IT Notice on turnover exceeding 2 crore

My wife received Income Tax Letter - For furnishing information of Large value transaction from NSE / BSE - exceeding 2 crore. for the FY 2014-2015 .

She had filed the ITR on 31.03.2016 , the Short term Capital was only 55,000/- but the Total Sale was 1.35 crores and Total Purchase for the full year was again 1.35 crore. 
The ITR was filed in due forms Showing Capital Gains but not falling into taxable income slab.
My query is
1. Was the Audit necessary, even in case of Capital Gain ?
2. We have responded accordingly thru some CA firm , that the full information had already been submitted. What are options , if i receive further notice. ?

Thanks and regards
Manish
Asked 2 months ago in Capital Gains Tax from New Delhi, Delhi
Hii...
In case of share market transactions intraday trading /jobing is not part of turnover , only Delivery based transactions is considered as turnover , thus divide your Turnover in 2 parts for tax audit applicability.

Capital gain /business income depends on your intention at the time of buying any share , means if buy for investment purpose this is part of capital gain, if for instant sale means frequent transactions then it's business 
Hope your doubts / problems solve 
Lalit Bansal
CA, New Delhi
72 Answers
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  Talk to Lalit Bansal
Dear Sir,

If you have shown the income under capital gain head then audit is not required. However, if you have shown there income under the head of business income, audit will beer required.

If you have filed the reply just wait for the action from department side.

Please feel free to call/revert in case of any doubts.

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
761 Answers
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Hi Manish,
few things need to know,
1) were trading in futures and options.
2) frequency of trading 
3) are transactions non delivery basis.
4) money used for trading is her own or yours.

turnover for the purpose of trading in shares -if the transactions in shares are non-delivery based, it is only the net of the sales and purchases that is to be treated as turnover. 

turnover for Futures and Options- 
     1)The total of positive and negative, or favourable and unfavourable differences shall be taken as turnover; 
   2) Premium received on sale of options is to be included in turnover;
  3)  In respect of any reverse trades entered, the difference thereon shall also form part of the turnover.

if the frequency of trading amount of transaction is more then trading will fall under profits and gains of business or profession’ and you can claim expenses incurred on such tradings.

First check your turnover, if it is exceeding Rs 1 cr, on the basis of above definitions


Vishakha Agarwal
CA, Bangalore
210 Answers
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  Talk to Vishakha Agarwal
In your case we need further details like whether the sale was intraday or delivery based . How you have got money to pay to broker for purchase or source. If it was intraday then audit needs to be done . If not then need to get details from you to answer correctly
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
  Talk to Shyam Sunder Modani
Hello Sir,

As per the Information provided by you, it appears that it was a trading transaction and not an Investment. If it was a trading transaction then the profits should have been shown under Business & Profession. 

The department may question you as to why an audit of your books of accounts was not conducted.

You may stick to your ground stating that it was a mere investment and not a trading activity and hence No Audit was conducted.

Trust this clarifies your query. 

Feel free to call / get back in case of further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP.
Rohit R Sharma
CA, Mumbai
719 Answers
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