1. This is a classic example of filing appeals by the revenue without proper application of mind. The only point involved in these appeals, as well as cross-objections, pertains to the imposition of penalty under Section 18(1)(c) of the Wealth-tax Act, 1957 ('the Act').
2. The assessee is a HUF. The assessment years are 1970-71 to 1972-73 and 1974-75 and the relevant valuation dates are the last days of Samvat years 2025 to 2027 and 2029, respectively.
3. The assessee, along with another person, owns a property at Suryapur Mills Compound, Varachha Road, Surat, having half share therein. At this stage, it would be necessary to tabulate the valuation of the said half share shown by the assessee and that estimated by the WTO:Assessment Per assessee _______Per WTO_________year Original Revised 1st 2nd (1) (2) (3) (4) Rs. Rs. Rs. Rs.1970-71 2,52,500 2,78,700 4,03,990 2,73,0501971-72 2,52,500 2,95,350 4,44,270 2,90,9001972-73 2,52,500 3,36,600 4,75,300 3,24,1001974-75 2,52,500 5,00,000 8,14,380 4,60,950 Based on its approved valuer's report dated 20-3-1969, the assessee had shown the value of his half share in the property in question as indicated in column No. 1 above. Due to family disputes, the property in question was again valued by an approved valuer on 1-7-1975. As the subsequent valuer had valued the property in question upwardly, the assessee filed revised returns on 8-10-1975, declaring the value of his share as indicated in column No. 2 above. The WTO had referred the matter to the Departmental Valuation Officer (DVO) and the DVO had submitted his report dated 29-8-1975, wherein he had valued the assessee's share in the property in question as indicated in column No.3 above. Based on the DVO's report, the WTO had framed the assessments originally on 16-12-1975. The assessee preferred appeals before the AAC and, inter alia, contested the valuation adopted by the WTO in respect of the property in question. Vide his order dated 20-3-1978, the AAC set aside the orders of the WTO, with a direction to frame the assessments afresh. The WTO once again referred the matter to the DVO, who again submitted his report dated 21-3-1980 valuing the assessee's share in the property in question as indicated in column No. 4 above.
Thereafter, the WTO framed fresh assessments on 31-3-1980, adopting the value of the assessee's share in the property in question as shown by the assessee in its revised returns instead of adopting the valuation made by the DVO vide his second report dated 21-3-1980. Simultaneously, he initiated the proceedings under Section 18(1)(c)/18(2) and called upon the assessee to show cause why penalty should not be imposed under Section 18(1)(c) for the variation in the value shown by the assessee in its original returns and that shown in the revised returns.
(b) Without prejudice to the above, I deny having concealed particulars of wealth or having furnished inaccurate particulars of wealth. Although, the order and the notice are silent about the matter in respect of which penalty proceedings are initiated, I presumed that they have been initiated in connection with the valuation of my property at Varachha road. You will kindly note that the returns of wealth were filed, showing the value of the property based on the report of the approved valuer. As the property was in dispute, there was hardly any development in that area during this period and on account of several factors, the property was presumed to have the same value from year to year. It is incorrect to state that the valuation was done when the inquiries were started about the valuation. No such inquiries were ever made about the valuation, but the valuation was again done by me as I desired to ascertain the correct market value for partitioning the property between the members of the HUF and as is on the record, the partition had taken place. It would be, therefore, incorrect to link valuation done by me again with any other motive and as soon as the valuation was done and it was found that the property had higher value, I filed revised returns voluntarily and substituted the net value of the property, which after the appellate proceedings has been accepted as correct.
5. The WTO, however, was not satisfied with the assessee's explanation.
He, therefore, imposed penalty of Rs. 26,200, Rs. 42,850, Rs. 84,100 and Rs. 2,47,500, respectively, for the years under consideration.
