9911796707
TMI Blog2012 (6) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... ed family, carrying business under the name and style of "Mahaveer Electric Agency" as a proprietary concern. The assessee filed his return of income on October 27, 1998, admitting a total income of Rs. 46,46,946 which consisted of a long-term capital gain of Rs. 44,53,310. During the year of accounting, the assessee completed the construction of a three-storied building at No. 15, Astabujam Road, Chennai. The assessee disclosed in the accounting year 1998-99, the cost of construction of the three storied building at No. 15, Astabujam Road, Chennai as Rs. 12,50,000. The building consists of a ground floor, first floor and two residential flats in the second floor. A notice under section 143(2) of the Act was served on the assessee. The assessee supported the cost admitted by him with a valuation report from Sri Pakkirsamy, chartered engineer and approved valuer. As the said report was not in accordance with law, a reference was made under section 133(6) to the Officer of the Valuation Department of Chennai, requesting him to inspect the building and furnish a report on the cost of construction of the building. The Valuation Officer gave his report estimating the cost of constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restored the imposition of penalty. Being aggrieved by the said order, the assessee is before this court. 3. This appeal was admitted on June 21, 2007, to consider the following substantial questions of law : "(i) Whether the order of penalty passed by the assessing authority under section 271(1)(c) of the Income-tax Act and affirmed by the Appellate Tribunal without there being a finding with regard to satisfaction of the imposition of penalty on the differential costs as the same is undisclosed income for the accounting year 1998-99 is proper and just in law ? (ii) Whether the finding of the Appellate Tribunal on the concurrent finding of fact and imposition of penalty upon the differential costs on the basis of estimated cost of the building is proper and valid ? (iii) Whether the Appellate Tribunal is justified in affirming the order of penalty passed by the Assessing Authority when the assessment on the undisclosed income is set aside by the Appellate Tribunal ?" 4. Learned counsel appearing for the appellant assailing the impugned order contended that the imposition of penalty cannot be automatic. Unless the explanation offered by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up with yet another valuation report showing the valuation of Rs. 23,22,000 and the difference in the amount was shown as a loan which he has borrowed from a relative. He failed to substantiate his explanation even at that time by producing any acceptable evidence, books of account, receipts, ledgers and vouchers as the same were not produced. It is under those circumstances, that the Assessing Officer proceeded to assess the cost of construction by accepting the Department's valuers report at Rs. 41,10,000 and the said valuation was modified by the appellate authority treating the cost of construction at Rs. 32,05,000. As far as the assessee is concerned, he has accepted the said cost of construction. The argument is that though the assessee accepted the cost of construction of Rs. 32,05,000, it was only to purchase peace with the Department and, therefore, that cannot be the basis for initiating penalty proceedings. Whether the assessee accepted the said amount of the cost of construction to buy peace or not, the legal effect is that the total cost of construction is Rs. 32,05,000. The assessee has in his first return shown the cost of con- struction as only Rs. 12,50,000 and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books, vouchers and receipts. When a show-cause notice was issued based on the Government valuer's report, voluntarily the assessee came out with a valuation of Rs. 23,22,000 based on the second report of the valuer and he admitted the difference. The explanation offered is that the best registered valuer had estimated the cost of construction based on the plan whereas, the second valuation report was based on actual construction, which fact is not established by any material evidence on record. Therefore, the authorities rightly rejected the said contention. The assessee accepted the cost of construction at Rs. 32,05,000. We are satisfied from the material on record that there was a deliberate attempt on the part of the assessee to suppress the true facts from the assessing authority and they did not avail of the opportunity to support their explanations by any acceptable evidence, at least by producing the accounts which they had maintained while putting up the construction. In that view of the matter, when the assessee in the first instance admittedly increased the cost of construction as Rs. 23,22,000 from the initial figure of Rs. 12,50,000 and ultimately accepted Rs. 32,05, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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