1988 PLP (Trib (PTD)

MOHAMMAD MUJIBULLAH SIDDIQUI (JUDICIAL MEMBER').--The above cross appeals are directed against the order dated 6-6-1982 by the learned Commissioner of Income-tax (Appeals) Zone-2, Karachi in ITA No. CIT (A) Z-2/1086, 1087, 1088 pertaining to assessment years 1979-80. 1980-81 and 1981-82. '

2. Briefly stated the relevant facts are that the assessees (hereinafter referred to as the appellants) are joint owners, with definite shares, of the building known as Pakistan Handicrafts Chambers. The said multi-storeyed building has been let on hire to various tenants and has been subjected to wealth tax by the Wealth Tax Officer in the hands of A.O.F. for the assessment years 1979-80, 1980-81 and 1981-82. Originally five co-owners purchased a plot of land measuring 1,124 square yards, bearing No.251, R.A. Lines, Sir Haji Abdullah Haroon Road, Karachi vide sale deed-dated 22nd November, 1967. They constructed a multistoreyed building thereon having ground plus six floors. The original co-owners were as Under:

1. Haji Fareeduddin.

2. Haji Hafizuddin.

3. Mr. Mohammad Abdullah.

4. Mr. Mohammad Abdul Rehman.

5. Mr. Wahiduddin. The original co-owners gifted shares of the property to their sons and daughters retaining remaining shares as under: S. NO. NAME OF THE CO-OWNERS MEMBERS OF THE A.OP. ORIGINAL SHARE AT THE TIME OF PURCHASE (1) Haji Fareeduddin 35% 25% (2) Mr. Hafeezuddin 29% 1% (3) Mr. M.A. Rehmand 20% 1% (4) Mr. Mohammad Abdullah 9% 3% (5) Mr. Fazalur Rehman 6% (6) Mr. Waheeduddin 7% 6% (7) Mr. Mujurbur Rehman 4% (8) Mr. Azizur Rehman 4% (9) Mst. Amtul Saleem 4% (10) Mst. Amtul Raheem 4% (11) Mst. Amtul Habib 4% (12) Mst. Mahmooda 4% (13) Iqbal Jehan 8% (14) Mr. Motiur Rehman 8% (15) Mr. Atiqur Rehman 8% (16) Mst. Farhana Rehman 4% (17) Mr. Rizwan 3% (18) Mr. Imran 2% (19) Mst. Halim Sadia 1% (20) Mst. Amtul Rehman 1%

3. The Wealth Tax Officer issued notices under section 16 (2), 16 (3) and 15 (4) of the Wealth Tax Act, 1963 (hereinafter referred to as the said Act). The learned counsel for the appellant and some co-owners appeared before the W.T.O. from time to time and furnished various information s particulars/details. The W.T.O. got the enquiry held through Circle Inspector as well and confronted the appellants with Inspector's report. After a very lengthy and protracted proceedings, correspondence and discussions, the W.T.O. framed ex parte assessment under section 16 (5) of the said Act.

4. The W.T.O. made a detailed order for the assessment year 1981-82-and then adopted the same for the assessment years 1979-80 and 1980-81.

5. Being aggrieved with the assessments appellants preferred appeals before the learned C.I.T. (Appeals) agitating the following grounds: (1) That the order passed; by the WTO is bad in law and on facts; (2) That the WTO erred in passing order under section 16 (5); (3) That the WTO erred in not accepting the declared GARV and erred further in estimating the same on hypothetical basis. (4) That the WTO erred in not accepting the declared net wealth of the appellant and erred further in estimating the same on hypothetical basis;" (5) That the WTO erred in not allowing the liabilities by the appellant; (6) That the WTO erred in assessing the twenty co-owners in the status of AOP in the year 1979-80.

