO report and concluded that the assessee had booked fictitious profits through commodity trading. The entire amount of Rs.3,05,75,681 was consequently added as unexplained cash credit under Section 68.
