SUSHMA DEVI BIHANI,KOLKATA vs. ASSESSING OFFICER, DELHI

The present appeal is directed at the instance of the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter the “ld. CIT(A)”) dt. 28/06/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2014-15.

Sole grievance of the assessee is that the ld. CIT(A) erred in confirming the penalty u/s 271B of the Act at Rs. 82,885/- levied by the Assessing Officer for not getting the books of accounts audited u/s 44AB of the Act.

At the outset, the ld. Counsel for the assessee submitted that the turnover of the assessee is only Rs. 65,42,350/- and the same is duly supported by the contract notes and it is not the case of the totaling of favourable and unfavorable difference of the transactions carried out during the period but, in all six transaction of purchase and six Assessment Year: 2014-15 Sushma Devi Bihani transaction of sale. Therefore, since the turnover is less than Rs.1 Crore, no penalty is leviable u/s 271B of the Act. 3.1. On the other hand, the ld. D/R vehemently argued supporting the orders of both the lower authorities and also referring to the guidelines given by the ICAI with regard to the turnover in respect of transactions in shares, securities and derivatives.

We have heard rival contentions and perused the material available on record.

We notice that the assessee is an individual and in the profit and loss account, she has disclosed the purchases under National Spot Exchange Limited (NSE) at Rs.64,37,250/- and sales at Rs.65,42,350/-. Complete details of the purchase and sales are filed. There are in all six transactions carried out on six dates and on each of these dates, there is a transaction of purchase and sale. Against the total purchase of Rs.64,37,250/- sales is Rs.65,42,350/- and the net difference is Rs.1,05,100/-. Perusal of the orders of the revenue authorities indicates that the Assessing Officer took information from National Spot Exchange Limited, which communicated that during the year purchases of assessee is Rs. 82,29,750/- and sales is Rs.83,47,350/- and the total of both is Rs.165,77,100/-. Both the lower authorities have stuck to this figure of total turnover based on which the assessee is held to be liable to pay penalty u/s 271B of the Act since turnover is exceeding Rs.1 Crore and no auditor report has been procured u/s 44AB of the Act.

We notice that as per the guidelines given by the ICAI, where in case of derivatives, futures and transaction where transactions are 3 Assessment Year: 2014-15 Sushma Devi Bihani completed without actual delivery then in such case turnover is calculated by adding of total of favorable and unfavorable difference. For instances on a particular day, assessee makes transactions of purchase of Rs.1 Crore and sale of Rs.1,00,02,000/- and the transaction is squared off at the end of the day. In this case Rs.2,000/- will be taken part of the turnover and similar method will be applied for other transactions carried out during the year. However, in the instant case, if the above stated method is adopted, the turnover would be Sales minus Purchase i.e., Rs.1,05,100/- as referred supra. Assessee has filed complete details of purchase and sale with the contract notes. The figures available at National Spot Exchange Limited vary on some occasions where the transactions at the end of the year are not accounted by the assessee. Even if the details filed by the National Spot Exchange Limited is considered, the sale figure is only Rs.83,47,350/-. When we co-relate this figure with the contract notes, we find that this figure is not total of favourable and unfavorable but they are merely total of transactions of sale.

We, therefore, under the given facts and circumstances of the case are of the considered view that either we adopt the sales figure declared by the assessee at Rs. 65,42,350/- or we consider the sales figure as per the information provided by National Spot Exchange Limited at Rs.83,47,350/-, sales turnover is less than Rs.1,00,00,000/- which is the limit applicable for the year under appeal exceeding which the assessee is required to get its books of accounts audited u/s 44AB of the Act. Since the turnover of the assessee is less than Rs.1 Crore, there is no requirement of getting the books of accounts audited