6. The main ground urged in support of appeal pertaining to assessment year 1979-80 was that the W.T.O. erred in assessing the twenty co-owners in the status of AOP in the year 1979-80. The learned C.I.T. (Appeals) accepted the contentions and held that the building in question does not belong to AOP and is owned by twenty co-owners having specific shares. It was further held by him that since the property is owned by twenty different individuals with specific shares, therefore, the net wealth could not be assessed in the hands of AOP in 1979-80 for the reason that Explanation (iii) to clause (m) of Section 2 of the said Act providing that immovable property other than agricultural land vesting in more than one person shall be assessed as an association of persons, was added by Finance Ordinance, 1980 and become effective from the assessment year 1980-8' He, therefore, directed the WT O to assess the net wealth in the hands of each individual co-owner in the status of individual according to their specific shares in the property under consideration accordance with the tax law prevalent in the assessment year 1979-80. The other contention that the property was not liable to be subjected to the wealth tax was repelled by placing reliance on the judgment of Sind High Court in the case of B.P. Biscuit Factory reported 1981 P T D

217. While deciding 'appeals pertaining to the assessment years 1980-31 and 1981-82 the learned C.I.T. (Appeals) adverted t. the question whether the W.T.O.s as justified in framing ex parte assessment under section 16 (5) of the said Act and came to the conclusion that there was no justification for finalizing the assessment orders under section 16 (5) of the said Act. The learned C.I.T. (Appeals) observed that the assessment orders should have been passed under section 16 (3) of the said Act and ordered that the W.T.O. should amend the impugned orders to the extent that the words "order under section 16 (5) of the Act" should be substitutes: with the words 'order under section 16 (3) of the Act". The learned C.I.T. (Appeals) then proceeded to consider the issue relating to valuation of the property and computation of net wealth. After a detailed discussion he directed the W.T.O. to recompute the A.L.V, for each year under appeal and gave elaborate directions in this behalf. For the sake of brevity and in view of the order which we propose to make presently, the directions of learned C.I.T. (Appeals in this behalf are not incorporated in this order. The learned C.I.T. (Appeals) lastly dilated on the question of liabilities. It was contended before him that the liabilities are constituted by advance rent which has been used in the construction of the building and as such it should be allowed. The learned C.I.T. (Appeals) dial not agree with the contention for the reason that no evidence was led to prove that the amount of advance rent was utilized in the construction of building. He, therefore, held that the claim of the liabilities cannot be allowed in any of the years under appeal.

7. The assessee and department (hereinafter referred to as the respondent) both felt aggrieved with the orders of learned C.I.T. (Appeals) and preferred the above appeals. A perusal-of the grounds of appeal at the instance of appellants shows that they have raised the following grounds: (i) The property is not held by the AOPs for the purposes of business of construction and sale or letting out of property. The learned C.I.T. (A) has erred in subjecting the appellant to tax under Wealth Tax Act, 1963. (ii) The valuation of property is unjustified, excessive and exorbitant. (iii) The learned C. I. T. (A) has erred in disallowing the liabilities claimed by the appellant.

8. The department has agitated the following two common grounds in all the three appeals: (i) The learned C.I.T. (A) has erred in holding the order not to have been passed under section 16 (5) of the Act. (ii) The learned C.I.T. (A) has erred in discarding worked out fair ALV of the building.

9. The following ground pertains to the assessment year 1979-80 only ' "The learned C.I.T. (A) has misinterpreted plain language of Explanation (iii) of Section 2 (m) of the Act in ousting the A.O.P.s from the ALV."

10. We have heard Mr. I.N. Pasha, learned counsel for the appellant in all the appeals and Mr. Muhammad Farid, learned D.R. for the respondent.

11. For the sake of convenience, the issues for consideration, emerging out of the grounds of appeal agitated by the parties, are framed as under: (i) Whether the property owned by twenty co-owners in definite shares is liable to the levy of wealth tax in the hands of AOP in the assessment year 1979-80. (2) Whether the value of property has been properly estimated by any of the two officers below. (3) Whether the liabilities claimed have been rightly disallowed by the learned two officers below. (4) Whether the assessment was properly finalized under section 16 (5) of the W.T. Act.

