TMI Blog2008 (11) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... O that according to this order, the assessee company during the period from February, 1994 to October, 1994 has constructed its factory building at T-1/114, Mongaolpuri, Industrial Area, Phase-I, New Delhi. In the aforesaid order of the Dy. Assessor and Collector, the cost of construction of the factory building (for purpose of determination of ALV for house tax purposes) was adopted at Rs. 34,53,125 as against. Rs. 8,89,024 shown by the assessee company (Rs. 1,05,385 for the period relevant, to asst. yr. 1994-95 and Rs. 7,83,639 for the asst. yr. 1995-96). As per the AO, on the comparison of cost of building shown by the assessee and adopted by Dy. Assessor and Collector, the assessee company has made an investment of Rs. 25,64,101 (Rs. 35,53,125 - Rs. 8,89,024) on the construction of the factory building over and above the amounts in this behalf recorded in the books of accounts of the assessee for relevant period. On the basis of these facts and circumstances, the assessment was reopened for asst. yr. 1994-95 as well as for asst. yr. 1995-96. In the course of reassessment proceedings, it was submitted by learned Authorised Representative of the assessee before the AO that the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In course of penalty proceedings, it was the only explanation of the assessee that penalty is not leviable in the cases of addition made in respect of cost of construction based upon the valuation made by the valuer but this explanation was not found acceptable by the AO. The penalty so levied is Rs. 60,941 in asst. yr. 1994-95 and Rs. 4,13,797 in asst. yr. 1995-96. The assessee carried the matter in appeal before learned CIT(A) in both these years against levy of penalty under s. 271(1)(c) of the Act but without success and now the assessee is in further appeal before us in both these years. 5. It was submitted by the learned Authorised Representative of the assessee that penalty proceedings are separate proceedings and hence mainly because the addition has been confirmed by the Tribunal. the levy of penalty cannot be upheld. In support of this contention reliance was placed on the judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. J.K. Synthetics Ltd. (1996) 135 CTR (Del) 4 : (1996) 219 ITR 267 (Del). In support of same contention, reliance was also placed on another judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. Chetan Doss Lachhman Das ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the impugned factory building was Rs. 8,89,024 as per books of accounts of the assessee and the same was valued at Rs. 20,45,400 by the registered valuer, Shri Prakash Ahuja whose valuation report was submitted by the assessee itself. Although there are three other valuation reports of Dy. Assessor and Collector, MCD, Jt. Assessor and Collector, MCD and of the DVO but these valuations reports are no more relevant because the addition has been confirmed by the learned CIT(A) on the basis of valuation report of the registered valuer submitted by the assessee itself and this order of learned CIT(A) is upheld by the Tribunal. The difference in cost of construction as per this valuation report submitted by the assessee and as per the books of accounts of the assessee is not a marginal difference but the difference is huge because we find that as against the cost of construction shown by the assessee in its books of accounts at Rs. 8,89,024, as per this valuation report of the registered valuer, cost of construction of factory building has been valued at Rs. 20,45,400.The difference is of Rs. 11,56,376 which is more than 100 per cent to the cost of construction shown by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing the total income of such person as a result thereof shall, for the purposes of cl. (c) of this sub-section be deemed to represent the income in respect of which particulars have been concealed." 10. From the above it can be seen that as per Expln. 1, if the assessee fails to offer an explanation or offers an explanation which is found by the AO or by the CIT(A) to be false or if the assessee is not able to substantiate his explanation and fails to prove that such explanation is bona fide in those situations, the amount added in computing the total income of such assessee is deemed to represent the income in respect of which particulars have been concealed. In the light of these provisions of the Act, when we examine the facts of this case as noted above, we find that no explanation whatsoever has been furnished by the assessee to explain the difference in the cost of construction of the factory building as per the books of accounts of the assessee and as per the report of registered valuer which is also furnished by the assessee itself. The only contention of the assessee is that the actual expenses incurred are recorded in the books of accounts. The assessee has not bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf. The assessee has not brought on record the detailed break up of the cost of construction accounted for by the assessee in its books of accounts showing item-wise value and quantitative details of materials such as cement, steel and bricks, etc. used for construction along with the details of labour charges etc. to show that sufficient quantity of all required materials and labour charges has been accounted for by the assessee to take care of the impugned area of construction. In view of this discussion, it is amply clear that the assessee could not offer any reasonable explanation to show that the cost of construction shown by the assessee in the books of accounts is the actual cost of construction and the value shown in the valuation report of the registered valuer submitted by the assessee itself is defective and hence we feel that penalty has been rightly imposed by the AO and confirmed by learned CIT(A) and we find no reason to interfere in the order of learned CIT(A) on this issue. 11. It is also worth mentioning that when the AO pointed out to the assessee that the cost of construction of the impugned factory building shown by the assessee in its books of accounts at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee on the judgment of Hon'ble apex Court rendered in the case of Dilip N. Shroff; this judgment is also of no help to the assessee in the present case because the facts are different. In that case, the facts are that the assessee submitted a valuation report of the registered valuer regarding valuation of property as on 1st April, 1981 and as per this valuation report, the value of the property was Rs. 2.50 crores. The AO in that case referred the matter of valuation of property under s. 55A to the DVO and as per the report of the DVO, the value was of Rs. 114.92 lakhs. Because of difference in value as per these two valuation reports, the addition was made by the AO and penalty was also imposed on account of such addition in income. Under these facts, it was held by Hon'ble apex Court that a duty might be enjoined on the assessee to make a correct disclosure of income but if such disclosure is based on the opinion of an expert, who was otherwise also a registered valuer having been appointed in terms of a statutory scheme, only because his opinion was not accepted or some other expert gave another opinion that would not by itself be sufficient for arriving at the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 586 it is around 14.5 per cent. In the present case, the difference is huge being more than 100 per cent and the difference is not on the basis of DVO's report but on the basis of valuation report of registered valuer submitted by the assessee itself. In that case, the assessee produced agreement and report of the contractor who carried out the construction whereas nothing has been produced in the present case to support the cost of construction recorded in the books of accounts. In fact, in the present case, no explanation whatsoever has been furnished by the assessee regarding this huge difference and because of these differences in facts noted above, this judgment is also of no help to the assessee in the present case. 15. Learned Departmental Representative of the Revenue has relied upon the judgment of Hon'ble Patna High Court rendered in the case of CIT vs. Md. Warasat Hussain. In this case, it was held by Hon'ble Patna High Court that penalty can be imposed even if income is added on the basis of estimate. In the present case, the impugned addition has been made and confirmed by the Tribunal on the basis of valuation report of registered valuer submitted by the assessee it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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