1981 PLP (Trib (PTD)

MUHAMMAD MAZHAR ALI (MEMBER).‑

These five wealth tax appeals per taining to assessment years 197273 to 1976‑77, which arise from the consoli dated order of the learned Appellate Assistant Commissioner, Hyderabad Range, raise common question of law and facts and they would, therefore, be disposed of by this single order.

2. The first objection is directed against the adoption of the value of an immovable property situated an Plot No. 3/3, Drigh Road, Colony, Karachi, at Re. 3 latch as against disclosed value of Pa. 2,80,000, only, in all the years under appeal. The assessee had disclosed its value on the basis of purchase price paid by him. The said property was purchased by the appellant through a registered sale‑deed dated 28th August, 1971, which was executed In pursuance of the agreement of sale made on 18‑3‑1970. The description of the property given in the Schedule attached to the sale agreement is as under: "The entire plot and premises bearing No. 3/3‑C Drigh Colony, Karachi, measuring about 2000 sq. yds. together with entire building, structure, constructions existing thereon comprising of one big shed, two storey partly finished building in the middle, four office rooms in the front area, with other attachments as existing." On appeal, the learned Appellate Assistant Commissioner declined to interfere as, in his opinion. ". . . . the Wealth Tax Officer .is empowered to determine the value of property on high scale, and cost of jewellery at high rates on account of the fact that market rates of these assets have increased in the recent past." The assesses‑appellant had, it may be added here, declared the value of 60 tolas of jewellery at Rs. 6,000, which was estimated by the Wealth Tax Officer at Rs. 24,000, t. e. Rs. 400, per toga in the first three years under appeal and at Rs. 48,000, i. e. Re. 800, per Cola in the last two years.

3. Assailing the estimated value of the immovable property at Rs. 3 lakh in all the years, the counsel for the appellant submitted that the gross annual rental value of the said property is Rs. 24,000, and, as such, the 9eclared value being higher than 10 times the gross annual rental value of the property should have been accepted by the Wealth Tax Officer. He further urged that the enhancement of the declared value to Rs. 3, lakh without obtaining the prior approval of the Inspecting Assistant Commissioner of Wealth‑tax, is improper and illegal. The counsel placed before us the copies of the order of VIIIth Senior Civil Judge A/S/J Karachi, dated 19‑9‑74 in Rent Case No. 1829 of 1974‑75 entitled 'Abdus Sattar Shaikh v. Messrs Pioneer Trading Co., in support of his contention that the rent of property in question was Rs. 2,000, per month. The counsel says that the copy of the said order was submitted before the Wealth Tax Officer also, but he has failed to refer it in his order. Making his submissions in respect of the excessiveness of the value of jewellery, the counsel contended that the rate of Rs. 400, and Rs. 800, per Iola as adopted by the Assessing Officer, was wholly arbitrary and in disregard of the prevailing selling rates of gold per Iola in the respective assessment years. The learned Departmental Representative, in his turn, submitted that in terms of rule 8(3) of the Wealth Tax Rules, the value of lands and building is to be estimated with due regard to the nature and size of the immovable property; amenities avaiLahle and the price prevailing for similar property in the same locality or in the neighbourhood of the same locality. The Wealth Tax Officer, in his submission, had estimated the value of the property in question quite leniently and conserva tively. So also, the value of gold as taken by the Wealth Tax Officer, the Departmental Representative so submitted, was quite moderate. In short, he supported the impugned order.

4. Having heard the arguments of both the Representatives and upon perusal of the relevant rule, we are clearly of the view that the Wealth Tax officer has definitely failed to comply with the requirements of‑rule 8(3) of the Wealth Tax Rules. He has we strongly feel, arbitrarly estimated the value of property in all the five assessment years under appeal at Rs. 3 lakh each year without, in the least, disclosing the factors which promoted him to do so. If the adopted value of Rs. 3, lakh is held to be fair and reasonable in assessment year 1976‑77 then it cannot but be held to be too excessive and unreasonable in the first two assessment years under appeal and vice versa. Moreover, the Wealth Tax Officer has not applied his mind to find out or determine the gross annual rental value of the property in question. Unless be disclosed the sum for which the property might reasonably be expected to let from year to year, it cannot be judged whether the estimated value was higher than 10 times the gross annual rental value, and whether the Wealth Tax Officer was under an obligation to have first obtained the prior approval of the Inspecting Assistant Commissioner of Wealth Tax ad envisaged by the Proviso attached to sub‑ruin (3) of rule 8 of the Wealth Tax Rules, or not. We arc also, at the same time clearly of the view that the agreed rent of Rs. 20,000, per monsum could not be hold to be a "Gross Annual Rental Value" within the meaning of Explanation attached to proviso to sub‑rule (3) of rule 8 of the Wealth Tax Rules. The gross annual value as per Explanation means 'the sum for which the property might reasonably be expected to let from year to year'.

5. In the foregoing facts and circumstances of the case and for the reasons already assigned, we would hold that the Wealth Tax Officer has not acted in accordance with law in estimating the value of the property in question, for all the years under appeal, at Rs. 3 lakh. The learned Appellate Assistant Commissioner also failed to examine the case in the right We would, therefore, vacate the orders of both the Officers below in this behalf and remit the case to the Wealth Tax Officer for de nova proceedings and fresh orders in accordance with law and in the light of the observation and heretofore.

6. After considering the submissions made at the bar in respect of the estimated value of jewellery, we think that there also Wealth Tax Officer has acted quite arbitrarily in fixing the value of gold at Rs. 400, per to in the first three years and at Rs. 800, per tola for the remaining two year under appeal without bringing any material on record. The Wealth Tax Officer could have easily found out the prevailing rates of gold on the relevant valuation dates by making a reference to the Bullion Bulleton, or collecting some informations from tip concerned parties. We cannot approve of the manner in which the Wealth Tax Officer has proceeded to determine the value of the jewellery. We would, therefore on this issue also vacate the orders of both the Officers below and remit the case to the Wealth Tax Officer for fresh adjudication.

7. The counsel for the appellant also attempted to assail the determined value of car and furniture but we did not allow him to do so as these objections were not urged before the learned Appellate Assistant Commissioner as there is no discussion relating to them in the impugned order of the learned Appellate Assistant Commissioner. In the result, all the five appeals succeed and are allowed to the extent and in the manner stated above. Appeal allowed.