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2016 (3) TMI 1010 - ITAT JAIPUR

2016 (3) TMI 1010 - ITAT JAIPUR - TMI - Penalty u/s 271B - accounts of the assessee from speculative business were not audited u/s 44AB - whether the assessee's speculative transaction on NCDEX can be considered as actual transaction liable for provision of audit u/s 44AB read with Section 271B or they are mere speculative profit and transaction value and the entire notional transaction value cannot be treated as turnover of the assessee? - Held that:- ITAT Pune Bench in the case Banwari Sitaram .....

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ot considered these two published decisions in the cases of ITAT Pune Bench in the case Banwari Sitaram Pasari HUF vs. ACIT and Growmor Exports Ltd. vs. Asstt.Commissioner (supra).

The contention of the ld. AR of the assessee is that when there are two views on same issue, the issue favorable to the assessee should be considered for which the ld. AR of the assessee relied on the decisions of CIT vs. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court] and CIT vs. Vatika Township .....

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penalty u/s 271B of the Act of ₹ 1.00 lac in respect of each assessment year mentioned above. 2.1 Brief facts of the case are that in all these years assessee carried on business of speculative transactions in commodities through NCDEX where no delivery is given/ taken for the commodities traded. It is contended that the speculative transactions through NCDEX are in the nature of only forward / future transactions of commodities like Gold, Silver etc. is done without delivery. In effect on .....

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ted by accepting speculative income declared in respective returns. The AO however was of the view that accounts should have been audited u/s 44AB and initiated penalty proceedings u/s 271B of the Act where the assessee filed detailed submissions replying as under:- (i) The transactions of commodities through NCDEX do not involve any delivery. Therefore, the entire notional value cannot be treated as a part of turnover. (ii) The word turnover is not defined in the I.T. Act and the definition the .....

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d penalty of ₹ 1.00 lac in each assessment year. 2.2 Aggrieved, the assessee preferred first appeal wherein the ld. CIT(A) confirmed the penalties holding that the provisions of Section 44AB of the Act, use the words - total sales, turnover or gross receipts which are of wide amplitude and cover the transaction value on NCDEX and not only the profit/loss there from. The ld. CIT(A) relied on the decision of ITAT Lucknow Bench in the assessee of DCIT vs. Gopal Krishan Builders 272 ITR (AT) 1 .....

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ided in Indian Companies Act. (iii) The gross receipts of NCDEX are undisputedly below ₹ 40 lacs. Therefore, transactions in questions are not under the provisions of Section 44AB of the Act (iv) The assessee was under bona fide belief that assessee having received only speculative profit or incurred speculative loss, it was not liable for audited the account as the turnover did not exceed ₹ 40 lacs in all these assessment years. The bona fide belief is based on legitimate considerat .....

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ling of commodities is a speculative activity where the physical delivery is taken or given and in this view of the matter, following the parity of reasoning given in the case of Growmore Exports Ltd. (supra), herein also, we are inclined to hold that there was no turnover constituted in the amount of ₹ 1,86,66,488/- for the purpose of considering the liability of assessee to get the accounts audited u/s 44AB of the Act and hence, there was no requirement to get the accounts audited u/s 44 .....

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siness of the shares that the transactions entered into by her were more than the prescribed monetary limit as envisaged by the provisions of Section 44AB of the Act, that no bonafide reasons were furnished by the assessee, for not attending the books of account audited, before the AO or the FAA . We are of the opinion that words total turnover indicate the aggregate price of the commodities received by an assessee's during the course of his trading or business activities. It does not differ .....

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e expression income to be subjected to tax as income from sources do not form part of total turnover. Considering the principles governing the imposition of penalty u/s 271B and the facts of the case we are of the opinion that AO was justified in levying penalty for not her books of account audited. We find that the cases relied upon by the A.R. are not relevant to decide the issue as the facts of the case are totally different. Secondly, while deciding the case at that point of time Tribunal di .....

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ai Bench in the case of Growmor Exports Ltd. vs. Asstt. Commissioner (supra) which were already published decisions. Therefore, the judgement of ITAT Mumabi Bench in the case of Anahaita Nalin Shah Vs. DCIT (supra) is per incuriam. Besides when two views are possible on any issue then the view which is in favour of the assessee should be adopted. The ld. AR of the assessee relied on following decisions. (1) CIT vs. Vegetable Products Ltd. (1973), 88 ITR 192 (SC) (2) CIT vs. Vatika Township (P) L .....

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