ITA NO. 1034/LB OF 1991-92, DECIDED ON 15TH FEBRUARY, 1992. VS ITA NO. 1034/LB OF 1991-92, DECIDED ON 15TH FEBRUARY, 1992.
1992 P T D (Trib.) 1624
[Income Tax Appellate Tribunal Pakistan]
Before: Abrar Hussain Naqvi, Judicial Member and A.A. Zuberi, Accountant Member
ITA No. 1034/LB of 1991-92, decided on 15/02/1992.
(a) Income Tax Ordinance (XXXI of 1979)...
----S.13(1)(d)---Assessing Officer has a right. to estimate the value of the property if he considers that the declared value of the property was low or understated.
(b) Income Tax Ordinance (XXXI of 1979)---
---S.13(1)(d)---Constitution of Pakistan (1973), Art. 25 ---Equal protection of law---One Assessing Officer having the jurisdiction and power to determine the value of the property had determined the value in certain manner while another Assessing Officer having the same jurisdiction had also determined the value and had accepted the value declared by the assessee who was a co-sharer in the same property---Both these officers had independently exercised the power and had come to different conclusions---Such different conclusions by two different officers in respect of different co-sharers of the same property could not be said to be a discrimination or depriving an assessee of equal protection of law as envisaged in Art. 25 of the Constitution---Duty of Assessing Officer in such like cases stated.
In the present case the Assessing Officer having the jurisdiction and power to determine the value of the property had determined the value of the property in a certain manner. Another Assessing Officer having the same jurisdiction had also determined the value and had accepted the declared value. Both these officers had independently exercised they powers and come to a different conclusion. These different conclusions by two different officers in respect of different shareholders of the same property, could not be said to be a discrimination or depriving an assessee of equal protection of law as envisaged in Article 25 of the Constitution. Not only that, while in one case another I.T.O. had accepted the declared value being reasonable in three other cases of co-sharers the I.T.O. came to a different conclusion and was of the opinion that the value declared was low and estimated the higher value of the property. The net result would be that in case of three co-sharers the higher value had been determined by an I.T.O. while in the case of one co-sharer the declared value had been accepted by another I.T.O. In such circumstances the I.T.O., who started the proceedings first, should have noted that there were other shareholders in the same property and he should have inquired about the fate of the cases of the other co-sharers. In fact in such circumstances it was the duty of the I.T.O. to get the cases of the co-sharers consolidated so that two contradictory orders may not be passed and it was there that the I.T.O. who accepted the declared value had defaulted.
Strictly speaking the rule of discrimination is covered by sub-Article (2) of Article 25 where the discrimination on the basis of sex alone has been prohibited. It is not provided in Article 25 that two different persons or class of persons could not be given different treatment in the given circumstances particularly when the treatment has been given by two different officers having the authority and power to exercise that power under the law validly given by the legislature.
Jaswant Rai v. CWT, Patiala (1978) 38-Tax-106; AIR 1967 SC Ind. 1836; AIR 1972 SC 67 and AIR 1961 SC 552 distinguished.
The Tribunal further observed that it is a pity that it was in the knowledge of both the assessing officers that the property in question had been jointly purchased by six persons but one assessing officer only proceeded against one assessee and the other assessing officer proceeded against three assessees only. None of the assessing officers bothered to find out as to whether any proceedings were going on against the other shareholders or not and what was the fate of these cases. The proper course for the assessing officer, who took cognizance of these cases, should have been. to get these cases consolidated through the, Commissioner even if they were under the jurisdiction of the two different assessing officers. It was suggested that in all such eases where one decision of the assessing officer affects some other co -sharers or joint-holders of the property, the relevant authority should ensure that such cases are decided by one and the same assessing officer to avoid any contradictory judgment and embarrassment to the department.
Qaiser Yahyah, D.R. for Appellant.
Amin Butt and Shamim A. Syed, CA. for Respondent.
Date of hearing: 12th February, 1992.
ORDER
This is a departmental appeal against an individual deriving income from property and relates to the assessment year 1988-89. The department in this appeal is aggrieved against the deletion of addition under section 13(1)(d) of the Income Tax Ordinance to the extent of Rs.7,67,037.
