1981 PLP (Trib (PTD)

2,64,000 P. R. 2/1 72,000 4,03,000 (in the assessment year 1964‑65 only). 0‑5‑9‑share in Kaamari Property 28,412 64,000 The assessee‑respondent being dissatisfied with the orders of the Wealth Tax Officer preferred appeals to the Appellate Assistant Commissioner who by his impugned order allowed both the appeals and directed the Wealth Tax Officer to adopt the value as returned by the assessee which according to him had been worked out on the basis of the annual letting value. It is against this order of the Appellate Assistant Commissioner that the present appeals have been filed at the instance of the Department on the following grounds:

(1) That the learned Appellate Assistant Commissioner erred in directing that the value of properties as returned by appellant should be accepted as it was in conformity with the provisions of rule 8(3) of the Wealth Tax Rule. (2) That the learned Appellate Assistant Commissioner misconceived the provisions of rule 8(3) of Wealth Tax Rules. (3) That 2nd proviso to sub‑rule (3) of rule 8 of Wealth Tax Rules was inserted by Central Board of Revenue's Notification No. SRO 552(x) 64 dated 1‑7‑1964 which is not retrospective in effect and as such the learned Appellate Assistant Commissioner erred in holding that appellant's basis of valuation of properties was correct. (4) That the Assessing Officer correctly ignored the provisions of 2nd Proviso to sub‑rule (3) of rule 8 of Wealth Tax Rules while making the assessment as it was not operative in this period. It may be mentioned here that the order of the Wealth Tax Officer fixing the value of the said properties as disclosed above in respect of the assessment year 1963‑64 was set aside on the assessee's appeal by the Appellate Assistant Commissioner who had directed the Wealth Tax Officer to adopt the value as returned by the assessee as, in his opinion, it had been worked out in accordance with the provisions of rule 8(3) of the Wealth. Tax Rules. The Department thereupon preferred second appeal being I. T. A. No. 187 of 1969‑70 before the Income‑tax Appellate Tribunal, Karachi Bench, Karachi. The point mooted out in the said appeal before the Tribunal was that the Second Proviso to rule 8(3) was not applicable to the assessment year 1963‑64 and that in the absence of any valuation by any local or provincial authority, the Wealth Tax Officer, was justified in law in valuing the properties with due regard to the nature and size of the properties amentities available and the prices prevailing for similar properties, in the same locality of in the neighbourhood of the said locality. The Tribunal agreed with the contention of the learned Departmental Representative in that appeal and held that the Second Proviso to rule 8(3) was introduced on 1‑7‑1974 and hence it could not be made applicable to the assessment year 1963‑64, which was then under appeal. The Tribunal thus allowed the said appeal by its order dated 17‑3‑1971 holding: In this view of the matter we are clear to our mind that the Appellate Assistant Commissioner was not justified in law in directing acceptance of the valuation as declared by the respondent. In this view of the matter we vacate the order of the Appellate Assistant Commissioner and restore that of the Wealth Tax Officer."

