The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) comprising Shri Waseem Ahmed, accountant member and Shri Siddhartha Nautiyal, Judicial member has held that addition made on undisclosed income can sustain in the absence of evidence.
The assessee engaged in the activity of derivative business of shares and securities. The AO found that the assessee had obtained the benefit of accommodation entries by way of client code modification used by the broker namely M/s Mehta Finstock Pvt. Ltd. The assessee claimed losses for Rs. 12,56,760/-, on account of client code modification was disallowed and added to the total income. CIT(A), confirmed the order of the AO
The AO made the addition holding that the appellant got the benefit of CCM done by the broker, which was done with a malafide intention, to avoid taxes on true income. The appellant on the other hand claimed that the client code modifications were carried out by the broker to rectify genuine punching errors on the same day that the errors were made, and that since were committed at the broker’s end, the assessee could not be penalized.
It was viewed that the addition made by the AO cannot be taken based on suspicions, conjectures and surmises, as he has collected information from the National Stock Exchange as well as the appellant’s broker before arriving at his decision. The respondent contended that the assessee was not cooperative and the assessee failed to appear for hearing on several occasions even though the notices for hearing were issued at the given address of the assessee. Further observed that the assessee should be vigilant enough to pursue the appeal after filing the same.
The Tribunal held that in the absence of any contrary information, the addition of undisclosed income will sustain and confirms the order passed by CIT(A). The appeal filed by the assessee was dismissed.
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