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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
आयकर अपीलीय अधिकरण, ‘डी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI श्री जॉजज माथन, न्याधयक सदस्य एवं श्री इंटूरी रामा राव, लेखा सदस्य एवं BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3215/Chny/2019 धनिाजरण वर्ज /Assessment Year: 2015-16 Shri. Dwaraknath Krishnaram Income Tax Officer, “Sai Sri Saraswathi” Non Corporate Ward – 7(3), Flat No.5, Vivek Apartments, Vs. Nungambakkam High Road, 3rd Floor, Building New No.9, Chennai – 600 034. I-Block, 1st Main Road, Anna Nagar East, Chennai – 600 102 [PAN: AHVPK 3978P] (अपीलार्थी/Appellant) (प्रत्यथी/Respondent) Mr. R. Vijayaraghavan, Advocate अपीलाथी की ओर से/ Appellant by : प्रत्यथी की ओर से /Respondent by : Ms. R. Anitha, JCIT सुनवाई की तारीख/Date of Hearing : 25.02.2020 घोर्णा की तारीख /Date of Pronouncement : 25.02.2020 आदेश / 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 ITA No.7/CIT(A)-7/2018-19 dated 30.09.2019 for the Assessment Year 2015- 16 confirming the levy of penalty u/s.271B of the Income Tax Act, 1961.
ITA No.3215/Chny/2019 :- 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
ITA No.3215/Chny/2019 :- 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
ITA No.3215/Chny/2019 :- 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.
Sd/- Sd/- (जॉजज माथन) (इंटूरी रामा राव) (INTURI RAMA RAO) (GEORGE MATHAN) लेखा सदस्य/ACCOUNTANT MEMBER न्याययक सदस्य/JUDICIAL MEMBER चेन्नई/Chennai, धदनांक/Dated: 25th February, 2020 IA, Sr. PS आदेश की प्रधतधलधप अग्रेधर्त/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3. आयकर आयुक्त (अपील)/CIT(A) 4. आयकर आयुक्त/CIT 5. धवभागीय प्रधतधनधि/DR 6. गाडज फाईल/GF