12. Our findings on the above issues are as under: ' ISSUE NO.

1. Before adverting to the respective contentions of the learned representatives for the parties it would be appropriate to refer the relevant provisions' of the said Act, dealing with the taxability of various classes of assessees. The relevant provisions are as under: "Section

3. Charge of wealth tax.--Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of July, 1963, a tax (hereinafter referred to as wealth tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family, firm, association of persons or body of individuals, whether incorporated or not, and company at the rate or rates specified in the Schedule." "Section 2 (c). Assessee means a person by whom any tax or any other sum of money is payable under this Act, and includes--every person in respect of whom any proceeding under this Act has been taken for the assessment of his wealth or the wealth of any other person in respect of which he is assessable or of the amount of refund due to him or to such other person; and (ii) every person who is required to furnish a return of wealth under Sections 14, 15 and 19." Section 2 (e). Assets includes-- (ii) in the case of a firm, an association of persons or a body of individuals, whether incorporated or not, and a company, immovable property held for the purpose of the business of construction and sale, or letting out, of property. Section 2 (m) "net wealth" means the amount by which the ',aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located belonging to the assessee on the valuation date including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owned by the assessee on the valuation date other than-- (i) debts which under Section 6 are not to be taken into account: and (ii) debts which are secured on, or which have been incurred in relation to, any asset in respect of which wealth tax is not payable under 'this Act; Explanation--For the purposes of. this .clause,- (1) any immovable property, other than agricultural land, owned by the spouse or any minor child of the assessee shall be deemed to belong to the assessee: Provided that any immovable property so deemed to belong to the assessee shall not be included in the net wealth of the spouse or minor child of the assessee: (ii) "assessee' shall be the spouse determined by the Wealth Tax Officer; and (iii) where the right, title or interest to or in any immovable property other than agricultural land vests in more than one person, such persons shall, in respect of such 'property, be assessed as an association of persons and the value of such right, title or interest shall not be included in the net wealth of an individual provided wealth tax 4s charged on such right, title or interest."

13. A perusal of section 3 and section 2 (m) Explanation (iii) shows that the following categories of an assessee have been brought to tax net for the purposes of wealth tax. (a) Individual and Hindu undivided family; (b) Firm and Company; (c) Association of persons or body of individuals, (d) Notional association of persons.

14. All the above categories of assessees have not been subjected to tax since the very inception of Wealth Tax Act, 1963 but the scheme has developed gradually and progressively, therefore, a brief history of legislation in this behalf shall be helpful in clinching the issue. At the time of promulgation of the said Act, in the year 1963 only one category of assessees comprising of two classes, i.e., individual and Hindu undivided family was charged to tax under sec tion 3 which is a charging section and originally read as under: "subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the Ist .day of July, 1963 a tax (hereinafter referred to, as wealth tax) in respect of the net wealth on the corresponding, valuation date of every individual and Hindu undivided family."

15. The firm, association of persons, body of individuals and company were brought to tax net by amendment in section 3 of the said Act under the Wealth Tax Amendment Ordinance. 1980 with effect from 28-6-1979. Alongwith the amendment in section 3 of the said Act, section 2 (e) was also amended whereby the immovable property held for the purpose of business of construction and sale or letting out of property owned by a firm, association of persons, or body of individuals and a company was included in the assets.

16. Thereafter Explanation (iii) to Section 2 (m) reproduced above was added by Finance Ordinance, 1980 whereby a new category of notional or fictional AOPs was created and in all cases where a property unit stood registered in the name of more than one individual the unit was treated as property owned by an AOP and was made liable to be assessed in the hands of AOP. On recapitulation of legislative history the following position emerges:. (a) Individual and HUF were subjected to wealth tax since the very promulgation of the said Act in the year 1963. (b) The firms, companies and association of persons or body of individuals have been subjected to wealth-tax with effect from 28-6-1979 by virtue of amendments introduced in section 3 and section 2 (e) (ii) of the said Act. (c) Notional or fictional AOPs have been subjected to wealth tax with effect from Ist of July, 1980 by virtue of addition of Explanation (iii) to Section 2 (m) by Finance Ordinance, 1980.

