ITA No.74/2021

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$~S-7

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IN THE HIGH COURT OF DELHI AT NEW DELHI

+

ITA 74/2021 & C.M.No.9974-2021

PR. COMMISSIONER OF INCOME TAX- 04, DELHI ..... Appellant

Through

Mr.Ajit Sharma, Advocate.

versus

M/S JAYPEE CAPITAL SERVICES LTD. ..... Respondent

Through

Mr.Ved Jain with Ms.Richa Mishra,

Advocates.

%

Date of Decision: 03^rd August, 2021

CORAM:

HON'BLE MR. JUSTICE MANMOHAN

HON'BLE MR. JUSTICE NAVIN CHAWLA

J U D G M E N T

MANMOHAN, J

1.

The petition has been heard by way of video conferencing.

: (Oral)

2.

The present appeal under Section 260A is directed against the order

dated 31^st

3.

Briefly stated, the assesse is a company engaged in trading of equity

shares, securities and commodities through recognized exchanges. It filed its

return of income on 30

January, 2020 passed by Income Tax Appellate Tribunal, in ITA

No. 3321/Del/2016 for the Assessment Year 2010-11 whereby the appeal of

the Revenue has been dismissed.

th September, 2010 declaring total income of

Rs.39,85,15,922/-. Subsequently, on 30^th March, 2012, a search and seizure

Digitally Signed

By:KRISHNA BHOJ

Signing Date:04.08.2021

22:37:42

Signature Not Verified

ITA No.74/2021

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operation under Section 132 was initiated in the case of the assesse, as part

of Jaypee Group. During search, data of the computers found at the premises

was cloned and seized along with certain documents. Thereafter, on 05^th

4.

In appeal preferred by the assessee, the CIT(A), following the dicta of

this Court laid down in CIT Vs. Kabul Chawla, 2015 SCC OnLine Del

11554, held that no assessment/reassessment proceedings were pending on

August, 2013, a notice under Section 153A of the Act was issued. Pursuant

thereto, the assessee filed its return of income reiterating the return of

income filed by them. During the course of post search proceedings, the

assessing officer found evidence of Client Code Modifications done by M/s

Jaypee Capital Services Ltd. and Futurz Next Services Ltd, companies

registered with NSE, MCX, and NCDEX and United Stock Exchange. A

Special Auditor was appointed u/s 142(2A) and directed to file a report on

the aspect of Client Code Modifications done by the afore-noted companies

as well the assessee company. On the basis of the Auditor Report and the

response of the assessee, the AO concluded that in the case of member

(broker) group companies of the assessee, the Client Code Modification is

by and large not for genuine reasons and is rather for extraneous

considerations. The net effect of profit and loss shifting in the code of

assessee-company has been suppressed in its books of accounts.

Accordingly a sum of Rs. 3,33,12,138/- was added to the income declared

by the assessee on account of various additions made by the AO which

included disallowance of interest under section 36(1)(iii), tour and traveling,

Preliminary expenses, interest from AE under section 92 and disallowance

under section 14A. The total income thus was assessed by the AO at

Rs.43,18,28,060/-

Digitally Signed

By:KRISHNA BHOJ

Signing Date:04.08.2021

22:37:42

Signature Not Verified

ITA No.74/2021

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30^th

5.

Before us, Mr. Ajit Sharma, senior standing counsel for the Revenue,

fairly submits that the facts of the present case are identical to the facts of

appeals decided by this Court in the case of Pr. Commissioner of Income

Tax (Central )-3 VS M/s Jaypee Financial Services Ltd. in ITA No

42/2021 and ITA No 44/2021 dated 20

March, 2012 when search action took place and hence no assessment

was abated. The addition made by the AO is not based on any incriminating

document/seized material found during the course of search and seizure

action u/s 132 of the Act and accordingly the same were deleted. In further

appeal preferred by the Revenue before the ITAT, the findings of the

CIT(A) were confirmed.

th July, 2021 whereby the appeals of

the Revenue were dismi