ISMAIL J. - By these petitions under section 27(3) of the Wealth-tax Act, 1957, the Commissioner of Wealth-tax, Tamil Nadu-II, Madras, requests this court to direct the Income-tax Appellate Tribunal, Madras, to state a case and refer the following questions of law for the opinion of this court in each of these cases :
'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the penalty levied under section 18(1)(c) of the Wealth-tax Act
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the department has not established that the assessee had concealed his wealth in the return filed by him when the assessees value was far less than that fixed by the assessees valuer ?
(3) Whether the Tribunals finding that the assessee is not guilty of concealment of wealth is based on relevant and valid consideration and is a reasonable view to take on the facts of the case ?'
The respondent in T.C.Ps. Nos. 112 to 115 of 1976 is one S. Venugopala Konar and these four petitions relate to four assessment years 1966-67 to 1969-70, T.C.Ps. Nos. 116 and 117 of 1976 relate to S. Venugopala Konar, legal representative to late M. G. Srinivasa Konar, in respect of two assessment years 1968-69 and 1969-70. T.C.Ps. Nos. 136 to 139 of 1976 relate to one S. Govinda Konar and they are referable to the four assessment years already referred to. The three assessees in this batch of petitions were two sons and the father and the matter related to the levy of penalty in respect of their return for purpose of assessment to wealth-tax. It related to the construction of a building, which, according to the finding of the Tribunal, was commenced on May 28, 1965, and ended on September 30, 1969. The assesses had maintained a construction account and in that account they had actually entered the amounts spent for the construction work. According to such account, the amounts spent in the respective four years were as under :
The total cost of construction was said to amount to Rs. 90,000. It is on this basis that the assessees had submitted the returns for the respective years. But the department did not accept those figures returned by them and proceeded to estimate the value of the wealth on the respective valuation dates on the basis of the valuers report dated August 14, 1969. That valuer who is a chartered engineer estimated the cost of construction at Rs. 2,27,608 and the value as on August 14, 1969, after allowing depreciation for a period of five years, was arrived at Rs. 1,89,472. But the Wealth-tax Officer estimated the cost of construction at Rs. 2,40,000 and spread over that cost for the four years in question as follows :
It is with reference to the different between the value so arrived at by him and the value shown by the assessees that the proceeding were taken for the purpose of imposing penalty. The Tribunal held that the department had not placed any materials to show that the cost of construction as debited in the books was in any way incorrect and that it was only a case of estimate by the department of such cost of construction. We are of the opinion that the Tribunal in coming to such a conclusion did not commit any error of law. As we have pointed out already, the Tribunal itself refers to the period of construction as May 28, 1965, to September 30, 1969. The valuers report was said to give the value as on August 14, 1969. If the construction was completed on September 30, 1969, the building should have been only incomplete on August 14, 1969, and, therefore, there was no question of valuing the building which was incomplete as on August 14, 1969, and allowing depreciation in respect thereof for a period of five years. It is this aspect of the matter which has been overlooked by the Inspecting Assistant Commissioner when he imposed the penalty. In respect of any incomplete construction, normally there cannot be any market value as on successive valuation dates on the basis of the progress in the construction work and the only manner in which the value of such incomplete construction, as on different valuation dates, could be arrived at was by finding out the actual amount spent on the construction as on the different valuation dates. As the Tribunal pointed out, the department had not placed any material to show that the amount incurred by the assessees on the respective valuation dates and as entered in the construction account was incorrect. Again, assuming that the department was right in rejecting the construction account maintained by the assessees and estimating the total cost of construction, still no principle or basis was brought to our notice to justify the action of the department in spreading the said total cost over the period of four years in question at the particular amounts on the respective valuation dates as it has actually done in these cases. If so, there was no scope for finding that the assessees had suppressed the real value as on the different valuation dates so as to render themselves liable to penalty.
In view of these reasons, we are of the opinion that the Tribunal cannot be said to have committed any error of law, and, therefore, the questions extracted already cannot be said to arise out of the order of the Tribunal. Hence, these petitions are dismissed. There will be no order as to costs.