17. Now reverting to the facts of the present case we find that the building known as- Pakistan Handicrafts Chamber is jointly owned by twenty co-owners with definite shares and the learned W.T.O. assessed the property for wealth tax in the hands of joint co-owners as A.O.P. It was contended before the learned C.I.T. (Appeals) that the Wealth Tax Officer erred in assessing the twenty co-owners in the status of A.O.P in the year 1979-80. It was urged that the concept of assessing co-owners of property in the status of A.O.P has been introduced for the first time by the amendment vide Finance Ordinance, 1980 which was not given retrospective effect and as such co-owners could be assessed in the status of A.O.P. with effect from assessment year 1980-81 and onward. In the assessment year 1979-80 the co-owners should have been subjected individually to wealth tax according to their respective shares in the property in accordance with the law as prevalent at that point of time, i.e., 1979-80. After considering the elaborate and lengthy arguments of the parties the learned C.I. T. (Appeals) held as under: "The learned Assessing Officer has tried to imply that the property under consideration belongs to A.O.P. But that is not correct. The building is owned by twenty co-owners having specific shares. The history of income-tax enactment in respect of section 9 from 1924 to date is of no avail to the department. Likewise the cases relied upon by the learned Assessing Officer in that context are of no avail to the department. According to Wealth Tax Act the wealth-tax is leviable on: (i) individual, (ii) HUF' (iii) Firm, (iv) A.O.P and (v) company. Prima facie as the property is owned by 20 different individuals with specific shares, it cannot be held that the property belongs to the A.O.P. That being the case in the absence of sub-clause (iii) to Explanation appended to clause (m) of Section 2 of the Wealth Tax Act, 1963 in the assessment year 1980 and not in the assessment year 1979-80, the net wealth could not be assessed in the hands of A.O.P in 1979-80 for that year. For the reason assigned by the learned A.R. reproduced supra and for the reason given by him in the foregoing discussion, I hold that the W.T.O. erred in assessing the net wealth for the year 1979-80 in the status of A.O.P. I accordingly order and direct the learned W.T.O. for 1979-80 to assess the net wealth in the hands of each individual co-owner in the status of individual according to their specific shares in the property under consideration, in accordance with the wealth tax law prevalent in the assessment year 1979-80 after fulfilling necessary requirements of law." The reasons assigned by the learned A.R. referred to by the learned C.I.T. (Appeals) in the concluding part of his order were to the effect that the provisions contained in clause (iii) of Explanation to S. 2 (m) inserted with effect from l-7-1980 were not retrospective in effect and that from the submissions of Assessing Officer before the learned C.I.T. (Appeals) it could be inferred that prior to 1-7-1980 unless the immovable property belonged to A.O.P it was not taxable within the meaning of section 3 read with section 2 (e) (ii) of the Wealth Tax Act, 1963. .

18. Mr. 'Mohammad Farid, learned D.R. has candidly conceded at the very outset that the provisions of Explanation (iii) to Section 2 (m) of the said Act introduced with effect from 1-7-1980 creating a new category of assessees for the purposes of wealth tax in the form of notional A .O. P are not retrospective in effect and shall be operative from the assessment year 1980-81. However, Mr. Mohammad Farid has contended that the learned C. I. T. (Appeals) has misdirected in holding that the appellants were not liable to be assessed as A.O.P in the assessment year 1979-80 on the assumption that they, have been so assessed by virtue of provisions contained in Explanation (iii) to Section 2 (m) of the said Act. In fact, the appellants are not notional A.O.P. and they are real A.O.Ps. The real A.O.Ps were brought to wealth tax net by virtue of amendments in sections 3 and 2 (e) (ii) with effect from 28-6-1979 and as such the appellants were rightly assessed as A.O.P by the learned W.T.O. in the assessment year 1979-80. This contention of Mr. Mohammad Farid brings us to the question of definition of the term A.O.P. The term "association of persons" or "body of individuals" has not been defined in the said Act. It is provided in section 2 (s) of the said Act that any term not specifically defined shall have the meaning assigned to it under the Income-tax Ordinance, 1979, but this term has not been defined in Income-Tax Ordinance, as well. The only clue, which we get in this behalf is from the provision of section 21 of the Income-Tax Ordinance which reads as under: "

