Income Tax Appellate Tribunal Delhi Dcit, New Delhi vs M/S. Jaypee Capital Services Ltd., New ... on 21 September, 2021 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES "I1 " : DELHI [THROUGH VIDEO CONFERENCING] BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA.Nos.3558 & 3559/Del./2016 Assessment Years 20112012 & 20122013 The DCIT, M/s. Jaypee Capital Central Circle29, Services Ltd., FA45, Room No.318, 3 Floor, rd vs. Shivaji Enclave, ARA Centre, Jhandewalan Extn., New Delhi 110 027. New Delhi. PAN AAACJ0628A (Appellant) (Respondent) Shri Bhuvnesh Kulshreshtha, For Revenue : CITDR Shri Ved Jain, Sr. Advocate For Assessee : And Shri Ashish Goel, C.A. Date of Hearing : 23.06.2021 Date of Pronouncement : 21.09.2021 ORDER PER R.K. PANDA, A.M. The above two appeals filed by the Revenue are directed against the separate Orders Dated 16.03.2016 of the Ld. CIT(A)30, New Delhi, relating to the A.Ys. 2011 2 ITA.No.3558 & 3559/Del./2016 M/s. Jaypee Capital Services Ltd., New Delhi. 2012 and 20122013 respectively. Since common issues are involved in both these appeals, therefore, these appeals are heard together and are being disposed of by this common order. ITA.No.3558/Del./2016 A.Y. 20112012 : 2. The facts of the case, in brief, are that the assessee is a company engaged in the business of share trading through recognized stock exchange i.e., NSE and BSE etc. A search and seizure action under section 132 of the I.T. Act, 1961 was initiated in the case of the assessee as part of Jaypee Group on 30.03.2012. The key persons of the group are Shri Gaurav Arora and his son Shri Saurav Arora. This group is engaged in the business of trading of equity, commodity, derivatives of equity and forex market. During the course of search, incriminating documents and evidences have been found and seized. In response to the notice under section 153A of the I.T. Act, 1961 dated 05.08.2013, the assessee company filed its return of income 3 ITA.No.3558 & 3559/Del./2016 M/s. Jaypee Capital Services Ltd., New Delhi. on 02.09.2013 declaring a total taxable income of Rs. 2,91,41,210/. 2.1. During the course of assessment proceedings, the A.O. noted 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 Futurz Next 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 ["CCM"] done by these companies in their own account as well as in the accounts of client were found. The Special Auditors appointed by the Department was directed to look into the aspect of CCM in the account of assessee company also. After examining the report of the Special Auditor, reply of the Assessee etc., the A.O. observed that CCM are carriedout by the assessee to shift Profit and Loss amongst Group Companies to reduce the tax liability. He noted that CCM were done by the assessee for its clients [other than Group concerns] vide 4 ITA.No.3558 & 3559/Del./2016 M/s. Jaypee Capital Services Ltd., New Delhi. which profit is transferred to the clients who have losses and transferred the losses to the clients who have profit to reduce the tax liability of the clients and accordingly, accommodation entries given, on which, Commission Income was determined by the A.O. at 3.5% of the profit/loss shifted. It was further analyzed by the A.O. that the whole process of CCM in the case of the assessee does not seem to be genuine. He held that the copy of File Transfer Protocol ["FTP"] was not made available during the assessment proceedings and, therefore, there may be entries not as per the guidelines of SEBI. He, therefore, concluded that an amount of Rs.11,97,21,030/ is the net effect of profit/loss shifted from the assessee company to the other client codes and vice versa. 2.2. The A.O. further held that 20% of such CCM transactions to be genuine errors. However, according to him all the CCM h