1994 (5) TMI 264 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order under the Kerala Building Tax Act, 1975.
2. Whether the petitioner can resile from the capital value stated in the return.
3. Compliance with procedural requirements u/s 6(2) and Rule 8(3) of the Kerala Building Tax Act.

Summary:

Issue 1: Validity of the Assessment Order
The writ petition challenges the assessment orders Exts. P2, P3, and P6 under the Kerala Building Tax Act, 1975. The petitioner, a scheduled bank, constructed a multi-storeyed building and filed a return stating the capital value as Rs. 2,08,10,330. The assessing authority adopted this value without proper verification, leading to the assessment order Ext. P2 demanding a tax of Rs. 20,54,783. The appellate authority and the District Collector upheld this assessment without adequately addressing the petitioner's claim of mistake.

Issue 2: Resiling from the Return
The petitioner contended that the capital value mentioned in the return was a mistake and actually represented the cost of civil construction. Citing CIT vs. Bharat General Reinsurance Co. Ltd. (1971) 81 ITR 303(Del), the court held that there is no estoppel in tax law, and the petitioner could resile from the mistaken value stated in the return. The court emphasized that an admission in a return is relevant but not conclusive and can be contested if shown to be incorrect.

Issue 3: Procedural Compliance
The court noted that the assessment must conform to the provisions of the Act, particularly u/s 6(2) and Rule 8(3). The assessing authority failed to form an opinion that the annual value fixed by the local authority was too low and did not provide the petitioner an opportunity to be heard. The appellate and revisional authorities also did not apply their minds to this aspect. The court quashed the orders Exts. P2, P3, and P6 and directed the assessing authority to make a fresh assessment in accordance with the law, providing the petitioner an opportunity to be heard.

Conclusion:
The court quashed the impugned orders and directed a fresh assessment, emphasizing the need for compliance with statutory provisions and procedural fairness. The petitioner was allowed to contest the capital value stated in the return as a mistake.