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TMI Blog1992 (2) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... response to which returns were filed by the assessee for the assessment years in question on 6th March, 1984. The assessee had constructed a single storeyed residential house at Alwar from asst. yr. 1974-75. It is not under dispute that part of the house was completed upto the asst. yr. 1976-77 and that it was completed in the asst. yr. 1981-82. During that asst. yr. 1977-78 and 1978-79 no constructions are said to have taken place. During the asst. yr. 1977-78, the asssessee only paid Rs. 13,082, the cost of the land, while constructions took place in the asst. yr. 1980-81. The period of construction and the above facts are not in dispute. The ITO made reference to the Valuation Officer for determining the cost of construction. The report dt. 9th Oct., 1984 of the Valuation Officer was that excluding the value of the land, the cost of construction was Rs. 89,000. As against the same, the investment as shown by the assessee was Rs. 44,815 and thus there was a difference of Rs. 44,190 (in round figures). The following tabular statement will show the investment as per the assessee and as per the Approved Valuer during the various assessment years: Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional report and that the difference in the two being large, it could not be merely on difference of opinion. Holding that the value as declared by the assessee was not bona fide and that the assessee had deliberately, wilfully and consciously understated the investment, the levy of the penalties was confirmed. Here it may be stated that for the asst. yr. 1975-76 the ITO had levied the penalties on the basis of 100% of the tax on the income held concealed in accordance with the provisions of s. 271(1)(c) as operative w.e.f. 1st April, 1976. 4. For the asst. yr. 1975-76, the learned CIT issued a notice dt. 1st Aug., 1989 under s. 263 to the effect that the penalty order was erroneous in so far as it was prejudicial to the interests of Revenue. This was on the basis that the act of concealment was committed on 6th Oct., 1975 when the original return was filed and, therefore, penalty was leviable in terms of the amount held concealed as per the provisions of s. 271(1)(c) prior to 1st April, 1976. In the reply dt. 1st Aug., 1989, it was stated that the alleged concealment was detected by the Department only after the reassessment proceedings and the filing of the return in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of actual concealment of income. Referring to the report of the Valuation Officer, he submitted that the valuation was an art and not an exact science. For this proposition, reliance was placed by him on the decision of Allahabad High Court in Addl. CIT vs. Karachi Kampatwala (1981) 127 ITR 421 (All). He also placed reliance on the following decisions for the propositions mentioned therein : (1) CIT vs. Mohammed Kunhi (1973) 87 ITR 179 (Ker), (2) CIT vs. S.P. Bhatt (1974) 97 ITR 440 (Guj), (3) Addl. CIT vs. Noor Mohd. Co. Ors. (1974) 97 ITR 705 (Raj), (4) Addl. CIT vs. Gem Palace 1975 CTR (Raj) 15 : (1975) 98 ITR 640 (Raj), (5) B. Muniappa Gounder, B. vs. CIT 1976 CTR (Mad) 28 : (1976) 102 ITR 787 (Mad), (6) Addl. CIT vs. Smt. Kanakammal (1979) 118 ITR 94 (Mad), (7) CIT vs. P.A. Patel (1981) 127 ITR 390 (Pat), (8) CIT vs. Sadananda Sahu (1982) 29 CTR (Ori) 351 : (1982) 136 ITR 726 (Ori), (9) CIT vs. Sardar Bhagat Singh (1983) 142 ITR 836 (Pat), (10) CIT vs. Devkinandan Bhandari (1983) 35 CTR (MP) 44 : (1983) 144 ITR 178 (MP), (11) CIT vs. Apsara Talkies (1985) 155 ITR 303 (Mad) and (12) ITO vs. K.V.R. Krishnaji (1988) 40 Taxman 222 (Hyd). Shri Ranka submitted that the explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad stated before the ITO that the valuation had to be done on the basis of PWD rates including amounts to be given and spent on labour welfare and contractors' profit at 10% which could not be equated with actual expenses incurred under personal supervision. He had also stated that as per land and buildings tax valuation, which had also adopted the rates of PWD (cost and production method), the cost came to Rs. 69,000. Thus, though the assessee did not file any second appeal against the order of the first appellate authority, the fact remained that the valuation as arrived at by the ITO was on the basis of secondary evidence as against the primary evidence on which reliance was also placed by the assessee. That primary evidence had not been specifically rejected by the ITO. On the basis of the report of the Valuation Officer as contradistinguished from the valuation arrived at by Land and Buildings Authority, the difference in the two could not be treated as concealment. There was also no evidence of any actual concealment. The bifurcation of the difference was also by a mere estimate. On the basis of these facts, therefore, the assessee is right in pointing out that the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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