(a) Wealth Tax---

---- Res judicata, principles of---Application---Principles of res judicata would not apply to the income tax/wealth tax proceedings because each year was a separate assessable entity.

(b) Wealth Tax---

---- Natural justice, principles of---Natural justice and fair play demand that none should be burdened with tax if the facts of the case are proved to be otherwise.

(c) Administration of justice---

---- Cause of justice---Advancement of---Judgment of Court is to be designed to advance cause of justice and not to be a source of perpetual injustice.

(d) Wealth Tax Act (XV of 1963)---

----S. 16---Assessment---Land---Determination of status---Agricultural or residential---Evidence of payment of land revenue, water tax and Fard Malkiat Khasra Girdwari was furnished wherein land was shown to be under cultivation---Land was assigned non-agricultural status by the Department on the basis of paper work prepared for housing scheme on such land and intended to sell---Validity---Assessing Officer misdirected himself not to take cognizance of the assessee's submissions---In wealth tax proceedings, it was that status of land on the valuation date which was to be taken into consideration for purposes of determining value of immovable assets---Order of Assessing Officer was set aside with the directions to ascertain factual position of the land---If the Assessing Officer came to a conclusion that status of the land on the valuation date was agricultural, the assessee's claim of land to be agricultural in its character be accepted otherwise the Assessing Officer shall proceed in accordance with law and facts which shall be brought on record while re determining the status of land ---Assessee shall be at liberty to adduce any documentary evidence in support of his contention during the course of assessment proceedings---Order of First Appellate Authority was vacated by Appellate Tribunal.

12 ITR 9; 30 ITR 618; 56 ITR 608 and 108 ITR 917 ref.

Javed ur Rehman, D.R. for Appellant.

Sajid Ijaz Hotiana for Respondent.

Date of hearing: 24th May, 2003.

ORDER

Out of these three appeals, two are cross-appeals each filed by the assessee and the Revenue, which are directed against the order passed by CIT(A) Zone-III, Lahore, dated 3-10-2000 in respect of assessment year 1994-95 while the appeal pertaining to the assessment year 1995-96 has been instituted at the instance of the assessee-appellant only against the order passed by First Appellate Authority, dated 15-5-2001. All the issues involved in these appeals are adjudged hereunder:--

2. The assessee's common grievance in both the years under appeal relates to non-assigning of agricultural status to residual portion of land located at Mauza Khaki and also valuation of house property bearing No.44 and 45 Chauburji Park. Lahore. In addition to, the assessee has objected to the valuation of Asif Centre and plots located at Allama Iqbal Town Lahore and Mustafa Town Lahore in respect of the assessment year 1995-96 only. On the other hand the Department has called in question the impugned order on account of relief allowed in the valuation of land of Mauza Khaki, Asif Centre and residential house situated at Chubaurji Park Lahore for the assessment year 1994-95 only.

LAND AT MAUZA KAKHI

3. Facts in short are that total holding of the assessee's land in Mauza Khaki Sheikhupura was 239 Kanals 7 Marlas being agricultural in characteristic. Out of this holding land consisting of 132 Kanals and 10 Marlas was negotiated with Leo Enterprises (Pvt.) Ltd. to develop a low cost housing scheme. As the scheme could not be matured beyond the paper work as such was revoked by the LDA. Later on a scheme namely Sharif Park was introduced on private basis and the portion, which was earlier earmarked for approved housing scheme, measuring 132 Kanal 10 Marla was intended to sell. Anyhow; un-sold portion of land was continuing to be used as agricultural land till a certain portion thereof was actually sold. It is pertinent to mention here that out of the total land holding, a portion of land measuring 94 Kanals, 19 Marlas was never part of any housing scheme and continues to be used for agricultural purposes till to date. In addition thereto, unsold land of Sharif Park measuring 49 Kanals and 14 Marlas and 221 sq. ft as 30-6-1994 and 46 Kanals, 11 Marlas as on 30-6-1995 was also actually being used for agricultural purposes on the respective valuation dates.

4. However, the assessee had claimed exemption over 177 Kanals 1 Marla land being agricultural. This claim was rejected by the Assessing Officer and the land in question was converted into a Residential Housing Scheme by observing that the Tribunal had also accepted this portion of land to be residential in the preceding assessment year. Accordingly the Assessing Officer valued this portion of land at Rs.70,84,400 in each year by adopting the rate of land at Rs.40,000 per Kanal after having taken regard to the history f the case. At the first appellate stage, the Appeal Commissioner restricted the value of this land of Rs.35,00,000 and Rs.40,00,000 respectively in view of the treatment accorded in the preceding assessment year.