3. Before we proceed further to deal with the issue raised for our consideration we would like to reproduce below the provisions of rule 8(3) of the Wealth Tax Rules, 1963: Rule 8(3). Lands and buildings.‑The value of lands and buildings shall be estimated with due regard to the nature and size of the property, the amenities available and the price prevailing for similar assets in the same locality; or in the neighbourhood of the said locality: Provided that where the capital vane of such property has been deter mined by the appropriate local and provincial authority for purposes of property taxation under the laws and regulations in force in the said locality the Wealth Tax Officer shall adopt such capital value (as determined in the latest assessment) as the value of such property for purposes of assessment to Wealth Tax. Provided further that where the capital value of such property has not been so determined, the Wealth Tax Officer shall not except with the prior approval of the Inspecting Assistant Commissioner of wealth tax adopted a value higher than a sum equal to ten times the gross annual rental value of such property. Explanation.--‑For the purpose of this sub‑rule, "gross annual rental value" means the sum for which the property might reasonably be expected to let from year to year. Mr. S. A. N. . . . the learned counsel appearing for the Department has at the very outset conceded, and very rightly too, that the second proviso to rule 8(3) of the Wealth Tax Rules is applicable to this case and that the Wealth Tax Officer could not adopt the value higher than the sum equal to ten times the gross annual rental value of such property without prior approval of the Inspecting Assistant Commissioner of Wealth Tax, but according to him, the non‑compliance of this legal requirement of obtaining prior approval is of no legal consequence in view of the peculiar facts and circumstances of this case. He submitted that admittedly the same value of each and every property in question as adopted by the Wealth Tax Officer for the assessment year under appeals, was estimated in the immediately proceeding assessment year viz. 1963‑64 and the said value was duly approved by the Tribunal vide its order dated 17‑3‑1971 referred to above. Thus according to the learned counsel for the appellant, it was not possible for the Wealth Tax Officer to make a fresh estimation of the said properties at any lesser amount whatsoever. Elabrating his argument Mr. N. . . . the learned counsel for the appellant has laid great stress upon the words "shall be estimated" appearing in rule 8(3) quoted above and urged that in this case the question of estimation did not arise inasmuch as the properties bad already been estimated in the earlier year and as such it was incumbent upon the Wealth Tax Officer to adopt the said valuation for the purpose of an assessment for years in question. Then he submitted that once the value of the properties was determined it could not be deviated from by the Wealth Tax Officer in the subsequent years unless circumstances were stressed or placed before the Wealth Tax Officer by the assessee justifying a reduction on the already determined value of the 'properties, the Wealth Tax Officer had no course open but to adopt the said valuation as be had legally done in this case. According to the learned counsel for the appellant the value of immovable property once determined under the Wealth Tax Act being inflexible, was final and could not be changed in any subsequent year by the Wealth Tax Officer and if it was not so, then ultimately it was to bring about an absurdity. Mr. N . . also pleaded that this case was hit by the doctrine of res judicata. He also contended that the assessee having accepted the valuation of the properties in question estimated in the assessment year 1963‑64 by not preferring any appeal there from, was estopped from challenging the same thereby he emphasised that the case was bit by the principle of estoppel. In short, according to the learned counsel for the appellant the Wealth Tax Officer did not commit any error and the order of the Appellate Assistant Commissioner making a direction to the Wealth Tax Officer to adopt the value as giver' by the assessee‑respondent is unjustified and should be set aside. Alternatively, he submitted that if it is not held to be so, then it will be conductive to justice if the orders appealed against are set aside and the case is remanded back to the Wealth Tax Officer for proceeding according to law, as otherwise, according to him, it will create inconsistency.

4. Mr. I. N. P. A. . . . appearing for the respondent‑assessee, on the other hand, drew out attention to section 3 of the Wealth Tax Act, and submitted that every year of assessment is a separate year. He also contended that section 7 of the Wealth Tax Act specifically provides that the value of any asset for the purposes of the Act shall be estimated by the Wealth Tax Officer in accordance with the rules made under section 46 of the Act. He therefore, has urged that the First and the Second Proviso to rule 8(3) of the Wealth Tax Rules are of substantive nature and non -compliance thereof vitiates the assessment. He submitted that admittedly in these cases the respondent had shown the valuation of the property in question at a sum equal to ten times the gross annual rental value of each property and as such it was not open to the Wealth Tax Officer to adopt a value higher than that amount. If he, however, wanted to do so, be could have done so only after obtaining prior approval of the Inspecting Assistant Commissioner of Wealth Tax which be has admittedly not done in the instant cases. According to Mr. P. . . . no finality can be attached to the estimation of value of the properties as contended by Mr. N. He submitted that it is quite possible that in one year the provincial or local authorities do not value the property whereas in the subsequent year, the value is done by the said authorities in terms of first proviso to rule 8(3). The Wealth Tax Officer was bound to adopt the valuation given by the assessee which, as already stated, was on the basis of ten times of the annual rental value, but if the Wealth Tax Officer wanted to exercise discretion vested in him then he should have sought prior approval of the Inspecting Assistant Commissioner of Wealth Tax. Therefore, Mr. P. ..stressed that in view of the clear violation of the legal mandatory prevision of law, the order of the Wealth Tax Officer is apparently bad in law and has been rightly set aside by the Appellate Assistant Commissioner.