6. In appeal before the Commissioner (Appeals), the assessee contended that on the facts and in the circumstances obtaining in its case, no penalty could have been imposed under Section 18(1)(c) inasmuch as the variation in the valuation of the property in question was due to honest difference of opinion between the assessee's valuer and that of the DVO. It was also highlighted before the Commissioner (Appeals) that in the second report of the DVO, the valuation of the assessee's share in the property in question was lower than what the assessee had shown in its revised return. It was, therefore, urged that penalty imposed under Section 18(1)(c) should be cancelled. The Commissioner (Appeals) cancelled the penalty in the following manner: 5. I find that there is much substance in the above argument.
Strictly speaking, the value of Rs. 2,52,200 for each of the years under appeal cannot be said to be supported by the valuation report because the valuation report was as for the assessment year 1968-69 and the appellant had adopted the same for the subsequent years. The appellant, therefore, cannot claim the advantage of the technical protection given to the returns of wealth filed by the assessee on the basis of valuation reports. The fact remains, however, that barring some reasons for substantial increase in value, the assessee would be justified in relying on the valuation report for the earlier year. Moreover, it is a fact that the same departmental valuer has given two different valuations for the same property as on the same valuation date. It would be unfair to charge the appellant with deliberate concealment and to alleg mala fide action on the part of the assessee merely on the ground of difference in valuation. I, therefore, agree that this is not a case for the levy of penalty under Section 18(1)(c).
6. In the result, four penalty orders are cancelled and the appeals for all the four years are allowed.
7. Being aggrieved, by the order of the Commissioner (Appeals), the revenue has come up in appeal before the Tribunal. The learned representative for the department strongly relied on the orders of the WTO and urged that the Commissioner (Appeals) was not justified in cancelling the penalties imposed under Section 18(1)(c). He, therefore, submitted that the order of the Commissioner (Appeals) should be set aside and that of the WTO should be restored. The learned Counsel for the assessee, on the other hand, strongly supported the order of the Commissioner (Appeals). In this connection, he once again highlighted the fact that in the second report of the DVO, the value of the assessee's share in the property in question was estimated at a figure lower than what the assessee had declared in the revised returns filed on 8-10-1975. Relying on the decision of the Hon'ble Gujarat High Court in the case of D.V. Patel & Co. v. CIT  100 ITR 524, the learned Counsel for the assessee submitted that since the assessee had filed revised returns voluntarily before the original assessments were framed on 16-12-1975, no penalty could be imposed under Section 18(1)(c).
8. We have considered the rival submissions of the parties and we are constrained to observe that much of the time, energy and material could have been saved if the revenue had applied its mind before deciding to file appeals before the Tribunal. We make this observation as under Section 16A(6) of the Act, the WTO has no choice but to frame the assessment 'in conformity with the estimate of the Valuation Officer'.
Therefore, in the fresh assessments framed by the WTO on 31-3-1980, he should have adopted the valuation made by the DVO in his second report dated 21-3-1980, instead of adopting the figures shown by the assessee in its revised returns filed on 8-10-1975. Perhaps, the WTO did not do so, as the valuation shown by the assessee was higher than that estimated by the DVO in his second report. After taking this wrong step, and against the provisions of the Act, the WTO initiated the proceedings under Section 18(1)(c)/18(2) with a view to penalise the assessee for showing higher value in the revised returns than that shown in the original returns. This approach of the WTO is not at all commendable. The assessee has liberty to file revised returns before the assessment is framed by the WTO. Therefore, when in the revised returns the assessee had shown higher value which was adopted by the WTO in framing fresh assessments on 31-3-1980, we fail to appreciate how the assessee's case could be brought within the mischief of Section 18(1)(c). In this connection, the aforesaid decision of the Hon'ble Gujarat High Court clearly supports the stand taken on behalf of the assessee. We have, therefore, no hesitation in upholding the order of the Commissioner (Appeals).
9. Before we part with this order, it may be mentioned that at the time of hearing, the learned Counsel for the assessee did not press the cross-objections. The same are, therefore, dismissed.
10. In the result, both the appeals as well as the cross-objections are dismissed.