2020 (7) TMI 212

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.... penalty of Rs. 1,00,000/-" 2. We have heard the ld. AR as well as ld. DR and considered the relevant material on record. The Assessing Officer while passing the scrutiny assessment U/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 c....

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....he income tax Act for the purpose of Section 44AA and 44AB of the Act and however, the guidance note on tax audit U/s 44AB of the IT Act issued by the Institute of chartered Accountant of India (ICAI) would be relevant on this point. We find that this Tribunal in case of Shri Rajjak Ahmed Khan vs. ITO in ITA No. 1181/JP/2019 vide order dated 13.01.2020 has considered an identical issue in para 5 as under:- "We have considered the rival submissions as well as the relevant material on record. The limited 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 transac....

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....ction 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 Institute of Chartered Accounts of India. For ready reference, we reproduc....

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.... 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 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 t....