2. Brief facts of the case under which this appeal has arisen are that the assessee alongwith five other persons purchased a residential plot on 17-3-1988 measuring 18 marlas 92 sq. ft. which is situated Off Queens Road, Lahore in consideration of Rs.11,50,000. The plot was jointly purchased by six persons and the assessee as also the other shareholders had 1/6th share each. The original assessment was finalised under section 59(b) of the Income-tax Ordinance. However, on receipt of information from the Survey Office the department reopened the assessee's case and notice under section 65 of the Income-tax Ordinance was issued which remained un-complied with and no return was filed by the assessee. A notice under section 62 of the Ordinance was also issued on 8-4-1991 in regard to the valuation of the property which was proposed to be adopted at the rate of Rs.2,50,000 per marla which also remained un-complied with. Subsequently, an ex parte assessment was made by the ITO and the value of the plot was adopted at Rs.2,50,000 per marla which works out to Rs.46,02,224. The 1/6th share of the assessee was worked out to Rs.7,67,037 and the ITO made an addition of this amount under section 13(1)(d) of the Income-tax Ordinance.
3. The learned C.I.T.(A) deleted this addition with the following observations:---
"Considering all aspects of the case and keeping in view the above discussion, the assessment has been framed in a slipshod manner without ascertaining the correct position. Not only complete assessment has been reopened on wrong premises but also no proper opportunity was provided to the appellant to make her submissions. Even the vendor was not summoned to confirm the value of the property sold. The parallel case relied upon is neither on all fours with the case of the appellant nor the appellant was confronted with the facts of this case. It is surprising that value of the same plot in respect of a lady co-owner having 1/6th share has been accepted by the department as being reasonable after reopening the assessment and thorough probe. In the circumstances there does not seem to be any justification to discard the value of the plot shown by the appellant in respect of her 1/6th share. The addition therefore made under section 13(1)(d) is dot only improper but also not sustainable in the eyes of law. Therefore on the ratio of the parallel case of the co-owner the addition so made being without any justification is accordingly deleted."
3. The learned D.R. contended that the observations of the learned C.I.T.(A) were that the assessing officer had framed the assessment in a slipshod manner without ascertaining the correct position and that the assessee had not been provided proper opportunity .to make her submissions and even the vendor had not been summoned to ascertain the value of the property. It was submitted that in these circumstances at best the learned C.I.T.(A) could have set aside the assessment and should have remitted back the case to the I.T.O. for re-determination of the value of the plot. The learned counsel for the assessee however contended that these observations, though correct but the case has not been entirely decided on these observations by the learned C.I.T.(A). He contended that had it been only these observations alone the case could have been set aside and remitted back to the I.T.O. However, there was another important factor which had been taken into consideration by the learned C.I.T.(A) and in the presence of which the assessment order could not be set aside. That factor was that in the case of a co-sharer of the same property namely Mst. Slamat Akhtar in the similar situation and circumstances, the case of that assessee was reopened under section 65 of the Ordinance and after thorough inquiry, the original assessment of that assessee was maintained and the proceedings under section 65 were dropped with the prior approval of the IA.O. Range-V Companies. It was submitted that in that case too the proposed value of the plot was Rs.2,50,000 per marla and in that case also as in the present case the case relied upon was the same as in the present case namely a shop measuring 1 marla 81 sq. ft. situated at Jail Road, Lahore where the sale rate was at Rs.3,75,000 per marla. It was contended by the learned counsel for the assessee that in the presence of that case the learned C.I.T.(A) could not pass a different order except to accept the same value as in the case of the co-sharer noted above. The learned counsel for the assessee cited certain cases to contend that an assessee cannot be subjected to discriminatory treatment as it is also hit by Article 25 of the Constitution where equality before law is a fundamental right of a citizen. The cases relied upon by the learned counsel for the assessee were as under:---
(1978) 38-Tax-106 Jaswant Rai v. CWT, Patiala; AIR 1967 SC (India) 1836; AIR 1972 SC 67; AIR 1961 SC 552.
5. The contention of the learned counsel for the assessee was that the assessee is entitled to the equal protection of law and cannot be discriminated. Since in the case of one of the co-sharers the department had accepted the declared value as reasonable the assessee has been discriminated as in her case the higher value had been adopted by the ITO and thus the assessee's fundamental right as contained in Article 25 of the Constitution of the Pakistan has been infringed. Article 25 of the constitution reads as under:-
"Article 25: Equality of citizens.---(1) Citizens are equal before law and entitled to equal protection of law.
(2) There shall be no discrimination on the basis of sex alone.
(3) Nothing in this Article shall prevent the state from making any special provision for the protection of women and children."
