1986 PLP (Trib (PTD)

FARHAT ALI KHAN (MEMBER).‑‑This appeal is directed against the order of learned Commissioner of Income‑tax (Appeals) recorded by him on 10th April, 1982‑ in I.T.A. No. C.I.T./Z‑1/1428/82. The only point involved in this appeal is regarding the market value of a property bearing. No. 18‑B, situated at Lalazar Colony Moulvi Tamziduddin Khan Road, Karachi; in assessment year 1979‑

80. The Gift‑tax Officer relying upon his Inspector's report and an allegedly comparable case of House No. 25‑A; situated in same Colony came to the conclusion that the market value of the property. in dispute should not be less than Rs.15,00,

000. He, however, deducted from it an amount of Rs.1,59,524 which was allegedly spent by the appellant on its: repairs and renovation. Thus, he arrived at the figure of Rs.13,40,476 from which he adjusted Rs.500,000 which was the declared value of the property in dispute and then again deducted Rs.5,000 as statutory exemption. He, therefore, finally estimated, the market value of the property in dispute at Rs. 8,34,476 and framed the assessment under section 15(3) of the Gift‑tax Act accordingly. The appellant felt, aggrieved and went up in appeal. The learned Commissioner of Income7tax (Appeals) found estimated market value of the property at Rs.15,00,000 "very excessive and arbitrary". He, therefore, brought it down to Rs.9,00,000 and then after deducting the amount of Rs:1,59,524 spent on repairs arrived at the figure of Rs.7,40,476 which he rounded to the figure of Rs.7,50,000, Consequently he directed the Gift‑tax Officer to frame the assessment after giving statutory exemption of Rs.5,000 from the estimated market value of Rs.7,50,

000. The appellant still fells aggrieved and has come up in second appeal.

2. We have heard Mr. Anwar of Messrs S. T. As., who‑appeared for the appellant and Mr. Amin‑e‑Ajam who appeared for the Department. From perusal of the assessment order it appears that the Gift‑tax Officer allowed himself to be influenced by certain what he has called, "notorious practice". We think it would be in fitness of things to reproduce his observation. It is as under:‑‑ "It is a notorious practice in this country to under‑state the sale price and it is followed everywhere for saving local provincial and federal taxes such as capital gains tax, stamp duty and gift‑tax etc. Another reason for, understating the value of a property is that normally the purchaser does not have enough white money available with him that he can show as the purchase price paid by him." From perusal of the assessment order it appears that the Gift‑tax Officer was very much influenced by his thinking as reproduced above but with due respect to him we feel very much inclined to ignore it altogether. We are very much aware that under the Stamp Act, Act II of 1889, evasion of Stamp duty has been made a penal offence. Moreover, various officers have been created under that Act whose primary duty is to detect such evasion and tiring such revenue dodgers to books. The same is the position under other tax laws, namely a machinery has been provided to enforce each and every provision of such laws. As such, one cannot rely upon merely an alleged notorious practice unless it is substantiated with relevant statistics collected from various Tax Departments. Since the observation of Gift‑tax Officer has no objectivity we take it as a misdirection which has ultimately, in our judgment, influenced his estimated market value of the property in dispute. Let us mention here that though it is only and only for the Gift‑tax Officer to determine the market value of a particular property, but at the same time we would also lay emphasis on the fact that he should always evolve some basis for it. The reports of Excise and Taxation Department cannot be lightly brushed aside as the officers of that Department acting under statutory authority arrive at certain figures. Similarly, the proceedings regarding capital gain‑tax also cannot be ignored without any concrete reason. The presumption of law is that unless there is evidence to the contrary. An officer who discharges any function or duty under a statute does so honestly and to the best of his capability. We would, therefore, observe that the Gift or Income‑tax Officers should refrain from making un‑called for or whimsical allegations against the officials of other departments while determining the market value themselves.

3. Now coming to the impugned order it is very clear that the learned Commissioner of Income‑tax (Appeals) found the estimated value arrived at by the Gift‑tax Officer as very excessive and arbitrary. Moreover, he has also admitted that property was very old and Rs.1,59,524 were spent on its repairs. He further admitted that the parallel case relied upon or the Gift‑tax Officer was not applicable under the facts and circumstances of the case. Likewise he also discarded the parallel case relied upon by the appellant. It is also clear from his order that he has found genuine the payment of sale price by cheques and Pay‑Orders from Messrs. B.L. the buyer, who according to Commissioner of Income‑tax (Appeals) their own showing were neither relatives or friends of the appellant. Notwithstanding these facts he has not accepted the sale price of Rs.5,00,000 as the market value of the property in dispute. With due respect to him we are of the view that like Gift‑tax Officer he was also supposed to evolve some basis for estimating the value of the property at Rs.9.00,

000. Moreso when he has not taken the sale of House No. 25‑A of the same locality to F.I.A. as a parallel case in which the house was sold for Rs.8,00,

000. We are unable to comprehend as to how a house built 25 years ago lying in dilapidated conditions requiring a huge amount of Rs.1,59,524 to make it inhabitable and with one portion in occupation of some other tenant who was reluctant to vacate it could be estimated at Rs.9,00,000 when the learned Commissioner of Income‑tax (Appeals) himself has made the following observation:‑‑ "The case cited by the Gift‑tax Officer in respect of the F.I.A. House is not comparable to this case for the reasons that this property belonged to a very prominent person apart from the fact that this property is situated on the main Queen's Road unlike the appellant's property which is in the interior of Lalazar Colony." From the above‑quoted passage it appears by necessary implication that the sale price of Rs.8,00,000 could be on higher side because the vendor was a very prominent person and the purchaser was a Government Department. Let us hastily add that there was not any basis available for such an implication but even if it is taken to be a genuine price how the property in dispute could be valued at higher value when it is situated in the interior of Lalazar Colony as pointed out by learned Commissioner of Income‑tax (Appeals) himself.

4. We, therefore, feel very much inclined to accept this appeal and direct the Gift‑tax Officer to accept the market value of the property at Rs.5,00,000 which was mentioned in the sale‑deed, dated 5th February, 1979. The appeal, therefore, is allowed and the impugned order is vacated. The Gift‑tax Officer is directed to accept Rs.5,00,000 as the value of the property in dispute and frame assessment accordingly. M. Y. H. ‑‑‑‑‑ Appeal accepted.