ITAT Deletes Additions on Client Code Modifications in Commodity Trading Citing Genuine Transaction Verification [Read Order]
The tribunal observed that the Revenue's additions based on client code modifications lacked substantial evidence, leading to the deletion of the additions
![ITAT Deletes Additions on Client Code Modifications in Commodity Trading Citing Genuine Transaction Verification [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Service-Tax-Shapoorji-Pallonji-CESTAT-taxscan-1.jpg "ITAT Deletes Additions on Client Code Modifications in Commodity Trading Citing Genuine Transaction Verification [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the additions made by the Assessing Officer (AO) concerning client code modifications ( CCM ) in commodity trading. Modern India Ltd. (assessee), a corporate entity engaged in manufacturing and trading activities, had filed its returns declaring incomes of ₹60,14,050 (AY 2012-13) and ₹2,84,14,510 (AY...
The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the additions made by the Assessing Officer (AO) concerning client code modifications ( CCM ) in commodity trading.
Modern India Ltd. (assessee), a corporate entity engaged in manufacturing and trading activities, had filed its returns declaring incomes of ₹60,14,050 (AY 2012-13) and ₹2,84,14,510 (AY 2014-15).
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The AO, based on reports from the Serious Fraud Investigation Office (SFIO) and Directorate of Income Tax (Investigation) [DDIT (Inv.)], reopened the assessments under Section 147 of the Income Tax Act, alleging that the assessee had engaged in bogus trades through client code modifications.
The AO noted that commodity trading through Anand Rathi Commodities Ltd. and its associates involved multiple client code modifications, leading to additions of Rs. 5.85 crore (AY 2012-13) and Rs. 30.97 lakh (AY 2014-15) under Sections 69 and 68, treating them as unexplained investment and unexplained cash credit, respectively.
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Aggrieved by the order of the AO, the assessee filed an appeal before the Commissioner of Income Tax(appeals)[CIT(A)]. The assessee argued that all transactions were conducted on the NSEL platform, an authorized exchange at the time.
The assessee submitted before the CIT(A) that no losses were incurred, and all profits were duly declared and taxed. The assessee further argued that proper documentation, including contract notes, bank records, and broker confirmations, established the authenticity of transactions.
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The CIT(A) accepted the assessee’s contentions and deleted the additions made by the AO. Aggrieved by the order of the CIT(A), the Revenue filed an appeal before the ITAT.
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The two member bench comprising Shri Saktijit Dey (Vice President) and Shri Girish Agrawal (Accountant Member) observed that the CIT(A) discussed the genuineness of the transaction in the order.
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The tribunal also observed that the report of SFIO and DDIT (Inv.) which was cornerstone of reopening the assessment did not establish any illegal activity of the assessee through Client code modifications.
Therefore, the tribunal upheld the deletions made by the CIT(A). Thereby the appeal of the Revenue was dismissed.
To Read the full text of the Order CLICK HERE
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