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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER:
This is an appeal filed by the Assessee against the order of the learned Commissioner of Income Tax (Appeals)-7, Chennai in dated 30.09.2019 for the Assessment Year 2015- 16 confirming the levy of penalty u/s.271B of the Income Tax Act, 1961.
2 -: 2. Mr. R. Vijayaraghavan, Advocate represented on behalf of the Assessee and Ms. R. Anitha, JCIT represented on behalf of the Revenue.
It was submitted by the learned Authorized Representative that the assessee is an individual who was doing Speculative Transactions in Derivatives and Securities Transactions. It was a submission that in the course of the assessment, the Assessing Officer treated the loss as suffered by the assessee in “Futures and Options Transactions” which was claimed by the assessee as speculative transactions, as treated as business transactions of the assessee. Consequent to the same, the Assessing Officer held that the turnover of the assessee required the assessee to get his accounts audited as provided u/s.44AB of the Income Tax Act, 1961, as the assessee had treated the transaction in ‘Futures and Options’ as speculative transactions. The assessee had prayed that the same was not liable to be considered as the turnover, in so far as there was no outflow of funds. It was a submission that the submission of the assessee was rejected and penalty levied. It was submitted by the learned Authorized Representative that in similar circumstances, the Co-ordinate Bench of this Tribunal, Pune Benches in the case of Banwari Sitaram Pasari [HUF] vs. Assistant Commission of Income Tax reported in 140 ITD 320 has held that the transactions of 3 -: buying and selling of commodities is a speculative activity where no physical delivery is taken or given and consequently there was no turnover constituted for the purpose of considering the liability of the assessee to get his accounts audited. Consequently, no penalty u/s.271B was liable to be levied on the assessee.
In reply, the learned Departmental Representative vehemently supported the order of the learned Assessing Officer and the learned Commissioner of Income Tax (Appeals).
We have considered the rival submissions and perused the materials available on record.
In the present case, it is clear from the assessment order which shows that the assessment was selected for limited scrutiny to verify the derivatives, (Futures Transactions and Securities Transactions). The assessee has disclosed the loss against the Futures and Options as a speculative loss. However, the Assessing Officer treated the same as a business transaction. A perusal of the decision of the Co-ordinate Bench of this Tribunal, Pune Benches in the case of Banwari Sitaram Pasari [HUF] vs. Assistant Commission of Income Tax shows that the Co-ordinate Bench has held that when no physical delivery is taken or given, the transaction of buying
4 -: and selling of commodities is to be considered as speculative transaction and consequently there is no turnover constituted for the purpose of the assessee to get his accounts audited u/s.44AB. As the facts in this assessee’s case are identical, applying the principles laid down by the Co-ordinate Bench of this Tribunal in the case of Banwari Sitaram Pasari [HUF] vs. Assistant Commission of Income Tax, it is held that the assessee’s accounts is not liable for audit u/s.44AB. Consequently, the penalty levied u/s.271B of the Income Tax Act, 1961 as levied by the Assessing Officer and as confirmed by the learned Commissioner of Income Tax (Appeals) stands deleted.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 25th February, 2020 in Chennai.