Income Tax Appellate Tribunal - Delhi
Deputy Commissioner Of Income Tax vs R.J. Wood & Co. (P) Ltd. on 11 September, 2001
ORDER
Phool Singh, J.M.
1. This appeal, preferred by the Revenue, is directed against CWT(A) is order dt. 30th Oct., 1995, relating to the asst. yr. 1984-85 by which penalty of Rs. 7,87,815 imposed by the AO under Section 18(1)(c) of the WT Act, 1957, was deleted.
2. Relevant facts as noted by the AO are that assessee filed return for asst. yr. 1984-85 showing value of building at 12/4, Milestone, Mathura Road, Faridabad at Rs. 8,52,321 and assessment was completed on 29th Aug., 1985, in which value of the Faridabad property was assessed at Rs. 24 lacs. The assessment order was set aside by the CWT(A) vide order, dt. 23rd Dec., 1986, and in subsequent proceedings the AO valued the property of Faridabad at Rs. 75,89,000. The CWT(A) reduced the valuation thereof to Rs. 64,49,874. While framing, the fresh assessment order the AO also initiated penalty proceedings under Section 18(1)(c) on account of addition in respect of Faridabad property and Bombay property. The assessee submitted before the AO that assessee had valued the property on the basis of report of registered valuer and the property valued by the AO was on the basis of Departmental valuer's report. The difference in the two valuations was on account of the opinion of the assessee's valuer and that of Departmental valuer and there was no question of any concealment. The AO 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 CWT(A) 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 GWT 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 AO 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 AO 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 directios of the CWT 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 CBDT 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 AO. Learned counsel for, the assessee had placed reliance on the order of CWT (A) 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 AO has to record his satisfaction while completing the assessment. In this case fresh assessment had been completed on 30th March, 1980, and AO 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 AO 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 AO while completing the assessment and penalty is not tenable as per ratio of jurisdictional High Court in the case of CIT v. Ram Commeicial Enterprises Ltd. (supra). The second legal plea of the assessee 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 assessee 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.