Jagruti Chetan Thakker Vs (ITAT Mumbai)
Mumbai ITAT Deletes ₹35.60 Lakh CCM Addition; Mere Investigation Wing Information Cannot Prove Bogus Client Code Modification
The Mumbai ITAT allowed the appeal of Mrs. Jagruti Chetan Thakker, deleting the addition of ₹35.60 lakh made under Section 69A read with Section 115BBE on the allegation that she had derived fictitious profits through Client Code Modification (CCM) transactions on the National Spot Exchange Ltd. (NSEL) platform. The reassessment was initiated solely on information received from the Investigation Wing alleging that the assessee was a beneficiary of CCM. The assessee, however, produced contract notes, broker’s ledger, warehouse records and a broker’s confirmation stating that any CCM was carried out due to the broker’s own punching error and without any instruction or involvement of the assessee.
The Tribunal relied on its earlier decision in ACIT v. Suman Gandhi (2026) 183 taxmann.com 217 (Mumbai-Trib.), as well as the Bombay High Court decisions in Aashish Niranjan Shah and Pr. CIT v. Pat Commodity Services Pvt. Ltd., which held that Client Code Modification by itself does not justify an addition unless the Revenue establishes that the assessee instructed the broker, colluded in the modification, or actually derived an unlawful benefit. It noted that the Revenue failed to produce any independent or corroborative evidence linking the assessee to any fraudulent CCM arrangement.
The Tribunal observed that the entire addition rested only on information received from the Investigation Wing, without any material showing that the impugned transactions were sham or that the assessee had received accommodation entries. Since the broker had categorically confirmed that the CCM resulted from its own operational error and the Department failed to rebut that evidence, the Tribunal held that the addition under Section 69A was unsustainable in law. Accordingly, it deleted the addition of ₹35.60 lakh, set aside the order of the CIT(A), and allowed the appeal.
Cases Discussed
- ACIT v. Suman Gandhi (ITAT Mumbai), (2026) 183 taxmann.com 217 (Mumbai-Trib.)
- Aashish Niranjan Shah v. UOI (Bombay High Court), [2024] 167 taxmann.com 561 (Bombay)
- CIT v. Pat Commodity Services Pvt. Ltd. (Bombay High Court), IT Appeal No. 1257 of 2016, dated 15-1-2019
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity, ‘the Act’), for Assessment Year 2014-15, date of order 13.02.2026. The impugned order emanated from the order of the National Faceless Assessment Center, Delhi (for brevity ‘Ld. AO’), order passed under Section 147 r.w.s. 144B of the Act, date of order 28.03.2022.
