TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 136
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....ssing 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, Sec. 44AD was applicable only for business of civil construction or supp....
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....tion 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 positive and negative differences arising from these transactions. In support of his co....
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....nsequently 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. 5. We have considered the rival submissions as well as the relevant material on reco....
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.... 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 ....
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....gative 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 ICAI is a relevant and proper guidance for determining the turnover in respect of such speculative transactions. As it is clear....