The Tax Publishers2020 TaxPub(DT) 1418 (Jp-Trib) INCOME TAX ACT, 1961
Section 44AB, 271A and 271B
Where the assessee was indulged in share trading than turnover has to be determined by taking the aggregate of both positive and negative differences arising from such speculative transactions and as an outcome of settlement of such contracts during the relevant year under consideration, which in instant case was less than the threshold provided under sections 44AA and 44AB. Where assessee's turnover was less than the threshold provided under section 44AA, he was not required to maintain his books of account in respect of such transactions and on same analogy, where the books of account were not required to be maintained, the question of getting the same audited did not arise for consideration and in any case, the turnover was less than the prescribed threshold under section 44AB, thus there was no basis to hold that there was any violation of provisions of sections 44AA and 44AB and consequently, the penalties levied under sections 271A and 271B were liable to be deleted.
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Penalties under sections 271A and 271B - Leviability - No violation of provisions of sections 44AA and 44AB -
Assessee was engaged in day-to-day trading of commodity/shares. AO noticed that the assessee failed to produce his books of account and other documents as required under section 44AA. Accordingly, he levied penalty under section 271A for non-maintenance of books of account. Similarly, the AO levied penalty under section 271B stating that the assessee was required to get its accounts audited but he failed to so, which was in violation of section 44AB. Held: In case of speculative transactions, in absence of term “turnover” defined in the Act, as per the guidance note issued by ICAI, the turnover has to be determined by taking the aggregate of both positive and negative differences arising from such speculative transactions and as an outcome of settlement of such contracts during the relevant year under consideration, which in instant case was less than the threshold provided under sections 44AA and 44AB. Thus, where assessee's turnover was less than the threshold provided under section 44AA, he was not required to maintain his books of account in respect of such transactions. On same analogy, where the books of account were not required to be maintained, the question of getting the same audited did not arise for consideration and in any case, the turnover was less than the prescribed threshold under section 44AB. Hence, there was no basis to hold that there was any violation of provisions of sections 44AA and 44AB and consequently, the penalties levied under sections 271A and 271B were deleted.
REFERRED : Rajjak Ahmed Khan v. ITO [ITA No. 11181/JP/2019, dt. 13-1-2020]
FAVOUR : In assessee's favour
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 271(1)(b)
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