From the perusal of the above Article it is obvious that the assessee's case is not covered by Article 25. The different valuation had been adopted by two Income-tax Officers perhaps without knowledge of the fact that in the case of other co-sharer, the proceedings have been taken in regard to the valuation of the property by another I.T.O. There is no dispute (nor it has been so argued) that an assessing officer has a right to estimate the value of the property if he considers that the declared value of the property was low or understated. This power is contained in section 13(1)(d) of the Income-tax Ordinance. Now in the present case the assessing officer having the jurisdiction I and power to determine the value of the property had determined the value of the property in a certain manner. Another assessing officer having the same jurisdiction has also determined the value and had accepted the value. Both these officers have independently exercised the powers and came to a different conclusion. These different conclusions by two different officers in respect of different shareholders of the same property, could not be said to be a discrimination or depriving an assessee to equal protection of law as envisaged in Article 25 of the Constitution. Not only that, 'while in one case another I.T.O. had accepted the declared value being reasonable in three other cases of co-sharers the I.T.O. came to a different conclusion and was of the opinion that the value declared was low and estimated the higher value of the property. The net result would be that in cases of three co-sharers the higher value had been determined by an I.T.O. while in the case of one co-sharer the declared value has been accepted by another I.T.O. In such circumstances the I.T.O., who started the proceedings first, should have noted that there were other shareholders in the same property and he should have inquired about the fate of the cases of the other co-sharers. In fact in such circumstances it is the duty of the I.T.O. to get the cases of the co-sharers consolidated so that two contradictory orders may not be passed and it is there that the I.T.O. who accepted the declared value had faulted. So far as the cases relied upon by the learned counsel for the assessee are concerned, we find that none of them are relevant and applicable to the facts of the present case.
6. The first case is that of Jaswant Rai v. C.W.T., Patiala, (1978) 38 Tax-106. That was a case of Wealth tax and not of Income-tax. Secondly, in that case there were different methods adopted by the two different Wealth Tax Officers. In the present case we find that the assessing officer who accepted the declared, value of the property did not adopt any method whatsoever and accepted the declared value of the property merely on the ground that the property had been purchased through a Co-operative Society and there was no justification to estimate the higher value. Secondly that the property was mortgaged to the Bank for loan purposes and the Bank had adopted the same value as declared. Without commenting on the rationale of the assessing officer for accepting the declared value, we would point out that in the present case the ex parte assessment was made by the assessing officer as the assessee chose not to appear before the I.T.O. and therefore he adopted the value proposed by it in the notice at the rate of Rs. 2,50,000 per marla. The learned C.I.T.(A) while holding that no proper opportunity was provided to the assessee to defend her case accepted the declared value of the property solely on the basis of the assessment order passed in the case of another assessee without applying his own mind. In the present case it is not the situation where two different methods of valuation had been adopted. As stated above, in one case no valuation has been adopted by the I.T.O. by applying his own independent mind and he proceeded on assumptions. While in the present case of the assessee the case has gone by default which the learned C.I.T.(A) considered as unreasonable as according to him proper opportunity of being heard was not provided to the assessee. In the case relied upon by the learned counsel for the assessee namely Jaswant Rai v. CWT this was not the situation.
7. In the second case relied upon by the learned counsel for the assessee Satwant Singh v. A.P.O. the case before the Supreme. Court of India was entirely of different nature. It was a case of refusal of passport to the petitioner and it was in that context that the Supreme Court of India held that the doctrine of equality before the law is necessary corollary to the high concept of the rule of law and that every executive action, if it is prejudicial to any one person must be supported by some legislative authority. It was further held by the Supreme Court that a discretion vested in the executive would violate the doctrine of equality if it differentiated the treatment to different persons arbitrarily. It is obvious that this case has no application on the facts of the present case as two different authorities have passed two contradictory orders without knowing the proceedings of each other. There is no conscious discrimination on the part of one officer who passed the order which he is empowered to pass under the law. The next case is that of Narain Dass and others v. Improvement Trust. That was a case of exemption of land where in one case it had been exempted and in the other it was not. The learned counsel for the assessee has relied upon the observation of the Supreme Court of India where it said that equal protection of laws has to be applied to all persons in the same situation and there must be no discrimination between one person and another. However- in the same judgment it was observed by the Supreme Court as under:-
"If a person has however failed to bring his case within section 56 of the Punjab Town Improvement Act then merely because some other party has erroneously succeeded in getting his lands exempted ostensibly under that section that by itself would not clothe the former with a right to secure exemption for their lands. The rule of equality before the law or of the equal protection of the laws under Article 14 cannot be invoked in such a case."
