Find a Lawyer

‑‑S. 10 (2)‑Re‑opening of case for assessment suo motu‑No time, held, prescribed‑Except in exceptional circumstances, creating impression in mind of functionary that there has been gross under statement or assessment manifestly causing loss to State revenue, a matter need not be re‑opened‑Proceedings cannot be struck down merely on ground that case was re‑opened after five years.‑Constitution of Pakistan (1973), Art. 199

‑ ‑‑S. 10. (2)‑Retrospective effect‑.Section 10 (2) envisages only re‑examination of original proceedings in light of prevailing conditions obtaining at time of initial assessment‑Nothing in impugned order that original assessment made on wrong data. retrospective effect to such assessment, held. cannot be given‑ . Constitution of Pakistan (1973), Art. 199

Hashmat Ali Chawla and 3 others v. Director‑General, Excise & Taxa tion, Karachi P L D 1978 Kar. 691 and Lipton (Pakistan) Ltd. v. Govern ment of Sind P L D 1977 Kar. 714 ref.

Mansoor‑ul‑Arfin for Petitioners.

Muhammad Ibrahim Memon, Add. A.‑G. for Respondents.

Date of hearing : 7th April, 1982.

ABDUL HAYEE KURESHI, ACTG. C. J.‑This petition has been filed by Abbas Bhoy and Iqbal Hussain to challenge an order passed by the Assistant Director‑General, Excise and Taxation,. Sind, on 24th December, 1973, whereby the assessment under the Immovable Property Tax Act was enhanced in exercise of powers under section 10 (2) of the said Act. For the purposes of convenience, we will refer to the Urban Immovable Property Tax Act as "the Act".

We have heard Mr. Mansoor‑ul‑Arfin for the petitioners, and Mr. Muhammad Ibrahim Memon for the respondents.

The brief facts are that the petitioners are owners of a building, bearing Nos. M. R. 6‑52/1 and 4, situated in Market Quarters, Rambharti Street, Karachi. It is the case of the petitioners that there are nine shops, a mill and one godown, which are rented to various tenants. In 1968, the Assessing Authority under the Act called for list of tenants from every landlord in Karachi for the purpose of making assessment. A list was indeed filed by the petitioners on 18th October, 1967, wherein the names of all the tenants,. together with the monthly rent paid by each one of them, were disclosed. The total rent as disclosed, was Its. 663.61 per month. Such, statement made by the petitioners was accepted by the Assessing Authority, and the gross annual rental value of the property was fixed at Rs. 7,963.00. The said order was passed on 27th April, 1968 and has been produced as annexure B/2. After more than five years, a notice was issued by the Assistant Director‑General, stating that the property unit bad been under‑assessed. Simultaneously, the petitioners were asked to show cause why the assessment should not be enhanced. On the date of hear ing, the petitioners submitted a list of their tenants. together ‑with the monthly rent paid by each one of them, and such list showed that the tenants were paying a total rent of Rs. 741.18 per month to the petitioners. An order, which the Assistant Director‑General styles as Judgment, was passed on 24th December, 1973, wherein the case of enhancement was dis posed of in the following words :‑

"The entire property unit is admittedly let out on a yearly rent of Rs. 9,100.00. . Let it be assessed on actual rent. The GRAV thus fixed at Rs. 9,100.00. It shall take effect from the date of original assessment."

Mr. Mansoor‑ul‑Arfin has raised the following contentions before us;‑

(1) That re-opening of the case under section 10 (2) of the Act was not proper, and

(2) that the new assessment should not have been given retrospec tive effect.

In‑regard to the re‑opening of the matter under section 10 (2) of the Act, we cannot agree with Mr. Mansoor‑ul‑Arfin. The said provision reads as under :‑

"(2) The Director‑General or such other officer as may be appointed by the Government by notification in this behalf, may of his own motion at any time, or on application made within a period of one year from the date of the taking of any proceedings or passing of any order by an authority subordinate to the Director‑General call for and examine the record of the proceedings or the order for the purpose of satisfying himself as to the legality or propriety of the same and may pass such order in reference thereto as he may consider fit."

We are conscious that notice under section 10 (2) of the Act was issued after five years of the initial assessment, but, on a plain reading of the provisions of section 10 (2) of the Act, it is clear that, for re‑opening the case of assessment suo moru, or, on his own motion, no time is prescribed. In such, circumstances. it cannot be said that the notice could not be given. However, we would like to observe that, except in exceptional circum stances, creating an impression to the mind of the functionary that there has been gross under statement, or, that the assessment is manifestly causing loss to State revenues, a matter need not be re‑opened after a lapse of five years, because, every five years, a new list of assessment is prepared, so that even otherwise fresh assessment becomes due Be that as it may the proceedings for fresh assessment in this particular was cannot be struck down merely on the ground that the case was re‑opened after five years.

