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Issues involved: Appeal against penalty order u/s 271B r.w.s 274 of the Income Tax Act for the assessment year 2008-09. Additional ground raised regarding the levy of penalty u/s 271B unjustified due to online transaction of future commodities not forming part of turnover for tax audit u/s 44AB.
Additional Ground Raised: The assessee, engaged in online trading of commodities, argued that the speculative transactions on the Multi Commodity Exchange (MCX) did not involve physical delivery of commodities and therefore should not be considered as turnover for tax audit u/s 44AB. Citing relevant case laws, the assessee contended that the daily mark-to-mark transactions on MCX were squared at the end of each day or carried forward, with no actual delivery taken/given, thus not constituting turnover. Decision and Reasoning: After considering submissions from both parties and reviewing the facts, it was noted that the Assessing Officer (AO) had considered the sales figure on MCX as turnover, leading to the penalty under section 271B for non-compliance with section 44AB. Referring to precedents, it was established that in speculative activities without physical delivery, turnover for tax audit purposes is not constituted. The Tribunal held that the value of sale transactions on MCX without delivery should not be treated as turnover u/s 44AB, in line with previous decisions by the Tribunal and the High Court. Consequently, the penalty u/s 271B was deleted as the transactions did not fall under the turnover ambit for tax audit purposes. Outcome: The Tribunal allowed the appeal in favor of the assessee based on the additional ground, rendering other grounds moot. As a result, the penalty u/s 271B was deleted, and the appeal was allowed.
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