Limited Scrutiny Notice

[suri112000]

According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts:

(a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years.

(b) Rs. 1,50,000.

However, according to section 273B, no penalty shall be imposed if reasonable cause for such failure is proved.

 

[FnOtrader80]

There are cases decided by Income Tax Appelate Tribunal which has accepted turnover as calculated as per ICAI study note.

ST

Sir , 27 lacs is calculated as per ICAI guidelines only , IT department is claiming it as 47 crs.

 

[suri112000]

If you read this
http://orange.taxsutra.com/articles/639670b576d2dae02d4db2f87da8e3/expert_article

with this

https://indiankanoon.org/doc/100410418/

the concept of turnover gets clarified.

First link clearly lays out what is turnover and in the second link in one of the cases at IT Tribunal, the Assessing Officer clearly said turnover is modulus of profits or losses.

 

[DSM]

Just an update to the below post.

I had received further notice from the IT dept, to provide some additional information (not related to trading) which was provided by my C.A. Now I have received intimation from IT Dept. that my scrutiny is completed with my returns being accepted as filed. Summarizing my understanding of my experience :

* All F&O and MCX turnover details are reported to the dept.

* As per reports published in the papers, ALL transactions now are under govt. knowledge. Last week, I.T dept. issued a notice to a woman who made online purchase of about 10 lacs. NRI Friends who had purchased property got IT notices. Even credit card transactions depending on value and place of usage (5 star hotel and luxury establishments), foreign travel, purchase of vehicles, transfer of large value funds to/from banks are reported to govt. and notices/scrutiny can be expected.

* For peace of mind, and to get a closure, it is better to file returns every year, even if it is a nominal income or a loss to avoid scrutiny of old records in future.

* Govt. is trying to widen its base of tax assesse's and will go after individuals who are not filing returns.

* Due to data mining, any account can come under scrutiny.

* Laws are only getting stricter so it is better to be on the right side of the law.

* I repeat my observation that IT Officers are really busy and have little time for traders who CANNOT hide their turnover, transactions or income. So if a trader gets a notice, he has nothing to fear if he has reported his income correctly.

So in my view, it is better to file returns regularly, have peace of mind, and a good night's sleep.

Just my views...

FnOTrader,

I did not ask anything further, and I think I answered the questions satisfactorily to the officer. If the IT dept. has questions in future, I do not have any problems answering, because all transactions can be verified with the broker's statements as well as records of the stock exchange and at MCX. The IT dept. knows the P&L of every individual trader, even if they trade thru multiple brokers. So only those who have not declared true figures need to worry, which I doubt any trader will need to resort to. So for me, the matter is closed as there are no pending questions to answer, and in future if the IT dept has any questions, will handle them as they arise....

 

[iTrade]

I think its high time that a system is implemented where brokers handover a Form-16 (incase of salaried people) kind of form for one's trading account. Period. No audit needed and no questions asked. It should be a final legal document telling one's tax liability.

 

[comm4300]

I think its high time that a system is implemented where brokers handover a Form-16 (incase of salaried people) kind of form for one's trading account. Period. No audit needed and no questions asked. It should be a final legal document telling one's tax liability.

perfect idea. So much hassle can be avoided by this method.

 

[FnOtrader80]

My meetings with IT officer going from last year........ now they again called me on monday......

Any updates with your case ?

 

[iTrade]

perfect idea. So much hassle can be avoided by this method.

I have written to SEBI. You guys can also write here: http://www.sebi.gov.in/sebiweb/stpages/contact_us.jsp

 

[comm4300]

I have written to SEBI. You guys can also write here: http://www.sebi.gov.in/sebiweb/stpages/contact_us.jsp

thanks,

Posted. let's hope it reaches someone.

"Every broker should issue a "form 16" type of document to each investor/trader in the retail segment. This will help both the retail trader and Income Tax department in correct assessment of taxes due on stock transactions. This will also help avoid so much hassles that each Derivatives trader is going through in the form of turnover, tax and audit requirements. Thanks for your time."

 

[lonstud]

I received notice u/s 154 today. The contents are as follows:

"Your return for the above mentioned assessment year will henceforth be rectified by your Assessing Officer . You are requested to contact your Jurisdictional assessing officer for any rectification related issues."

Please guide me if I need to do anything to respond to this notice.