21. Liability in the case of co-owners..-Where any property to which section 1 applied is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not, in respect of such property, be assessed as an association of persons, but the share of each such person in the income from the property shall be included in his total income." Section 9 (3) of the Income Tax Act, 1922 was in pari materia with the above provision and was added by Act VII of 1939. The question whether co-heirs of a Muhammadan, managing property jointly and distributing income in accordance with their respective shares could be assessed as association of individuals, came for consideration before the Lahore High Court in the case of Nizamuddin Amiruddin (1943) 11 ITR 443 and it was held that the co-owners having specific shares in the property did not form an association of individuals and they should be assessed separately on their individual shares. The provisions of section 9 (3) of the Income-tax Act, 1922 came for consideration before the Lahore High Court in the case of Abdul Rehman v. C.I.T. (1944) 12 I.T.R. 302 and the principle was enunciated that where the property is possessed jointly by co-heirs under the Islamic Law, the shares of co-heirs under that law are definite and ascertainable, therefore, each of the heirs must be separately assessed in respect of his share of the income. The only condition laid down was that the share of each co-owner should be definite, i.e., fixed, exact and clear. A similar question came for consideration before the Kerala High Court in the case of Abdul Azeez and Bros. v. C.I.T. (1961) 4 Tax 155 and it was held that where the shares were definite and determinate the co-owners could not be assessed as an association of persons.

19. Looking to the Indian jurisdiction we find that C .I. T. v. Indra Balkrishna (1960) 39 I.T.R. 546 (SC of India) is the leading case wherein it was observed that: "There is no formula of universal application as to what facts, how many of them and of what nature, are necessary to come to a conclusion that there is an association of persons within the meaning of section 3; it must depend on the particular facts and circumstances of each case as to whether conclusion can be drawn or not." The Hon'ble Judges of Supreme Court of India while defining association of persons approved the observations in (1935) 3 I T R 408 that: "An association of persons must be one in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes the tax on income, the association must be one the object of which is to produce income, profits or gains. The following test laid down in the same case was also cited with approval. It may well be that the intention of legislature was to hit the combinations of individuals who were engaged together in some joint enterprise but did not in law constitute partnerships when we find that there is a combination of persons formed for the promotion of a joint enterprise then I think no difficult arises whatever in the way of saying that these persons dis constitute an association." In the cited case three widows earning income as heirs of their deceased husbands it equal shares were directed to be assessed as individuals and it was held that they did not possess status of an association of persons as they did no act which may help in producing income in respect of the shares and deposits inherited by them. The ratio in the case of C.I.T. v. Indra Balkrishna was followed almost in every notable case in India and a few of them are cited as under:- G. Murugeson and Brothers v. C.I.T. (1973) 188 I T R 132 (SC), C.W.T. v. Vishwanath Chattarji (1976) 103 I T R 536 (SC), C.I.T. 'v. A.P. Parukutty Mooppilama (1984) 149 I T R 131. '' In the case of G. Murugeson anal Bros. v. C.I.T. (supra) the Supreme Court of India held as under:- "For forming an association of persons', the members of the association must join together for the purpose of producing an income. An 'association of persons' can be formed only when 1 two or more individuals voluntarily combine together for a certain purpose Hence volition or the part of the members of the association is an essential ingredient."

20. In the case of C.I.T. v. A.P. Parukutty Mooppilama (supra) it was held by the Appellate Tribunal that:- "It appears to us that the property owned by the unit of body of individuals should be joint tenancy and co-ownership or tenants in common. The income should first accrue to the body of individuals. Nobody should have a clear title to it apart from being a member of the body of individuals. Otherwise the inclusion of body of individuals in section 86(v) would become meaningless. It is now well-settled that after partition the members owned 'the properties not yet divided by metes and bounds as tenants-in-common. Tenants-in-common and co-ownership appear to be synonymous terms and are interchangeable.. ... If there is no community of profits or s loss then the income does not accrue to the body of individuals initially. The income goes directly to the members and it was only for the sake of convenience that one of them receives it on behalf of himself and others." The above observations of the Appellate Tribunal were confirmed by the Kerala High Court.

21. In the case of C.I.T. v. Vishwanath Chattarji (supra) it was held that the property jointly held by a joint Hindu family governed under Mitakshara school of law has the attribute of aggregate ownership while Dia Bhaga school of law is known as of 'fractional ownership'. In aggregate ownership there was unity of ownership and the property was in the ownership of the whole body of co-parceners. On the other hand, under Dia Bhaga law there was unity of possession only without unity of ownership. However, co-parcener takes definite share in property and he is the owner of that share. It was held that in case of Dia Bhaga family where the share was definite the assessees should be assessed as individuals. It was further held that under section 3 read with section 2(m) of the Wealth Tax Act, 1957 liability to wealth-tax arises out of ownership of asset and not otherwise. Mere possession or joint possession unaccompanied by the right to, ownership of the property would, therefore, not being the property within the definition of net wealth for it would not then be an asset belonging to the assessee.