5. The learned counsel for the assessee vehemently argued that the land in dispute is still being used for agricultural purposes and evidence of payment of land revenue and water tax has been placed before us to substantiate the contention. Furthermore copies of Fard Malkiat Khasra Girdwari have also been furnished before us wherein land in question has been shown to be under cultivation. It was also pointed out by the learned counsel for the assessee that up to assessment year 1985-86 the said land was accepted as' agricultural while for assessment year 1986-87 and 1987-88 this was held to be non-agricultural. As regard assessment year 1988-R9 again the same Assessing Officer who had previously re assessed this piece of land to be non-agricultural accepted the entire land to be of agricultural status. Thereafter, once against this land was treated as to be non-agricultural. In this background, it was contended by the learned counsel for the assessee that status of the land in question should be decided on merits after ascertaining ground realities and the assessee's claim has been brushed aside without appreciating and bringing any material evidence on record. According to the learned counsel any findings of fact without evidence is vitiated and cannot be relied upon to burden a taxpayer with heavy tax demand. Reference in this regard has also been made to the case law cited as 12 ITR- 9 (Kerala High Court). Also added that the Assessing Officer instead of applying his mind to the factual controversy relied on the judgment of the Tribunal for the previous assessment year, which is not correct. It was also pleaded that principle of estoppel does not apply to the proceedings taken up before the Income Tax Authorities as well as before the Income Tax Appellate Tribunal. Thus, the Assessing Officer was obliged to look into the factual position prior to valuation of this piece of land for the year under appeals. Support in this regard has been sought from a case-law cited as 30 ITR 618 (Bombay High. Court). Further reliance has been placed on another case-law reported as 56 ITR 608 and 108 ITR 917 (Gujrat High Court India) to contend that actual use of land on the valuation date should be taken into account, and not the paper work of the land in dispute, which actually established status of the land. It was thus prayed that ' characteristic of the land in question may be declared to be agricultural and 'not the residential one. On the other hand the learned DR for the Revenue supported the orders of the two authorities below, for the reasons recorded therein.

6. We have deliberated the rival contentions put forth at the bar as well as perused the case-law and the documents placed before us. There is no denying the fact rather this is a settled law that principle of res judicata does not apply to the income tax/wealth proceedings reason being each year is a separate assessable entity. Therefore, the decision rendered in one year has no binding force if the circumstances changes in the subsequent year. Actually the assessee in the present case has a chequered history with regard to assigning status to the land in dispute. At the first place this piece of land was assigned the status of agricultural while in the second place the land was held to be residential and again to be agricultural in respect of assessment year 1988-89 and twice non agricultural in the subsequent assessment year. This conduct of the Department shows that factual positions on the ground has not been un earthed by the Revenue in any of the preceding assessment year. Natural justice and fair play demand that none should be burdened with tax if the facts of the case are proved to be otherwise. Although the Tribunal hart reduced the value of land in question assuming the status of the land to be non-agricultural. Neither factual controversy was ever unfolded nor discussed by the Tribunal in its order, dated 2-4-1987. It is imperative to mention here that the Tribunal while disposing of this issue has categorically observed in para 10 of its order that in absence of non production of copies of the orders we are constrained to presume that the ITO had not made any spot enquiries or ate other method to determine the factual status of the land in question. Despite these observations, it was held that on the contrary the fact remains that gart,of the land was earmarked for Sharif Colony. In no way such findings can be held to be of any persuasive value for the purposes of holding status of the land to be non-agricultural particularly when the assessee has furnished documentary evidence in support of his contentions. In fact a judgment of Court is to be designed to advance cause of justice and not be a source of perpetual injustice. If looked in this perspective the learned Assessing Officer has misdirected himself not to take cognizance of the assessee's submissions put forth before him. In order to resolve the factual controversy we deem it appropriate to remand the point regarding assigning status of the land in question to be re-determined afresh. Actually in Wealth Tax proceedings it is that status of the land, which is to be taken into consideration on the valuation date for the purposes of determining value of immovable assets. Accordingly, the order of the Assessing Officer is set aside with the directions to ascertain factual position of the land for the year under appeal and if he comes to conclusion that status of the land on the valuation date was agricultural he should not feel hesitant in accepting the assessee's clam of land to be agricultural in its character. Otherwise, the Assessing Officer shall proceed in accordance with law and the facts which shall be brought on record while re-determining the status of the land. The assessee shall also be at liberty to adduce any documentary evidence in support of his contention during the course of re-assessment proceedings. Consequently the order of the CIT(A) stands vacated.

