TaxTMI 
TaxTMI 
2020 (3) TMI 136
X X X X Extracts X X X X
X X X X Extracts X X X X
....issing the appeal of the appellant in limine by passing a non speaking order. 2. That the observation made by the ld. CIT (A) in the appellate order is incorrect and legally untenable. She has failed to consider the meaning of Turnover as per the guidance notes issued by ICAI. 3. That ld. CIT (A) failed to observe that assessee was not required to maintain books of account and in case of non maintenance of books of accounts assessee cannot be penalized for failure to get accounts audited and therefore penalty u/s 271B was not imposable. 4. That the ld. CIT (A) failed to appreciate that the business was not covered u/s 44AD and was thus not subject to audit u/s 44AB r.w.s. 44AD as held by the AO. (for AY 2010-11, S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... with the contention of the assessee and confirmed the levy of penalty under section 271B of the IT Act. 3. Before us, the ld. A/R of the assessee has submitted that the AO has taken the turnover of the assessee at Rs. 2,43,62,720/- in share transactions. However, the majority of these transactions are speculative transactions being intraday trading in the shares without actual delivery and, therefore, the value of these transactions cannot be taken as turnover when there was no actual delivery of the shares but these are only speculative transactions carried out by the assessee in the category of intraday trading. Thus the turnover for the purpose of section 44AB in respect of speculative transactions is only the aggregate of both posit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mit provided under section 44AB, then there is no violation by the assessee and consequently no penalty can be levied under section 271B of the IT Act. The ld. A/R has submitted that the AO has taken the total value of the transactions carried out by the assessee in the intraday speculative segment whereas only the aggregate of positive and negative differences is to be taken as turnover. 4. On the other hand, the ld. D/R has submitted that it is not a derivative transaction in the F & O segment but the transactions are cash security though nondelivery based, therefore, the total value of the transactions has to be considered as turnover for the purpose of section 44AB of the Act. He has relied upon the orders of the authorities below. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ck related to intraday activities/nondelivery 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ulting into whether a positive or negative difference is an independent transaction. Further, amount paid on account of negative difference paid is not related to the amount received on account of positive difference. In such transactions though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative differences is to be considered as the turnover of such transactions for determining the liability to audit vide section 44AB." The turnover has not been defined in the IT Act and particularly in respect of the speculative transactions in shares and securities. Therefore, the Guidance Note of ICA....