ORDER
S.K. Kulshrestha, J.
1. This appeal is under Section 27A of the WT Act, 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 Tribunal was justified in holding that the assessee has valued its assets on certain basis and non-acceptance of assessee’s explanation cannot attract the penalty under Section 18(1)(c) in the case, even though penalty is imposable in view of Expln. 4 to Section 18(1) of the WT Act?
2. The respondent/assessee is a limited company which filed a return showing its net wealth as on 31st March, 1988. According to the return of wealth, the showroom at Bombay was valued at Rs. 32,67,881, the value of car and jeeps was shown to be Rs. 5,54,903, while value of the plot was shown to be Rs. 1,108. In assessing the said value, the assessee had adopted the method of rent capitalization, while the value of automobile was arrived at on the basis of written down value. The Department did not accept the valuation of the assessee and appointed its valuer for the purpose of valuation. The value of the showroom at Bombay was made on the basis of the market value and it was assessed at Rs. 52,48,000, while the value of the automobile was assessed at Rs. 11,55,499. As against the value of the plot in Indore of Rs. 1,108, the value of the plot was assessed at Rs. 1,10,000. Thus, the total net wealth of the assessee was arrived at Rs. 65,13,499 as against the returned wealth of Rs. 32,67,881.
3. The assessee assailed the said order before the CWT(A), who maintained the order, but set aside the penalty, insofar as it related to the valuation of the showroom and the vehicles and granted the relief of Rs. 1,37,655 in respect of the penalty. In appeal filed by the Department, the Tribunal has maintained this order. In concluding para the Tribunal has observed:
It is evident from record that the assessee has shown the value of the vehicles on the basis of WDV for which he has some explanation. The Revenue has not given any basis for valuation of car 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 CWT(A) 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 invited our attention to the provisions of Section 18 of the WT Act and pointed out that where concealment was referable to Section 18(1)(c) and it was evident that value of the assets returned by any person was less than 70 per cent of the value of such asset as determined in the assessment, it would be deemed that such person has furnished inaccurate particulars of such assets within the meaning of Clause (c), unless he proves that the value of the assets as returned by him was the correct value. On this basis learned Counsel submits that there was deemed concealment and therefore, penalty had been correctly levied and therefore CWT (A) and Tribunal both erred in not (sic) setting aside the penalty as regards two items, namely, the showroom at Bombay and the vehicles. He has also relied upon the judgment of the apex Court in K.P. Madhusudhanan v. CIT to the effect that, “It is not necessary to disclose the explanation, while issuing notice to the assessee.”
5. Learned senior Counsel Mr. Chaphekar has per contra, submitted that the assessee has disclosed the entire wealth and merely because his method of calculation was different from that of the Department it is no ground to treat that he was guilty of concealment and therefore, the Tribunal was right in setting aside the penalty imposed by the AO.
6. We have heard learned counsel. The relevant provisions contained in Section 18 of the WT Act, provides as follows:
Section 18(1) If the AO, Dy. CIT (A), CIT (A), Chief CIT or CIT or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person-
(a) (*****)
(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-
(i) (*****)
(ii) in the cases referred to 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 thousand rupees for each such failure;
(iii) in the cases referred to in Clause (c), in addition to any wealth-tax payable by him, a sum which shall not be less than, but which shall not exceed five times, the amount of tax sought to be evaded by reason of the concealment of particulars of any assets or the furnishing of inaccurate particulars in respect of any assets or debts:
Provided that in the cases referred to in Clause (b), no penalty shall be imposable if the person proves that there was reasonable cause for the failure referred to in that clause.
Explanation 4 – Where the value of any asset returned by any person is less than seventy per cent of the value of such asset as determined in an assessment under Section 16 or Section 17, such person shall be deemed to have furnished inaccurate particulars of such asset within the meaning of Clause (c) of this subsection, unless he proves that the value of the asset as returned by him is the correct value.
7. We may reiterate some of the salient facts which are not disputed. The wealth was fully disclosed to the Department, as required. The wealth included the showroom in Bombay, car and jeeps owned by the assessee and a plot at Indore. The only dispute is with regard to correct value having been declared. As regards the showroom, the stand of assessee was that he had declared the value on the basis of rent capitalization, while the Department’s Valuation Officer had assessed the property on the basis of the market value. Learned Counsel Shri Chaphekar has referred to the decision of the Supreme Court in CWT v. Shawan Kumar Swarup & Sons in which referring to Rule 1BB of the WT Rules, which came into force on 1st April, 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:
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 objectionable, nor would there be any legal impediment, to adopt the mode of valuation embodied in Rule 1BB, namely, the method of capitalization of income on a number of years’ purchase value. The rule was intended to impart uniformity in valuations and to avoid vagaries and disparities resulting from application of different modes of valuation in different cases where the nature of the property is similar.
8. It is thus clear that the method chosen for the valuation of the assets by the assessee was “known method” and, therefore, it cannot be said that the assessee had made any concealment with regard to the property in Bombay. As regards the valuation of the vehicles (cars and jeeps), the AO observed that 33 per cent depreciation was claimed treating vehicles to be machinery, while only 10 per cent depreciation was permissible on automobiles. Learned Counsel Shri Chaphekar has pointed out that it was not concealed that it was on cars that depreciation was claimed, though it is a different matter that assets on which the depreciation was claimed was a vehicle. Since, the asset was not concealed, it cannot be said that there was any concealment.
9. Learned Counsel for the Revenue has placed heavy reliance on Expln. 4 to Section 18 stating that there is deemed concealment as the difference between the Departmental value and the value shown by the assessee is greater than 30 per cent. Learned Counsel for the assessee, per contra, has brought to our notice the decision of Gauhati High Court in Meghraj Tusnial and Anr. v. CWT 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 & Mineral Ltd. (2004) 186 CTR (Raj) 552 : (2003) 259 WR 212 (Raj), to the effect that, “if arguable claim for deduction is not allowed penalty cannot be imposed.” The said claim was however under the IT Act.
11. From the above discussion, what we deduce is that insofar 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 concealment as the assets had been fully disclosed and so also the method and it is a different matter that the Department did not agree with the method employed by the assessee. Under these circumstances, we do not find that the Tribunal committed any error for setting aside the penalty, insofar it related to the said two assets. We do not, therefore, find any substance in this appeal of the Department.
Appeal is dismissed but with no order as to costs.