VALUATION OF RESIDENTIAL HOUSE BEARING NOS 44 & 45 CHAUBURJI PARK, LAHORE

7. Value of the house property bearing No.44, for the wealth tax purposes, has been shown to be at Rs.300,000 while for House No.45 at Rs.228,000 in each year which was considered to be understated by the Assessing Officer. Accordingly their value was adopted by the Assessing Officer at Rs.9,50,000 and Rs.10,00,000 for the former property and Rs.11,00,000 and Rs.11,50,000 for the later property respectively. When the issue regarding valuation came up before the Appeal Commissioner, he restricted value of each house for the assessment year 1994-95 at Rs.800,000 and for the assessment year 1995-96 in respect of House No.4. it stood reduced to Rs.900,000 and for house No.45 at Rs.950,000. Since the department has violated rule 8(3) of the Wealth Tax Rule while valuing these house properties coupled with it no material evidence whatsoever has been brought on record by the Assessing Officer to justify his action, therefore, we also restrict value of each house i.e. No.44 and 45 at Rs.800,000 in respect of the assessment year 1995-96 as well. The cross-objection so far as assessment year 1994-95 is concerned that is turned down.

VALUATION OF ASIF CENTRE-DEPARTMENTAL OBJECTION FOR ASSESSMENT YEAR 1994-95 WHILE ASSESSEE'S OBJECTION FOR ASSESSMENT YEAR 1995-96 ,

8. For the assessment year 1994-95 its value for wealth tax purpose was declared at Rs.22,89,000 on the basis of GALV. However, the same was valued at Rs.48,62,000 relying upon the past treatment. At the first appellate stage, after making a lot of discussion, the Appeal Commissioner directed to accept declared value of the property.

9. Similarly value of this property for the assessment year 1995-96 was shown at Rs.22,89,000 on the basis of GALV. On assessment the Assessing Officer opted to determine value of the rented portion at Rs.39,70,000 and at self-occupied portion at Rs.20,00,000. The CIT(A) on first appeal, restricted value of the former portion at Rs.30,00,000 and the later portion at Rs.12,00,000.

10. On going through the facts available on record we find no reason to intervene in the impugned order on behalf of the Revenue in respect of assessment year 1994-95 as the learned DR could not dislodge the findings recorded by the First Appellate Authority while directing to accept the declared value of this property. In fact this being a rented property, the Appeal Commissioner had ordered acceptance of the declared value as that was worked out on the basis of GALV. As regard assessment year 1995-96, we find force in the learned AR's contention that the value of the rented portion has been declared by the assessee by adopting GALV basis while the Assessing Officer has not advanced any reason to disbelieve the declared value of the rented portion of Asif Centre as such that merited acceptance instead of reducing its value. We, accordingly, direct the Assessing Officer to accept declared value of the rented proton of this property in the assessment year 1995-96 as well. Rest of the treatment of the Appeal Commissioner with regard to valuation of self occupied portion is hereby upheld by us. Hence the Revenue's plea is turned down while that of the assessee partially succeeds.

POLOTS AT ALLAMA IOBAL TOWN AND MUSTAFA TOWN FOR THE ASSESSMENT YEAR 1994-95 (CROSS-OBJECTION ASSESSMENT OBJECTIONS) FOR ASSESSMENT YEAR 1995-96

11. In this regard it has been contended by the learned counsel for the assessee that the learned Appeal Commissioner had fallen in error while confirming valuation of the plots located at Allama Iqbal Town and Mustafa Town. We find that the appellant had claimed exemption over these plots on the ground that the assessee is merely holder of general power of attorney and not the actual owner of these plots. The claim was not accepted by the Assessing Officer and he resorted to estimate value of these plots at Rs.48,80,000 and Rs.60,00,000 respectively by rejecting claim of the assessee to be a general power attorney holder. In fact the LDA has allotted developed plots to the appellant in Allama Iqbal Town and Mustafa Town in lieu of his land acquired by the said authority. Thus, the assessee was owner of these plots for all practical purposes. Since valuation of these plots has been determined by adopting the rates of land notified by the Deputy Collector, therefore, the valuation so adopted by the Assessing Officer does not call for any intervention therein. Thus, this objection of the assessee is not sustainable. Hence, the objection of the revenue and that of the assessee is not entertained.

12. In the result, the assessee's appeals stand disposed of to the extent and in the manner indicated above while the departmental appeal for the assessment year 1994-95 is dismissed for want of merits.

C.M.A./967/Tax (Trib.)Assessee's Appeals accepted