8. The next case relied upon by the learned counsel for the assessee was of Jagannath Prasad Sharma v. State of Uttar Pradesh. This case has also no application as it merely lays down that equal protection of the laws does not postulate equal treatment of all persons without distinction; it merely guarantees the application of the same laws alike and without discrimination to all persons similarly saturated. As stated above it was not the same I.T.O. who gave a different treatment to two different persons. As stated above it was two different assessing officers who came to a different conclusions without knowing each other's views which resulted in contradictory orders. Another case relied upon by the learned counsel for the assessee was of State of Uttar Pradesh v. Upadhyaya reported as AIR 1960 SC 1125. This case has also no application as the question involved in that case was of vires of certain sections of the Evidence Act and the Cr.P.C. which were held to be ultra vires by the Supreme Court. Another case relied upon by the learned counsel was of Kathi Raning Rawat v. State of Saurashtra reported as AIR 1952 SC 123. This case is clearly distinguishable from the facts of the present case as firstly that was a criminal case. Secondly in that case certain provisions of an Ordinance have been contested. In the present case it is not the vires of any part of the provisions of Income-tax Law which has been contested by the assessee but a different treatment by two different officers has been contested. Strictly speaking the rule of discrimination is covered by sub-Article (2) of Article 25 where the discrimination on the basis of sex alone has been prohibited. It is not provided in Article 25 that two different persons or class of persons could not be given different treatment in the given circumstances particularly when the treatment has been given by two different officers having the authority and power to exercise that power under the law validly given by the Legislature. Another case relied upon was Charanjit Lal Chowdhury v. Union of India reported as A I R (38) 1951 S C 41. This judgment also in not of any help to the assessee as it only lays down that a law applying to one person or one class of persons is constitutional if there is sufficient basis or reasons for it. Any classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must bear a reasonable and just relation to the things in respect of which it is proposed. It was further observed by the Court in that case that the presumption is always in favour of the constitutionality of an enactment, and the burden is upon him to prove who pleads clear transgression of the Constitutional principles. In the present case, as stated above, the constitutionality of any provision of the Income-tax Ordinance has not been challenged on the basis of discrimination. This case has therefore also not application.
9. It is obvious from the above that none of the case relied upon by the learned counsel for the assessee are applicable to the facts of the present case. As stated above two different assessing officers have independently proceeded against the different co-sharers without knowing the other proceedings. Both the assessing officers had the jurisdiction to evaluate the property. The learned C.I.T.(A) has already observed that the assessee had not been provided proper opportunity of being heard and ex parte assessment had wrongly been made against the assessee. The proper course for the learned C.I.T.(A) in such circumstances was to set aside the assessment and remit the case back to the I.T.O. concerned where the assessee could, not only show that the value arrived at by the ITO was incorrect, the assessee could also raise a plea which has been taken before the learned C.I.T.(A) that in the case of another co- sharer another assessing officer had arrived at a different conclusion. In that case it would be the I.T.O. who would take into consideration all the facts of the case including the valuation arrived at by another assessing officer in the case of another co-sharer. We, therefore, vacate the order of the learned C.I.T.(A) and set aside the assessment with the direction that the assessing officer should revalue the property after taking into consideration the following facts:---
(1) Whether the property is on the main Queens Road and is a commercial property or it is off Queens Road (as asserted by the assessee which is also indicated from the plan shown to us).
(2) If it is a residential property how the case of commercial property at Jail Road, could be considered as parallel?
(3) The valuation adopted by another assessing officer in the case of a co sharer.
(4) If the answer to question No.1 is in the negative. what is the proper value of the property, based on the value of the parallel cases of residential area of that locality and the valuation should be adopted on the basis of those cases:
(5) Needless to say that the assessee should be provided proper opportunity of being heard before refraining the assessment.
10. Before parting with this judgment we would like to make observation that it is a pity that it was in the knowledge of both the assessing officers that the property in question had been jointly purchased by six persons but one assessing officer only proceeded against one assessee and the other assessing officer proceeded against three assessees only. None of the assessing officers bothered to find out as to whether any proceedings were going on against the other share-holders or not and what was the fate of those cases. The proper course for the assessing officer, who, took cognizance of these cases, should have been to get these cases consolidated through the Commissioner even if they were under the jurisdiction of the two different assessing officers. We would like to suggest that in all such cases where one decision of the assessing officer affects some other co-sharers or joint-holders of the property, the relevant authority should ensure that such cases are decided by one and the same assessing officer to avoid any contradictory judgment and embarrassment to the department. Let a copy of this order be sent to the Regional Commissioner for his information.
M.BA./1720/TCase remanded.