Treatment of profit/loss from futures and options trade

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 May 2018 I submitted ITR 2 showing incomes including capital gains from investments in equity shares/ MF units after deducting loss incurred on F&O trade therefrom for the Asstt. Year 2017-18 and got an intimation under Section 143(1).

Later on I realised that profit/loss from F&O trade need to be shown as income from business and I revised and submitted ITR 3 showing loss of about Rs.1.24 lacs under the Head 'Income from Business' resulting into refund of income tax due to appropriation of loss against income under other heads.
Being there was no business and was not maintaining any accounts I did not fill in any details in Profit & Loss Account and Balance Sheet in the Return form while submitting online.
Now I have been served notice under Section 139(9) for rectifying the return that has been treated as defective.
Summing up all negative and positive figures of net results of all transactions it comes to around less than 2 lacs.

I seek guidance as to the following points:

1. What will be gross turnover needed to be be filled in the profit and loss account. Will it be total sum of net results or sum total of full value of all transactions that took place.

2. Do I need to maintain accounts and get them audited under Section 44 AB.

3. As no audit has taken place, what will be the impact and how the income tax authorities will treat this. Will there be any further scrutiny and implications.

4. What further action be there in case I do not respond to the notice at all and not rectify the revised return submitted by me though intimation has already been received for the original return in Form ITR 2.

Kindly guide.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 May 2018 1. Whether audit applies or not, depends on the turnover plus the 44AD application.

2. If the audit is applicable, then not getting the audit done is liable for penalty.

I would suggest that you better contact a local CA to get your transactions reviewed and if audit is applicable, get it done asap.