5. We have very carefully considered the arguments put forth by the learned counsel for the parties and we feel that the contentions raised by Mr. S. . . A. . . . N. . . . are without force. We find that the Wealth Tax Act and so also the rules framed under section 46 of the said Ad, desire an "assessee" to submit a return of his net wealth every assessment year and it also cast as duty on Wealth Tax Officer to assess the "net Wealth" including the lands and buildings of an assessee every year. Section 17 of the Wealth Tax Act even provides that the Wealth Tax Officer may in certain circumstances adopt proceedings for effecting wealth escaping assessment. It is thus evident that the doctrine of res judicata does not come into play in proceedings under the Wealth Tax Act so as to make a decision of fact or law in a proceeding for assessment in one year binding in another year. We agree with Mr. P. . . . . that every assessment year is separate and distinct for the purpose of assessment under the Wealth Tax Act. We also fail to understand how the principle of estoppel is applicable in this case inasmuch as we find that the assessee had in his last year's assessment also disclosed and given the valuation of each of the said properties in the amount he has given in the assessment years in question. Estoppel does not mean anything more than this that a person shall not be allowed to say one thing at one time and the opposite of it, at another time. In the instant case, the assessee's stand has been consistent and as such, he is not debarred from contending that valuation as given by nun, is correct and in accordance with law. Similarly the next contention of Mr. N. . ., the learned counsel for the appellant, that fresh valuation of the said properties at a much lesser amount as compared to the valuation of the last year of assessment, as claimed by the assessee, would lead to great absurdity and vast inconsistency, is equally without force. It is evident from the given facts and so also it is conceded by Mr. N. . . that the second proviso to rule 8(3) of the Wealth Tax Rules having been introduced on 1‑7‑1964, was not applicable to the assessment year 1963‑64 whereas this provision is applicable to the assessment year under appeals. Now the legal position, therefore, turns out to be that in the absence of second proviso the Wealth Tax Officer had an absolute and unfettered discretion to estimate the valuation of the properties in consideration of the various factors numerated in main rule 3 of the said Rules namely, the nature and site of each property, the amenities available and the prices prevailing for similar properties in the same locality or in the neighbourhood of the said locality. But after the insertion‑of the two provisos to rule 8(3) on 1‑7‑1974 the position has been materially changed and the original available unfettered discretion of the Wealth Tax Officer has been completely taken away under the first proviso inasmuch as where the capital value of the property has been determined by the appropriate local or provincial authority for purposes of property taxation under the laws and regulations in force in the said locality, the Wealth Tax Officer has no discretion but to adopt such capital value (as determined in the latest assessment) as the value of such property for the purposes of assessment to Wealth Tax without any consideration of any absurdity or great inconsistency in valuation in comparison to the past assessment years whereas by virtue of the second proviso to rule 8(3) where capital value of such property "has not been so determined" as envisaged by the first proviso then the Wealth Tax Officer is initially under a legal obligations not to adopt a value higher than a sum equal to 10 times the gross annual rental value of such property. The Wealth Tax Officer has, However, also been given at the same time a description to estimate the value of such property at any sum whether lower or higher than a sum equal to 10 tithes the gross annual rental value of such property, but in such cases where he proposes to estimate the value at a higher sum then he may do so, but only with the prior approval of the Inspecting Assistant Commissioner of Wealth Tax. It may be pointed out that it is not disputed by Mr. N. that the valuation of the properties in question given by the assessee was on the basis of 10 times the gross annual letting value of each property involved ire the assessment years in question and as such except with the prior approval of the Inspecting Assistant Commissioner of Wealth Tax it was imperative for the Wealth Tax Officer to accept the valuation as shown by the assesses. But it was not open to the Wealth Tax Officer to adopt the valuation of the said properties on the basis of his order in respect of the last assessment year at a sum which is admittedly much higher than the sums worked out on the basis of 10 times the gross annual rental value, without prior approval of the Inspecting Assistant Commissioner. The Wealth Tax Officer has thus apparently committed an illegality by trans gressing the limits imposed upon him by the Second Proviso to rule 8(3) of the said Rule&. However, with a view to test the soundness of the contentions of Mr. N. . . ., the learned counsel for the appellant let us presume that in the following year of assessment the capital value of these properties is determined by the appropriate local or provincial authority for purposes of property taxation as envisaged by the First Proviso to rule 8(3) of the said Rules at still a lesser amount than the one which are given by the assesses in his returns in the assessment years under appeal, then would it be open to the Wealth Tax Officer to ignore the said valuations in disregard of the mandatory provision of the first as well as the second proviso to rule .8(3) and adopt the valuation estimated by him in the assessment year 1963‑64 on the plea as canvassed by Mr. N. . . . The answer to the above question would simply be in the negative, for the first proviso to rule 8(3), as already explained above leaves no discretion with the Wealth Tax Officer but to adopt for the purposes of assessment to wealth tax such a capital value as determined in the latest assessment by the local or provincial authority for the purpose of property taxation under the relevant laws and regulations. So also if the capital values the properties are determined by the appropriate local or provincial authorities at a much higher sum than the one given by the assessee or assessed by the Wealth Tax Officer in r 963‑64 then too the result would be the same, namely, it will have to be accepted as such. We, therefore, hold that the Wealth Tax Officer was legally bound to estimate the valuation of the properties in question afresh, for the assessment years in appeal, in accordance with the amended rule 8(3) o of the Wealth Tax Rules, which is reproduced above and his action in adopting the valuation at more than ten times the gross annual letting value without prior approval of the Inspecting Assistant Commissioner cannot be sustained in law in these appeals and we find that there is no reason to interfere wit the orders passed by the Appellate Assistant Commissioner and according confirm the same. For the reasons discussed above we hold that there is n substance in these appeals and accordingly. dismiss the same. Appeals dismissed.