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TMI Blog2020 (3) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, the total turnover of the assessee comes to ₹ 3,15,280.69. Hence, when the turnover of the assessee is less than the threshold limit provided under section 44AB, then the assessee is not required to get its books of account audited in terms of section 44AB of the IT Act and consequently the penalty provision of section 271B is not attracted. Even otherwise, when this issue of turnover is a debatable issue and the assessee has claimed this turnover as ₹ 3,15,280.69 if computed in terms of the Guidance Note of ICAI, then the said explanation of the assessee would be regarded as reasonable and bonafide as per the provisions of section 273B and consequently no penalty under section 271B is leviable. Accordingly, the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserves his right to add, amend/modify the grounds of appeal. 2. The assessee is an Individual and doing share trading transactions in the National Stock Exchange, Mumbai. The AO issued a notice under section 148 on 28th March, 2017 to assess the income arising from the activity of share trading carried out by the assessee. The assessment was completed under section 147 /144 of the IT Act vide undated assessment order, though the AO has stated in the penalty order passed under section 271B that the assessment was completed on 19th December, 2017. In the course of assessment proceedings it was found that the assessee s turnover in share transactions is ₹ 2,43,62,720/- and, therefore, the assessee was required to get its accounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on the Guidance Note on Audit under section 44AB of the I.T. Act issued by the Institute of Chartered Accountants of India (ICAI) and submitted that as per the said Guidance Note, the turnover or gross receipts in respect of speculative transactions of shares and securities has to be determined in the manner prescribed therein. Thus the ld. A/R has submitted that in case of speculative transactions in the shares only the aggregate of both positive and negative differences arising by settlement of various such contracts during the year has to be taken as turnover for the purpose of audit under section 44AB of the Act. The ld. A/R has referred to the details of the turnover in three segments of share trading carried out by the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dispute in the case in hand is whether the provisions of section 44AB are applicable in the case of the assessee when the assessee has done the share trading in intraday segment and some of the transactions are delivery based transactions to the extent of ₹ 53,498/-. There is no dispute regarding the turnover in respect of the transactions of the shares which are delivery based. However, the dispute is regarding the turnover in respect of the intraday transactions carried out by the assessee. The AO has taken the total value of the transactions at ₹ 2,43,62,720/- in the intraday non-delivery based trading segment. There is no quarrel that the transactions carried out by the assessee in intraday non-delivery based segment are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 43(5) of the IT Act, then the turnover in respect of these transactions has to be determined as per the Guidance Note issued by the Institute of Chartered Accounts of India. For ready reference, we reproduce the relevant part of the Guidance Note in para 5.14 as under :- Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961. 5.14. The turnover or gross receipts in respect of transactions in shares, securities and derivatives may be determined in the following manner :- (a) Speculative transaction : A speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear from the Guidance Note issued by the ICAI that the turnover in respect of non-delivery based speculative transactions including stock and shares has to be determined by taking the aggregate of both positive and negative differences arising from such transactions and as an out-come of settlement of such contracts during the year. We find that the assessee has produced the details of the speculative transactions as well as delivery based transactions and also given the computation of the turnover as under :- Intraday Positive or favorable differences (sheet enclosed for this) 109092.10 Intraday Negative or unfavorable differences (sheet enclosed for this) 152689.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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