9911796707
TMI Blog2020 (9) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... s of transactions, ledger accounts, bank statements, gain loss statements and contract notes, etc. provided by Broker - M/s. KOTAK SECURITIES). Ld. A.O. assessed income at Returned Figures vide Order under Section 143(3) dated 19.09.2017. * Section 44AA(2) only mandates that every person shall 'keep and maintain such books of accounts and other documents as may enable the A.O. to compute his total income in accordance with the provisions of law.' The ld. AO's apparent act of computing income at Returned Income figures is evidence of the approval and other documents by ld. A.O. * As there was no failure of the nature described in Section 271A (read with Section 44AA) penalty under section 271A needs to be quashed. 2. That the appellant carves to add, amend and alter the ground of appeal before or at the time of appellate hearing." The hearing of the appeal is concluded through Video Conference due to prevailing condition of COVID 19 pandemic. 2. During the course of assessment proceedings, the AO noted that the assessee was having the turnover from the transactions of purchase and sale of shares of Rs. 47.86 crores but the assessee is not maintaining proper books of account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 143(3) r.w.s. 147 of the Act has given the fining that the assessee is not maintaining the books of account and the turnover of the assessee in respect of derivative transactions on MCX is more than Rs. 127 Cr. Thus, the AO after framing the assessment initiated proceeding for levy of penalty U/s 271A as well as 271B of the Act. The assessee challenged the action of the AO before the ld. CIT(A) against the levy of penalty U/s 271A as well as 271B of the Act. The ld. CIT(A) deleted the penalty levied U/s 271A of the Act while passing even dated order but confirmed the penalty levied U/s 271B of the Act. We note that the Assessing Officer has proceeded on basis that the turnover of derivative more than Rs. 127 Cr. whereas total difference of positive and negative outcome of speculative transactions is only Rs. 22,55,040/-. The details of the speculative transactions carried out by the assessee during the year under consideration have been reproduced by the AO at page 3 as under:- Symbols Sale Purchase Diff in Qty Profit/Loss Qty Amount Qty Amount Copper 410 126596650 410 126510850 0 85800 Crudeoil 80 27252700 80 27214100 0 38600 Gold 31 511 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fact that the turnover of the assessee is more than the limit prescribed under section 44AB and the assessee has not got his accounts audited. Assessee has taken plea that these transactions of stock related to intraday activities/non-delivery based transactions. Therefore, the same did not require audit under section 44AB. Assessee claimed that the transactions are non delivery based and daily difference (by ignoring the signs) be taken as turnover. This plea cannot be accepted as it is applicable for transaction of derivatives whereas assessee transacted in cash securities where non delivery based transactions are classified as speculative transactions as per section 43(5) of the I.T. Act, 1961. Accordingly assessee is liable to get his accounts audited. Looking to these facts, penalty under section 271B imposed by the Assessing Officer is confirmed. These grounds of appeal are dismissed." Once these transactions are non-delivery based intraday transactions and classified as speculative transaction as per the provisions of 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 Institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 152689.69 Sale of delivery based transactions 53498.9 315280.69 There is no dispute regarding the delivery based transactions of shares to the tune of Rs. 53,498.90. We have verified the computation of the turnover in respect of intraday non-delivery based transactions and the positive and negative differences of these speculative transactions given in the above table. Therefore, by taking the aggregate of the positive and negative differences as well as the turnover of the delivery based transactions, the total turnover of the assessee comes to Rs. 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 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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