Delhi High Court
Dy. Cit vs R.J. Wood & Co. (P) Ltd. on 11 September, 2001
Equivalent citations: (2002)76TTJ(DEL)387
ORDER
Phool Singh, J.M. This appeal, preferred by the revenue, is directed against Commissioner of Wealth Tax (Appeals) is order dated 30-10-1995, relating to the assessment year 1984-85 by which penalty of Rs. 7,87,815 imposed by the assessing officer under section 18(1)(c) of the Wealth Tax Act, 1957, was deleted.
2. Relevant facts as noted by the assessing officer are that assessed filed return for assessment year 1984-85 showing value of building at 12/4, Milestone, Mathura Road, Faridabad at Rs. 8,52,321 and assessment was completed on 29-8-1985, in which value of the Faridabad property was assessed at Rs. 24 lakhs. The assessment order was set aside by the Commissioner of Wealth Tax (Appeals) vide order, dated 23-12-1986, and in subsequent proceedings the assessing officer valued the property of Faridabad at Rs. 75,89,000. The Commissioner of Wealth Tax (Appeals) reduced the valuation thereof to Rs. 64,49,874. While framing the fresh assessment order the assessing officer also initiated penalty proceedings under section 18(1)(c) on account of addition in respect of Faridabad property and Bombay property. The assessed submitted before the assessing officer that assessed had valued the property on the basis of report of registered valuer and the property valued by the assessing officer was on the basis of Departmental valuer's report. The difference in the two valuations was on account of the opinion of the assessed's valuer and that of Departmental valuer and there was no question of any concealment. The assessing officer considered all the facts but was not satisfied and he levied the penalty for concealment of wealth in respect of property at Faridabad and Bombay which stands cancelled by the Commissioner of Wealth Tax (Appeals) by observing as under :
"2.2 I have gone through the penalty order and have also considered the submissions of the learned counsel for the appellant. The enhancement in the wealth in the de novo assessment order in pursuance of the directions of the Commissioner of Wealth Tax under section 25(2) was limited to the Faridabad property. There was no enhancement in the case of the Bombay property. In the original assessment proceedings, no penalty proceedings had been initiated in respect of the Bombay property. Therefore, the assessing officer was not competent to initiate the penalty proceedings and, therefore, to levy the penalty in respect of Bombay property. However, he was also not competent to initiate the penalty proceedings in respect of an addition which was made for the first time in the de novo assessment proceedings. Coming to the substantive arguments of the learned counsel for the appellant, I agree that the assessing officer was not justified in levying the penalty in question. The only basis of addition to the net wealth was the report of the Valuation Officer to whom the reference was made after the directions of the Commissioner of Wealth Tax under section 25(2). The higher estimate of fair market value by the Valuation Officer is only another opinion just as determination of the fair market value by the approved valuer was also an opinion. On this basis, the appellant cannot be held to have concealed the particulars. In any case, the issue is covered by the aforesaid clarification issued by the Central Board of Direct Taxes and, therefore, the levy of the penalty under section 18(1)(c) in this case is held to be not justified and, therefore, cancelled."
Aggrieved, the revenue is in appeal.
3. On the date of hearing the learned Departmental Representative placed reliance on the order of assessing officer. Learned counsel for the assessed had placed reliance on the order of Commissioner of Wealth Tax (Appeals) and also raised two legal pleas. Learned counsel placing reliance on the decision of jurisdictional High Court in the case of CIT v. Ram Commercial Enterprises Ltd. (2000) 246 ITR 568 (Del) submitted that as per ratio laid down by Their Lordships the assessing officer has to record his satisfaction while completing the assessment. In this case fresh assessment had been completed on 30-3-1980, and assessing officer nowhere had recorded the satisfaction to start penalty proceedings under section 18(1)(c) of the Act except by mentioning at the end of the assessment order that penalty notice under section 18(1)(c) had been issued. The only requirement as per ratio of the above case is that assessing officer should form an opinion and should record his satisfaction but that is missing and penalty is to go. The second argument of the learned counsel is that Hon'ble jurisdictional High Court in the case of CWT v. Mrs. Vidya Malhotra (2000) 246 ITR 524 (Del) has confirmed the action of the Tribunal in which penalty under section 18(1)(c) which was on account of difference in the valuation reports of approved valuer and Departmental valuer was deleted. The contention is that same view is to be adopted in this case.
4. We have considered the rival submissions and perused the record carefully. Admittedly there is no satisfaction recorded by the assessing officer while completing the assessment and penalty is not tenable as per ratio of jurisdictional High Court in the case of CIT v. Ram Commercial Enterprises Ltd. (supra). The second legal plea of the assessed is also tenable that there is no concealment as difference in the valuation of the property was on the basis of valuation report of approved valuer and departmental valuer but fact remains that assessed had given out his valuation on bona fide belief that his valuer had given the correct valuation of the property. Concealment does not arise and hence the penalty is not exigible. Accordingly, the appeal of the department has no force and the same stands dismissed.