TMI Blog1981 (11) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ITO obtained an independent estimate of the construction cost of the theatre from his Departmental Valuer. That estimate put the figure at Rs. 5,67,300. Relying on the valuer's estimate, the officer held that the theatre must have cost more to build than was shown in the accounts. He further held that the expenses not shown in the accounts must have come out of some source of income not disclosed by the assessee to the Department. On the same basis, the IAC later imposed a penalty on the assessee under s. 271(1)(c), holding that there was concealment of income on the assessee's part to the extent that the expenses in its construction account fell short of the figure of cost as estimated by the Department Valuer. The IAC relied in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her estimate by an approved valuer which put the cost at Rs.3,10,541 , As earlier mentioned, the Departmental Valuer put the figure at Rs. 5,67,300. As if these, were not enough, the ITO himself put his valuation at Rs. 5,55,580. In this welter of estimates, there is no scope whatever for drawing the inference that the assessee's book figure of cost at Rs. 4,41,280 was not only an understatement but it involved an actual concealment of income. There is no evidence in this case to show that the assessee had understated the construction expenses in its accounts. The only basis for the addition in the assessment as well as for the levy of penalty is that furnished by the Department Valuer's estimated figure. We are satisfied that a valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mated cost of the building as rendered by a valuer, The learned judges held that a mere estimate of cost cannot constitute material on which finding of concealment can be rendered. In that case, some explanation had been offered by the assessee as to why the construction was at an economical cost. This explanation was not accepted by the ITO. The learned judges held that even if the assessee's explanation was not acceptable, it would still require some further material to support the finding that the assessee had concealed its taxable income. We respectfully agree with this view. Our answer to the second question is, accordingly, in the affirmative and in favour of the assessee. Having regard to our answers to the two questions, we dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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