The next question that has engaged our attention is in regard to retrospective effect being given to the new assessment made by the Assis tant Director‑General. As has been stated above, one Return was filed by the petitioners on 18th October, 1967 and the other on 22nd December, 1973. The Assistant Director‑General accepted the second statement, and related it to the time when the initial statement had been submitted. Mr. Mansoor‑ul‑Arfin has stated that, on a comparison of the two statements, it would appear that some of the old tenants, who were occupying the premises in 1967, had left, and those tenements were occupied by new tenants, who had paid higher rent. The contention is that such tenants who were paying higher rent in 1973, would not provide a circumstance for assumption that even in 1968, they were occupying the premises. The contention appears to be sound and reasonable, for, as we know, anew tenant very often pays a little higher rent to provide an incentive to the landlord for letting out the premises to him. This would then go to show that there was no material before the Assistant Director‑General for arri ving at the conclusion that the statement submitted by the petitioner on 18th October, 1967 was false. On the other hand, there was no material before the Assistant Director‑General to show when the new tenants had come in possession, or, had started paying higher rent since 1968. This Act is a fiscal statute, which has to be considered with a sort of exactness, so that. neither the citizens' rights are jeopardised, nor are the State reve nues reduced unreasonably. Reliance has been placed by Mr. Mansoor‑ul Arfin on the case of Hashmat Ali Chawla and 3 others v. Director‑General, Excise and Taxation, Karachi (P L D 1978 Kar. 691). Our attention has been specifically invited to the following passage appearing at pag a 695 of the Report :‑

"This in our opinion does not amount to correct exercise of power as subsection (2) of section 10 of the Act clearly envisages a re‑exami nation of the original proceedings or order in the light of the preva lent conditions as obtained on the date of determination of the valuation of the property unit at the time of initial assessment. For taking into consideration subsequent events affecting the rental value the Act provides for a very limited scope in terms of section 9. Additionally it is also clear that information and other materials taken into consideration by respondent No. 1 were not brought to the notice of the petitioners. Admittedly the notice issued‑ to the owner did not disclose the nature and details of the information received by the respondent No.1 making it necessary for him to amend the valuation."

1t would be clear that section 10 (2) of the Act envisages a re‑examina tion of the original proceedings, or, order in the light of prevalent conditions that obtained at the time of initial assessment. In the order of the Assistant Director‑General there is no finding that the original assessment was mad on wrong data being furnished by the petitioners. We are of the view that, in these circumstances; retrospective effect should not be given to the latter assessment order, which is being challenged before us.

Mr. Muhammad Ibrahim Memon, appearing for the respondents, had relied on the Judgment of Lipton (Pakistan) Ltd. v. Government of Sind (P L D 1977 Kar. 714). In paragraph 8 of the Judgment, the contention raised on behalf of the petitioner in that case were detailed, and one of the contentions was that the gross annual rental value could not be amended with retrospective effect. In that Judgment, the learned ‑Judges of the Division Bench came to the conclusion that gross annual rental value could be amended with retrospective effect. We are in respectful agreement with the conclusions reached by the learned Judges, but, in the peculiar circumstances of this case, we have taken a view that there was no material before the Assistant Director‑General to arrive at the conclusion that such rent, which the peti tioners received in 1973, was being received by them even in 1968. In fact,, the Assistant Director‑General had not even. adverted to that aspect of the case.

The last question that arises is as to relief, which should be awarded. Mr. Muhammad Ibrahim Memon suggested that the matter may be sent back to the respondents for re‑assessment. We are of the view that this case should not be remanded at this stage, because the original assessment was made in 1968 viz. fourteen years back. We are clear in our mind that the second assessment, which is being impugned before us, should not be given retrospective effect. In these circumstances, we allow the petition only to the following extent :‑

(1) That the order of respondent No. 2 is modified to the extent that the assessment made on 24th December, 1973 shall take effect from the date on which the assessment has been made.

(2) That the petitioners shall be charged tax (if not paid already) on the assessment made on 27th April, 1968 from the date of such assessment until 24th December; 1968.

(3) The parties to bear their own costs.

M.Y.M Order accordingly.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.