Sanjeev Kumar Gupta, Delhi V. ITO, Ward-56(4), New Delhi

ITA 48/DEL/2023

AI Insights

The case involves Sanjeev Kumar Gupta, the appellant, who filed an appeal against the order of the Commissioner of Income Tax (Appeals), which arose from an assessment order passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2016-17. The primary contention was the imposition of a penalty of Rs. 1,50,000 under Section 271B for not filing a tax audit report as required under Section 44AB, despite having transactions in a multi-commodity exchange exceeding the prescribed limit. The Tribunal examined whether the turnover reported by the assessee exceeded the threshold for mandatory audit under Section 44AB. It was determined that only the resultant differences from derivative transactions, which are non-delivery based, should be considered for turnover, not the gross transaction values.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121675 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-06-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 04-01-2023
• Other Referred Cases: Parag Jain vs. ITO, Sachin Marotrao Rangari vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 27; 201; 271B; 44AB; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.48/DEL/2023 Assessment Year 2016-17 Sanjeev Kumar Gupta, 1/6018, Kabool Nagar, Shahdara Delhi. Vs. The Income Tax Officer Ward-56(4) New Delhi TAN/PAN: AAJPG4093N (Appellant) (Respondent) Appellant by: None Respondent by: Shri Anuj Garg, Sr.DR Date of hearing: 08 06 2023 Date of pronouncement: 24 08 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he capti oned app eal has b ee n f il ed b y the A sse ssee a gainst the o rde r of the C ommiss ione r o f In come T ax (A ppe als), NFA C D elhi (‘ C IT (A )’ in s h ort ) da ted 31. 10.2 022 aris ing from the assess me nt orde r dat ed 28. 12. 20 18 pass ed by th e Assessing O fficer (A O) unde r Sect ion 14 3(3) of t he Inc ome T ax A ct, 19 61 (t he Act ) co ncerning Assess me nt Yea r 201 6-17. 2. T he capt ione d a ppeal has bee n file d by t he assess ee a gainst the impos i ti on of penal t y of Rs. 1, 50 ,000/ - u nde r Secti on 271B of the Act a lle gi ng t hat asses see has not fi led t ax audit rep ort i n terms of p rovi si ons of Sec tio n 44A B of t he Act despit e the total value of tran sac tions ma de in mul ti c ommodi t y e xc han ge of Rs. 69, 17,25, 042/- w hich fa r ex ceeds the li mi t pre scri bed f or aud it I.T.A. No.48/Del/2023 2 of t he books o f acc ount under Sect ion 44AB of the Act. 3. When th e matter w as cal le d for hearing, none appe are d for the assess ee. Havi ng re ga rd to nature of iss ue, the adj ou rnment re quest w as decl ined. T he mat ter w a s acco rdingl y proceeded ex- par te. 4. From t he case records, it is seen t ha t the appeal f il ed belated by si x da ys. Consi de ri ng t he mi nor d ela y, t he same is condoned. 5. From the pe rusa l of t he cas e recor ds, it a ppe a rs t hat i t is a case o f the ass es see t hat he ha s n ot c rossed the t hres hold o f presc ri bed t urnove r t o att rac t t he provisi ons of Sec ti on 4 4A B of the A ct. O n pe rusa l of the rec ords, it is seen that the as sessee has re por ted Long T e rm C apital G ai n a t Rs. 2, 56, 3 04/ - and Sho rt T er m Capit al L oss of R s. 4, 97, 542/-. This apa rt, the assess ee has also undert aken transac ti ons in fu tu re s and options ( de ri vati ves ). The res ul ta nt income w as show n a t R s. 2,50, 904/ -. A s per the ‘G uida nce N ote of T ax A udi t under Secti on 44A B of the A ct’ issu ed by I CAI the exp ression ‘sa le, turnove r a nd gros s recei pts ’ use d in Sec ti on 44A B of the Act, suc h expr essi on onl y re presents the sum to ta l o f favourable an d unfavou ra bl e di ff erences a ris i ng fro m s uc h t rans act ions in der iv ati ves, futures a nd opt ions seg me nt. Since su ch trans ac tions a re t ra de d w it hout del i ver y of sha res or securit ie s or the transac ti on ar e sq uared up b y pa yment of differenc es and the refore, onl y s uch di ffe rences, be i t prof it or loss ha s to be s u mme d up for t he purpos es of de te rminati on of turno ver e tc. T hus when onl y re sulta nt di fference s be i ng prof it o r loss is take n into a ccoun t as a gains t the gross value of t ra nsact ion inco rrectl y adopte d by A ssess ing O ffic e r, the t urn over for the pur pos es of S ect io n 44AB of the Ac t w ould be fa r l ow er than the I.T.A. No.48/Del/2023 3 thres hol d li mit app li cable t o A ss ess ment Y ea r 2016 -17 i n que st ion. 6. T he is sue is no l onger re s i ntegr a. I dentical iss ue ca me up for c ons i de rat ion b ef ore the Tribu nal in t he cas e of P ar ag Jain vs. ITO i n ITA N o. 278/D el /202 2 or der date d 23. 05. 