22. We have given our anxious consideration to the provisions of sections 3, 2(e)(ii) and 2(m) of the said Act and have considered the ratio of decisions by the Superior Courts cited at Bar and we draw the following conclusions: (a) The A.O.P. or body of individuals is a separate entity other than the individuals forming the same. (b) The A.O.P. is a combination of two or more persons, formed on their own volition actuated by a common design and' associated in common adventure of income producing activity (c) For the levy of wealth-tax, the only asset liable to be charged in the hands of A.O.P. is the immovable property held for the purpose of the business of construction and sale or letting out of property. (d) The. A.O.P. has been subjected to Wealth-Tax with effect from assessment year 1979-80. (e) The notional A.O.P. has been brought to wealth-tax net with effect from the assessment year 1980-81.

23. Now adverting to the facts of the present case Mr. Muhammad Farid has contended that in response to the notice of learned W.T.O. the appellants declared themselves as A.O.P. and, therefore, they t have admitted themselves as A.O.P. and now they are estopped from contending that they are not the real A .O. Ps and should be assessed in the status of individuals. An identical question came for consideration in the case of C.I.T. v. A.P. Rarukutty Mooppilama (supra) wherein the assessee took plea that no assessment could be made in the status of body of individuals since each member had 1lSth share in the property. It was contended before- the Appellate Tribunal that the assessee herself filed the return showing the status as body of individuals and in such circumstances it was not open to her to claim during the assessment proceedings or even later that the status should be a different one, i.e., an individual. The Appellate Tribunal observed that:- "It may be said that by mistake she originally showed the status as such but on being apprised of the correct legal position she could object to being assessed in that status." The Kerala High Court confirmed the above observation holding that an assessment is to be made, not solely based on the admission of a person and the view of law, which he takes. A proper order of assessment should be made on the basis of all facts and circumstances and on a correct application of the relevant provision of law. We are inclined to agree with the proposition that assessee is entitled to be dealt with in accordance with the law for the time being in force, irrespective of any wrong concession or declaration given by him under any misapprehension or misconception of law or due to ignorance. However, we are of the view that the declaration made by the appellant was in accordance with the law and in consonance with the facts as we will presently show and: therefore, the treatment meted to them is in consonance with the relevant provision of law Thus, notwithstanding the principle that an assessee is entitled to be dealt with in accordance with the law irrespective of a declaration made the contention of Mr. Mohammad Farid is held good on factual plane.

24. Applying the principles enunciated in para. 22 of this order to the facts of the present case we find that the property in question i.e. Messrs Pakistan Handicrafts Chambers is owned by twenty individuals with definite shares. However, the shares of each co-owner are not specified and ascertainable as no owner can say with exactitude that such and such portion of the building is owned by him. No portion of the building has been let out and can never be let out in the present circumstances by any individual co-owners and likewise the income did not accrue to any of the individual co-owners directly in the year 1979-80 which position is continuing so far. It means that the income first devolved jointly on all the co-owners in the name of Messrs Pakistan Handicrafts Chambers and, thereafter the income was distributed among the co-.owners in proportion of their respective shares. The rulings cited at Bar to the effect that the property inherited by legal heirs of a Muslim having definite shares in the property under the Shariah Law and the property devolved or. Hindu undivided family governed under Dia Bhaga school of law shall not be treated as A.O.P. are not applicable to the facts of the present case because in the case of inheritance of property there is no volition, on the part of individuals to form association for earning income or holding the property in common which is a necessary ingredient for forming the A.O.P. In the present case the property in question has not devolved on the co-owners by inheritance but they have joined together on their own volition and have held the property for the purpose of business of construction and letting out the same and are earning income in the name of their common ownership and thus all the ingredients for constituting A.O.P. are fulfilled. Since all the conditions required for constitution of A.O.P. are satisfied and we have already shown that an A.O.P. has been brought to wealth tax net with effect from assessment year 1979-80 by virtue of amendments in section 3 and section 2(e)(ii) of the said Act with effect from 28-6-1979, therefore, we are of the opinion that the learned C.I.T. (Appeals) has erred in holding that the W.T.O. erred in assessing the net wealth for the year 1979-80- in the status of A.O.P. and that the W.T.O. should assess net wealth in the hands of each individual co-owner in the status of individual according to their specified shares for the assessment year 1979-80. The learned C.I.T. (Appeals) misdirected himself by misconstruing the application of proper provision of law. He was impressed by the fact that Explanation (iii) to clause (m) of section 2 of the said Act was not in the statute book in the assessment year 1979-80 under the impression that the appellants were assessed in the status of notional A.O.P. under this particular provision of law while in fact the appellants are real A.O.P. and were subjected to tax under section 3 of the said Act read with section 2(e)(ii) as rightly pointed out by Mr: Muhammad Farid.

