VALUE LINE EQUITIES P. LTD ( FORMERLY KNWOAN AS M.S SB & T SECURITIES P.LTD),MUMBAI vs. ACIT CIR 4(2), MUMBAI

ACIT Cir 4(2), M/s Valueline Equities AayakarBhavan, M. K. Private Limited Road, Mumbai-400 020 405, Appejay House 4th बिधम/ floor, 130 Mumbai, Vs. Samachar Marg, Fort, Mumbai-400 001 स्थायीलेखासं./जीआइआरसं./PAN No. AAACS6170Q (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant : Shri Ravikant Pathak, AR by प्रत्यथीकीओरसे/Respondentby : Ms. Bharati Singh, DR सुनवाईकीतारीख/ : 05.03.2020 Date of Hearing घोषणाकीतारीख / : 08.07.2020 Date of Pronouncement आदेश / O R D E R

Per S. Rifaur Rahman, Accountant Member:

M/s Valueline Equities Private Limited 4. With regard to auditor’s remuneration, it is submitted that it has paid auditors remuneration and debited the same to the auditors remuneration account and it is inadvertently debited to legal and professional fees also twice.

6. Assessee submitted that he has neither concealed any income nor furnished any inaccurate particulars of income by relying on following cases:-

1. CIT versus Reliance Petro products private limited (2010) 322 ITR 158 (SC),

2. Price Waterhouse Coopers private limited versus CIT (6924/2012/SC),

3. Ken Software Technologies Ltd versus ITO 8 (2) (2)/ITA No. 4849/M/2009

M/s Valueline Equities Private Limited 7. After considering the submissions of the assessee, AO rejected the contention of the assessee and found that the assessee has concealed the particulars of income furnishing inaccurate particulars of income by relying on the following cases:

(2007) 295 ITR 244 (SC)

2. Zoom Communication (P) Ltd 40 DTR 249 (2010)

8. Aggrieved with the above order, assessee preferred an appeal before Ld. CIT(A) along with detailed submission. After considering the submissions of the assessee, Ld CIT(A) gave partial relief to the assessee by deleting the penalty on foreign travel expenses by observing that the disallowance is made on ad hoc basis that is at an estimated figure, therefore the penalty cannot be levied and confirmed the penalty levied by the AO on the other additions.

9. Aggrieved with the above order, assessee is in appeal before us contesting the penalty confirmed by the Ld CIT(A).

M/s Valueline Equities Private Limited 10. Before us, Ld AR submitted written submission along with ledger copies of legal and professional fees, auditors remuneration and M.M.Dubey account for the year ended 31.03.2008 and 31.03.2009. He brought to our notice the relevant entries recorded by the assessee in the subsequent years and submitted that the assessee has made genuine mistake inadvertently and prayed that penalty may be deleted. The written submission submitted by assessee is reproduced below:-

In above appeal, assessee has challenged the levy of penalty of Rs. 51,4847- u/s 271 (1)(c) of the Income Tax Act, 1961 (Act) confirmed by the CIT(A). CIT(A) has discussed and confirmed the penalty on page 5 to 7 of his order. The AO has discussed and levied the penalty on page 2 to 4 of his penalty order. Penalty has been levied and confirmed on two disallowances i.e. (i) fees of Rs. 1,23,596/- paid to the auditor, debited twice in the books and (ii) disallowance of Securities Transaction Tax (STT) of Rs. 27,825/-.

2.1 Assessee paid Rs. 1,23,596/- to the auditor namely M/s. M.M. Dubey & Company, Chartered Accountants on 31/03/2008. The said amount has been debited to legal and professional fees. Said amount was neither routed through auditor remuneration nor to the account of auditor in the books of assessee.

2.2 While, finalizing the books for audit in the month of September, 2008, the assessee passed another entry of auditor M/s Valueline Equities Private Limited remuneration. This entry was debited to the account of auditor remuneration and credited to the auditor's account which is shown as liability. In order to pay the liability, the assessee issued cheque of Rs. 1,10,866/- (i.e. auditor remuneration of Rs. 1,23,596 - TDS of Rs. 12,730) to the auditor on 24/01/2009. The said cheque was returned by the auditor communicating that he has already received the fees towards audit. Thus, the entry passed at the time of issuing the cheque has been reversed by the assessee.

2.3 Realizing the mistake, the assessee reversed the entry on 29/01/2009 (i.e. subsequent financial year 2008-09) by crediting the same to the profit and loss account. The assessee debited the amount and paid the amount twice due to mistake.

2.4 The result of the mistake is that the said amount is taxed twice i.e. in the current by making disallowance and in the next year by reversing the entry which is credited to the profit and loss account.

2.5 The assessee did not file the revised return under impression that there is no tax evasion as the assessee has reversed the said amount in the next year.

3.1 Assessee has paid the STT on trading on trading in derivatives which has been debited to profit and loss account. However, the same remained to be disallowed in the return income. Therefore, the AO was M/s Valueline Equities Private Limited requested to disallow the same while passing the order u/s 143(3) of the Act. STT remained to be disallowed due to mistake and oversight.

4. The assessee submits that there was no suppression of facts but a genuine mistake of debiting amount paid to auditor twice and not disallowing the STT. There was no attempt on the part of the assessee to hideor conceal the income so as to avoid the payment of tax. The said double debit of auditors remuneration and disallowance of STT were an inadvertent error; hence, penalty levied shall be deleted

5. In view of the above facts, the assessee prays that the penalty confirmed by the CIT(A) shall be deleted.

- Price Waterhouse Coopers (P.) Ltd. vs CIT [348ITR 306 SC] - CIT vs. SomanyEvergree Knits Ltd.[ 352 ITR 592 (Bom)] - CIT vs M/s. Bennett Coleman & Co. Ltd. [259 CTR (Bom) 383] - Ambico Integrated Marketing vs ACIT [ITA 1350/Mum/2017] - Spanco Technologies (I) (P) Ltd vs DCIT [ITA 5827/Mum/2014] 7. AO has relied on the judgment of Hon'ble Delhi High Court in the case of Zoom Communication [327 ITR 510 (Del)]. The assessee submits that the above decision has no application in the present case of the assessee as its case was subject matter of assessment in the preceding years as well as in the succeeding years. Thus, there cannot be any question of making incorrect claim. Moreover, the Hon'ble jurisdictional High Court has M/s Valueline Equities Private Limited deleted the penalty in the case of CIT vs S.M. Construction [233 Taxmann263] considering the decision of Zoom (supra). In view of the facts and circumstances of the facts, the assessee prays that the penalty confirmed by the CIT(A) shall be deleted.

11. On the other hand,Ld. DR objected the submissions of the Ld. AR and submitted that the mistakes were found because the assessment was selected for scrutiny and only assessing officer has pointed out the mistakes and otherwise, the issue would not have come to light. Therefore, he supported the levy of penalty in the present case.

Considering the total income declared by the assessee, we do not see any reason that assessee would indulge in concealing the income by furnishing inaccurate particulars to the extent of expenditure/income disallowed by the AO and the case of the assessee is similar to the case of Price Waterhouse (supra). Therefore we are inclined to accept the contention of the assessee and delete the penalty levied by the assessing officer.

(5) The pronouncement may be in any of the following manners:— (a) The Bench may pronounce the order immediately upon the conclusion of thehearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date forpronouncement.

M/s Valueline Equities Private Limited (c ) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall notordinarily(emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the noticeboard.

10.In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, M/s Valueline Equities Private Limited disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed “while calculating the time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken suomotu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”,inthelightoftheaboveanalysisofthelegalposition, theperiodduringwhich lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.