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TMI Blog2006 (7) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... HRESTHA and N. K. MODY JJ. JUDGMENT The judgment of the court was delivered by S. K. KULSHRESTHA J.— 1. This appeal is under section 27A of the Wealth- tax Act, 1957 which has been admitted on the following question of law: "Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was justified in holding that the assessee has valued its assets on certain basis and non-acceptance of the assessee's explanation cannot attract the penalty under section 18(1)(c) in the case, even though penalty is imposable in view of Explanation 4 to section 18(1) of the Wealth-tax Act ?" 2. The respondent/assessee is a limited company which filed a return showing its net wealth as on March 31, 1988. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and vehicles as it was done on estimate basis. Non-acceptance of explanation of the assessee does not invite penalty under section 18(1)(c) of the Act. Keeping in view the totality of the facts and circumstances of the case, we are of the opinion that the assessee has valued its assets on certain basis with certain explanations though they were not accepted by the Revenue. For non-acceptance of explanation, addition may be made but for this reason penalty under section 18(1) (c) is not called for. We, therefore, find ourselves in agreement with the order of the Commissioner of Wealth-tax (Appeals) and subscribe to the same." 4. It is against this order that the Revenue has filed the present appeal. Learned counsel for the Revenue has invi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, provides as follows: "18(1) If the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals), Chief Commissioner or Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person—. (b) has failed to comply with a notice under sub-section (2) or sub-section (4) of section 16; or (c) has concealed the particulars of any assets or furnished inaccurate particulars of any assets or debts; he or it may, by order in writing, direct that such person shall pay by way of penalty—………….. (ii) in the cases referred to in clause (b), in addition to the amount of wealth-tax payable by him, a sum which shall not be less than one thousand rupees but which may extend to twenty-five th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market value. Learned counsel Shri Chaphekar has referred to the decision of the Supreme Court in CWT v. Sharvan Kumar Swarup and Sons reported in [1994] 210 ITR 886, in which referring to rule 1BB of the Wealth-tax Rules, which came into force on April 1, 1979, prescribing the method for valuing a house wholly or mainly used for residential purposes, it was stated with approval that the property can be valued on the basis of the rent capitalization method. The scope of the rule was discussed in the judgment as under (page 895): "We may now turn to the scope and content of rule 1BB. The said rule merely provides a choice amongst well-known and well-settled modes of valuation. Even in the absence of rule 1BB it would not have been objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Gauhati High Court in Meghraj Tusnial v. CWT reported in [1996] 222 ITR 397, to the effect that, "presumption is rebuttable and the assessee may prove that the valuation given by him is proper." 10. Another decision of the Rajasthan High Court was brought to our notice in CIT v. Harshvardhan Chemicals and Mineral Ltd. [2003] 259 ITR 212, to the effect that, "if arguable claim for deduction is not allowed penalty cannot be imposed. The said claim was, however, under the Income-tax Act." 11. From the above discussion, what we deduce is that in so far as the two assets, namely, the showroom in Bombay and the two vehicles are concerned, though the assessee had employed a different method of valuation, it was not a case of conce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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