25. For the foregoing reasons it is held that notwithstanding the property being owned by twenty co-owners in definite shares it is liable to the levy of wealth tax in the hands of A.O.P. in the assessment year 1979-80 because the shares are not specified and the co-owners of the property in question have all the attributes for holding their status as A .O. P. The findings of learned C.I.T. (Appeals) on this issue are not sustainable in law. The issue No.l is decided accordingly. Mr. Muhammad Farid the learned D.R. has submitted that the question of disputed value may be referred to the arbitration of two valuers under section 24(6) which reads as under:- "Where the appellant objects to the valuation of any property, the Appellate Tribunal may, and if the appellant so requires shall, refer the question of the disputed value to the arbitration of two valuers, one of whom shall be nominated by the appellant and the other by the respondent, and the Tribunal shall, so far as the question is concerned, pass its orders under subsection (4) conformably to the decision of the valuers: Provided that if there is a difference of opinion between the two valuers, the matter shall be referred to a third valuer nominated by agreement, or failing agreement, by the Appellate 'Tribunal, and the decision of that valuer on the question of valuation shall be final."

26. Mr. I.N. Pasha has conceded that since the department is also in appeal against the valuation, therefore, reference to valuers is mandatory on the requirement of appellant. In view of the request of Mr. Muhammad Farid we refrain from giving any finding on the point of valuation of property which shall be referred to the valuers according to law. ISSUE No.3. The question of liabilities qua deposits /advance rent has been considered at length by a Pull Bench of this Tribunal in a recent order recorded in W.T.A. Nos. 20 and 211KB of 1981-82 and W.T.A. Nos. 71 and 72/KB of 1982-83 dated 30-4-1988 show reported as 1988 P T D 585 (FB) wherein it has been held as- under:- "Let us now also examine the nature of deposits /advance rent. They may fall in any of the following categories: - (i) The deposits/ advance rent may be taken by a landlord for investing them in building a new property and such deposits/ advance rent are made adjustable against the rent. (ii) The deposits /advance rent may be revived by a landlord as caution money for indemnifying himself for the damages caused to fixtures and fittings by the tenant. (iii) Deposits /advance rent may be obtained by a landlord for enforcing the performance of a contract, e.g. it may be agreed upon that a licensee or a lessee would vacate the property after certain period failing which the' landlord would charge mesne profits at certain rate and deduct the same from deposits/ advance rent in addition to taking resort to other remedies open to him. (iv) The deposits /advance rent may be obtained by a landlord for reducing the reasonable rent. It is thus clear that the deposits /advance rent falling under category (i), (ii) and (iii) would amount to 'debt owed' they reflect the liability of landlord which is real and is to be discharged in praesenti or in future, whereas amounts received under category (iv) would amount to illusory and false liability. In such cases the rents are held by the landlord in perpetuity them in consideration of a rent, which is on lower side than the reasonable rent. As such, such liability is not infact a liability hence cannot amount to 'debt owed'."