2023. T he re levant ope rative pa ra graph of the or der is re pr oduc ed her eu nde r: “ 5 . W e h a v e c a r e f u l l y c o n s i d e r e d t h e r i v a l s u b m i s s io n s a n d s t r a i g h t w a y f i n d o u r s e l v e s i n a g r e e m e n t w i t h t h e p le a r a i s e d o n b e h a l f o f t h e a s s e s s e e o n f i r s t p r i n c i p l e s . A s p e r t h e G u i d a n c e N o t e i s s u e d b y t h e I C A I f o r t h e p u r p o s e s o f t a x a u d i t u nd e r S e c t i o n 4 4 A B o f t h e A c t , t h e t u r n o v e r i n t h e c a s e o f d e r i v a t i v e a n d s p e c u l a t i v e t r a n s a c t i o n s ( w h i c h a r e n o n d e l i v e r y b a s e d t r a n s a c ti o n s ) , o n l y t h e r e s u l t a n t d i f f e r e n c e a r i s i n g t o t h e a s s e s s e e f r o m su c h t r a n s a c t i o n h a s t o b e t a k e n f o r t h e p u r p o s e s o f t u r n o v e r i n s t e a d o f g r o s s a m o u n t . T h e A s s e s s i n g O f f i c e r h a s w r o n g l y a d o p t e d t h e g r o s s a m ou n t i n s t e a d o f t h e d i f f e r e n c e s . W h i l e t h e a p p r o a c h o f t h e a s s e s s e e t o w a r d s n o n - a t t e n d a n c e a n d n o n - c o o p e r a t i o n b e f o r e t h e l o w e r a u th o r i t i e s i s h i g h l y i m p r o p e r a n d c a n n o t b e c o u n t e n a n c e d b u t h o w ev e r i n t h e s a m e v e i n , w e n o t i c e t h a t t h e t o t a l t u r n o v e r a s p e r t h e G u i d a n c e N o t e s t a n d s a t R s . 4 , 5 9 , 3 2 1 / - o n l y , a s p e r t h e m a t e r i a l pl a c e d b e f o r e t h e R e v e n u e A u t h o r i t i e s i n t h e c o u r s e o f t h e a s s e s s m e n t p r o c e e d i n g s . S u c h t u r n o v e r a r i s i n g f r o m d e r i v a t i v e / s p e c u l a t i v e t r a n s a c t i o n s a r e f a r l o w e r t h a n t h e t h r e s h o l d l i m i t p r e s c r i b e d u n d e r S e c t i o n 4 4 A B o f t h e A c t . C o n s e q u e n t l y , a r e a s o n a b l e c a u s e h a s b e e n s h o w n b y t h e a s s e s s e e f o r n o n c o m p l i a n c e o f p r o v i s i o n s o f S e c t i on 4 4 A B o f t h e A c t . T h e i s s u e i s s q u a r e l y c o v e r e d i n f a v o u r o f t h e a s s es s e e b y t h e d e c i s i o n o f t h e C o - o r d i n a t e B e n c h i n t h e c a s e o f S ac h i n M a r o t r a o R a n g a r i v s . A C I T ( 2 0 2 2 ) , 1 4 3 t a x m a n n . c o m 3 1 8 ( R a j k ot ) ( T r i b . ) 6 . W h i l e h o l d i n g i n f a v o u r o f A s s e s s e e , w e a l s o a d ve r t t o t h e c o n t e n t i o n o f t h e R e v e n u e t h a t n o m a t e r i a l h a s b e e n p l a c e d a p p a r e n t l y p l a c e d i n t h e p e n a l t y p r o c e e d i n g s . W e s im u l t a n e o u s l y o b s e r v e t h a t t h e r e l e v a n t m a t e r i a l w a s m a d e a v a i l a bl e i n t h e c o u r s e o f t h e a s s e s s m e n t p r o c e e d i n g s i t s e l f a n d t h e r e f o r e , a p p l i c a t i o n o f S e c t i o n 4 4 A B w a s o u t o f a c o n t e n t i o n i n t h e a s s e s s me n t p r o c e e d i n g s i t s e l f . I n s u c h a s i t u a t i o n , i n s t e a d o f r e m i t t i n g th e m a t t e r b a c k t o t h e f i l e o f t h e A s s e s s i n g O f f i c e r , w e c o n s i d e r i t e x p e di e n t t o a d j u d i c a t e t h e i s s u e o n m e r i t s w i t h o u t e n c o u r a g i n g t h e p r o t r a ct e d l i t i g a t i o n o n s u c h s m a l l i s s u e . 7 . I n t h e l i g h t o f t h e d e l i n e a t i o n s , t h e p e n a l t y i mp o s e d u n d e r S e c t i o n 2 7 1 B i s r e v e r s e d a n d c a n c e l l e d . 8 . I n t h e r e s u l t , t h e a p p e a l o f t h e a s s e s s e e i s a l lo w e d . ” I.T.A. No.48/Del/2023 4 7. In consona nce w it h the decis ion take n in P arag J ai n (s upr a), w e obse rve that the Revenue ha s mis directed i tse l f in t akin g g ros s fi gur es o f t ra nsact io n va l ue in der ivati ve seg me nt ins tead of su m of res ul tant p rofi t s an d losses fl ow ing from su ch tra nsacti ons. Based o n sum tota l o f profi t/ l oss on su ch n on-del i ve ry trans ac tions, t he t urn ove r for t he purpos es of Sectio n 4 4A B o f the A ct is far l ow e r th an w ha t is presc ribed unde r Secti on 44A B of the A ct at the rele vant time. 8. H ence, i n t he abs e nce o f st at utor y obl ig at ion to obta i n Tax A udi t R epo rt under Se ct ion 44A B of t he A ct b y t he assess ee, conseq uent penal act ion unde r Se ct i on 2 71B o f the Act i s devoi d of legit i mac y. We thus se t as id e t he o rder of t he CIT (A ) and direct the A ssess ing O ffice r to cance l th e pe nalt y of R s.1,5 0, 000/- so impose d. 9. In the res ul t, the appeal of t he asses see is allow e d ex-parte. Order pronounced in the open Court on 24/08/2023 Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /08/2023 prabhat