Central Circle29, FA45, Shivaji Enclave, New Delhi. New Delhi. PAN: AABCJ7692K (Appellant) (Respondent) Assessee by : Shri Ved Jain, Advocate & Shri Aasish Goel, CA Revenue by : Shri Satpal Gulati, CIT, DR Date of Hearing : 28.10.2021 Date of Pronouncement : 04.01.2022 ORDER PER R.K. PANDA, AM: This appeal filed by the Revenue is directed against the order dated 17th March, 2016 of the CIT(A)30, New Delhi, relating to the Assessment Year 201112. 2. Facts of the case, in brief, are that the assessee company is a member of recognized stock exchanges i.e., National Commodity and Derivates Exchange Ltd.(NCDEX) and Multi Commodity Exchange of India Ltd.(MCX) and ITA No.3556/Del/2016 providing trading services in commodity market through NCDEX and MCX. A search and seizure operation u/s 132 of the Income Tax Act, 1961 was initiated in the case of assessee company as part of search proceedings on Jaypee Group on 30.03.2012. In response to notice u/s 153A of the Act, the assessee filed the return of income on 02.09.2013 declaring the taxable income at Rs.53,99,850/. During the course of assessment proceedings, the AO observed that the assessee company is a member of Stock Exchanges and doing trading for the clients as well as in its own account. It is also a client with M/s Jaypee Capital Services Ltd., for trading in commodities. These companies are registered with NSE, MCX, and NCDEX. These are also registered with the United Stock Exchange. During the course of search and post search proceedings, the evidences of Client Code Modifications done by these companies in their own account as well as in the accounts of clients were found. The special auditors appointed u/s 142(2A) had observed that the assessee company has shifted loss amounting to Rs.237,54,77,970/ which have occurred all through by itself on/or on behalf of the clients. The AO, therefore, confronted the same to the assessee and asked him to explain the following: (i) Explain the reason and necessity of each client code modification and how the same are in conformity of guidelines of Stock Exchanges. (ii) To show cause as to why the amount of profit belonging to you shifted through CCM to other concerns/person should not be added in your 2 ITA No.3556/Del/2016 income and the commission earned by you for facilitating the shifting the profit/loss of other persons through CCM without the valid reasons and in contravention of Stock Exchange guidelines should not be added to your income. (iii) Instances of shifting of losses belonging to you to group companies as well as other persons are also reported. You are requested to explain the same and reply should include the complete details of CCM transactions along with the details of client code, name, address, PAN and account opening form of the beneficiaries. The copy of account of all the entities whose client code was modified is also required to be submitted. (iv) You are also requested to submit the complete list of client codes, containing name, PAN and address of persons. The client codes of your group concerns, individuals and related parties are also requested to be submitted. (v) You are requested to explain as to why modification through back office operation was undertaken and why the operation could not be materialized through CCM in exchange records. (vi) You are also requested to submit the name, PAN and address of the persons to whom profit and loss earned by you was shifted through back office operation along with their copy of accounts. 3 ITA No.3556/Del/2016 3. Rejecting the various explanations given by the assessee and observing that the assessee company is also a client of its sister concern M/s Jaypee Captal Services Ltd. and observing the following, the AO made additi