INCOME TAX ACT, 1961

--Tax Audit--Gross Turnover Assessee engaged in speculative trading--The assessee was engaged in online trading in commodities. During the year under consideration, the total sauda in the commodities booked with commodity exchange was shown at Rs. 1,86,66,488 on which gross profit of Rs. 16,44,343 was declared. As per the assessing officer, since the turnover in commodities by way of Sauda booking exceeded Rs. 40.00 lakhs, assessee was liable to get its accounts audited in terms of section 44AB of the Act and furnish report by the specified date. The claim of the assessee before the lower authorities had been that it was under a bona fide impression that the limit of Rs. 40.00 lakhs of turnover is to be applied to the net income from the speculation activity of dealings in commodity exchange and not gross amount of sauda booked. The assessee explained that in its activity of speculation trading in commodities, no delivery of physical goods was given or taken. It was therefore, pointed out that there was no requirement to get the accounts audited under section 44AB of the Act as the income from speculation activity was below Rs. 40.00 lakhs. Held: The transaction of buying and selling of commodities is a speculative activity where no physical delivery is taken or given and in this view of the matter there was no turnover constituted in the amount of Rs. 1,86,66,488 for the purposes of considering the liability of assessee to get the accounts audited under section 44AB of the Act and hence, there was no requirement to get the accounts audited under that section. Thus, the penalty under section 271B imposed by the assessing officer was also to be deleted.

Income Tax Act, 1961, Section 44AB

In the ITAT, Pune B Bench

G. S. Pannu, A.M. & R. S. Padvekar, J.M., JJ.

Banwari Sitaram Pasari HUF v. ACIT

ITA No. 1489 (PUNE) of 2011

A.Y. 2006-07

22 November, 2012

Income Tax Act, 1961, Section 44AB

Decision:In assessees of favour

Appellant by : Sunil Ganoo

Respondent by : S. K. Singh