27. Applying the above principles to the facts of the present ease we find that the appellant attempted to bring their case within the ambit of first category but failed to adduce evidence to prove that the amount of advance rent was utilized in the construction of budding. We are, therefore, of the opinion that the learned C.I.T.(A) rightly held that the claim of liabilities cannot be allowed in any , the years under appeal. Since the, appellant failed to discharge the onus heavily laid on them, therefore, no exception can the taken to the findings of learned C.I.T. (A), which is hereby confirmed. ISSUE No.

4. The learned W.T.O. completed the assessment ex parte under section 16(5) of the said Act for the following reasons:- (i) The assessee has been provided with the maximum Possible opportunity to place the true facts about his property and rental. (ii) The assessee has not availed of the opportunity provided co him and he did not provide the correct position of the property and rental. (iii) The assessee instead of co-operating and assisting created confusion and complication by not only filing the details, which were not called for and were not relevant but filing misleading and contradictory details. (iv) That the assessee all along showed dilatory attitude towards the case inasmuch as the assessee has asked the adjournment on the pretext like that of preparing the details, while it is evident that the details which were being called few were so simple in nature that these if taken seriously should have been provided within period of hours by copying from the already prepared rent statements as it is certain that the statements of rent must have been prepared on month to month basis at least for the sake of personal use. It is also a matter of record that the assessee has asked for adjournment or the ground of absence of Mr. Muhammad Abdullah, co-owners who was allegedly conversant with the case and who even afterwards did not attend the proceedings. (v) The assessee has made all efforts to conceal the true particulars of his property and rent inasmuch as the assessee has not declared the portion occupied by him as the same is being used as office of the landlords. He further made no mention about the 7th Floor, which was rented out vide lease deed, dated 28-12-1980 and stated that it was under construction. As to rental of 6th Floor it was stated that it was rented out on monthly rental of 88.12,825 as on June, 1981 while in fact it was rented out at Rs.17,100 as on valuation dates. (vi) The assessee has not only concealed the true particulars of his property and rentals but also filed inaccurate and incorrect particulars of his property and rentals."

28. The learned C.I.T. (Appeals) did not agree with the reasons assigned by the W.T.O. for finalizing ex parte assessment under section 16(5) of the said act for the following reasons:- "It is of no use to go into the controversy of affidavit filed by the co-owner viz. Mr. Abdul Rehman and the counter affidavit filed by the learned W.T.O. as I have already held that the learned W.T.O. erred in framing the assessments under section 16(5) of the Wealth Tax Act and further that as all the relevant material which was required to finalize the three impugned orders and to dispose of the three appeals under consideration is available on the record."

29. Mr. Muhammad Farid, the learned D.R. has contended that the appellant had not made proper compliance of the notices issued by the W.T.O. under subsections (2) and (4) of section 16 and, therefore, the assessment was rightly completed under section 16(5) of the said Act. After a careful perusal of the record and the reasons assigned by the W.T.O. and the learned C.I.T. (Appeals) in support of their respective findings, we are persuaded to agree with the reason advanced by the learned C.I.T. (Appeals). A. perusal of the record shows that almost entire facts were placed or, record by the appellant and the question of alleged contradictions, relevance or irrelevance of the particulars and details supplied was the matter of appreciation of evidence or to put .it in the popular phrase in judicial parlance, 'of sifting grain from the chaff'. The appellants and their representatives have been attending the W.T.O. from time to time and the evidence/ documents have been produced and as such we are inclined to agree with the observation of learned C.I.T. (Appeals) that there was no justification for finalizing the assessments ex parte under section 16(5) of the said Act. We are of the opinion that there have been mistakes on part of both the assessee as well as the Assessing Officer. The magnitude of mistakes on the part of parties may vary but in any case this issue has become more or less an academic discussion, because of the reference to the valuers under section 24(6) of the Wealth Tax Act, 1963. While appreciating the pains and efforts taken try the learned W.T.O. the findings of learned C.I.T. (A) are confirmed.

30. As a result of our findings the order of learned C.I .T. (Appeals) cancelling the demand created for the year 1979-80 in the name of A.O.P. is vacated. All the three assessments for the assessment years 1979-80, 1980-81 and 1981-82 are set aside to be framed afresh after the, determination of valuation of the property by the valuers.

31. All the cross-appeals are disposed of in the terms and manner as stated above. M.B.A./553/T Order accordingly.