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assessee to be audited under section 44AB of the Act. The ld. CIT (A) was not impressed with the contention of the assessee and confirmed the levy of penalty under section 271B of the IT Act.

3. Before us, the ld. A/R of the assessee has submitted that the AO has taken the turnover of the assessee at Rs. 2,43,62,720/- in share transactions. However, the majority of these transactions are speculative transactions being intraday trading in the shares without actual delivery and, therefore, the value of these transactions cannot be taken as turnover when there was no actual delivery of the shares but these are only speculative transactions carried out by the assessee in the category of intraday trading. Thus the turnover for the purpose of section 44AB in respect of speculative transactions is only the aggregate of both positive and negative differences arising from these transactions. In support of his contention, he has strongly placed reliance on the Guidance Note on Audit under section 44AB of the I.T. Act issued by the Institute of Chartered Accountants of India (ICAI) and submitted that as per the said Guidance Note, the turnover or gross receipts in respect of speculative transactions of shares and securities has to be determined in the manner prescribed therein. Thus the ld. A/R has submitted that in case of speculative transactions in the shares only the aggregate of both positive and negative differences arising by settlement of various such contracts during the year has to be taken as turnover for the purpose of audit under section 44AB of the Act. The ld. A/R has referred to the details of the turnover in three segments of share trading carried out by the assessee during the year under consideration. He has submitted that as far as the intraday non-delivery based transactions are concerned, Shri Rajjak Ahmed Khan, Jaipur.

4. On the other hand, the ld. D/R has submitted that it is not a derivative transaction in the F & O segment but the transactions are cash security though non- delivery based, therefore, the total value of the transactions has to be considered as turnover for the purpose of section 44AB of the Act. He has relied upon the orders of the authorities below.

5. We have considered the rival submissions as well as the relevant material on record. The limited dispute in the case in hand is whether the provisions of section 44AB are applicable in the case of the assessee when the assessee has done the share trading in intraday segment and some of the transactions are delivery based transactions to the extent of Rs. 53,498/-. There is no dispute regarding the turnover in respect of the transactions of the shares which are delivery based. However, the dispute is regarding the turnover in respect of the intraday Shri Rajjak Ahmed Khan, Jaipur.

transactions carried out by the assessee. The AO has taken the total value of the transactions at Rs. 2,43,62,720/- in the intraday non-delivery based trading segment. There is no quarrel that the transactions carried out by the assessee in intraday non-delivery based segment are speculative transactions as per section 43(5) of the Act. This fact is also accepted by the ld. CIT (A) in his finding in para 2.3 as under :-

" Ground No. 01 and 02 are being taken up together which are interrelated. I have perused the facts of the case, the penalty order and the submissions of the appellant. It is seen that the Assessing Officer imposed penalty under section 271B for not getting the accounts audited. There is no dispute as to the fact that the turnover of the assessee is more than the limit prescribed under section 44AB and the assessee has not got his accounts audited. Assessee has taken plea that these transactions of stock related to intraday activities/non- delivery based transactions. Therefore, the same did not require audit under section 44AB.

ICAI that the turnover in respect of non-delivery based speculative transactions including stock and shares has to be determined by taking the aggregate of both positive and negative differences arising from such transactions and as an out-come of settlement of such contracts during the year. We find that the assessee has produced the details of the speculative transactions as well as delivery based transactions and also given the computation of the turnover as under :-

Intraday Positive or favorable differences 109092.10 (sheet enclosed for this) Intraday Negative or unfavorable 152689.69 differences (sheet enclosed for this) Sale of delivery based transactions 53498.9 315280.69 There is no dispute regarding the delivery based transactions of shares to the tune of Rs. 53,498.90. We have verified the computation of the turnover in respect of intraday non-delivery based transactions and the positive and negative differences of these speculative transactions given in the above table. Therefore, by taking the aggregate of the positive and negative differences as well as the turnover of the delivery based transactions, the total turnover of the assessee comes to Rs.