ORDER
1. Heard Sri N. P. Samuel for the petitioner and Sri S. Vijayan Nair, Government Pleader for the respondents. The facts stated below are based on their submissions as also those disclosed by the files produced by the Government Pleader.
2. The writ petition arises out of an assessment to tax under the Kerala Building Tax Act, 1975 (the Act) and the challenge is to the orders Exts. P2, P3 and P6 as explained below. Petitioner, which is a Scheduled Bank, constructed a multi-storeyed building for its Head Office at Aluva. The construction was completed on September 13, 1987. The Aluva Municipality within whose area the building is situate, fixed the annual value of the building under Section 100 of the Kerala Municipalities Act, 14 of 1961 at Rupees 1075632/-.
3. The building was assessable to tax under the Act and therefore the petitioner filed return in the prescribed form for purposes of assessment under the Act on March 21, 1988. Against column 7 of the return, “Capital Value of the building”, the petitioner mentioned “Rs. 20810330”. The petitioner also mentioned in column 13 the amount of Rs. 1075632/- as the annual value of the building fixed by the local authority. Pursuant to a query made by the assessing authority namely the Tahsildar, the petitioner
informed him by letter dated May 31, 1983 (Ext, P5) that the total amount expended by it on the building was Rs. 248 lakhs, made up of Rs. 208 lakhs-cost of civi! works including water supply and sanitation, Rs. 11.60 lakhs-cost of electrical installation works and Rs. 28.40 lakhs-cost of electrical fittings including A.C., transformer, O.C.B., Generator and lifts. The assessing authority obtained report dated June 14, 1988 from the Revenue Inspector about the capital value of the building at the P.W.D. rates of cost of construction, the value reported being Rs. 9285461/-. The Revenue Inspector made a further report based on the petitioner’s letter dated May 31, 1988 that the cost of construction of Rs. 248 lakhs and the land value aggregated Rs. 27262297/- and that the capital value of the building on that basis will be Rs. 16357378/-.
4. The assessing authority was faced with these conflicting assessments of the capital value. Instead of applying his mind and deciding on the true capital value, he adopted a short cut. Since the petitioner had in its return mentioned the capital value as Rupees 20810330, which was higher than the capital value reported by the Revenue Inspector, as also the capital value as per the municipal valuation, the assessing authority adopted that as the capital value. In view of this he did not feel it necessary to afford a hearing to the petitioner before finalising the assessment on that basis. (See the Tahsildar’s file produced by the Government Pleader). Accordingly he completed the assessment. Ext. P2 on June 30, 1988 fixing the capital value at Rupees 20810330/- and demanding a tax of Rupees 2054783 / -. The order is in a printed form with only the figures filled up and nothing more, Neither the basis, nor the materials on which the assessment was made are disclosed therein.
5. The petitioner challenged the assessment in appeal before the appellate authority, namely the Revenue Divisional Officer. The point highlighted was that the petitioner had committed a mistake in stating the amount of Rs. 20810330/- as the capital value in the return while in fact it was the cost of construe-
tion. The petitioner accordingly prayed for determining the capital value in accordance with the provisions of the Act and levying tax on that basis.
6. The Appellate Authority obtained a report from the assessing authority in which he stated that he had made the assessment after taking into consideration all the aspects as required by the Act and on the basis of the capital value admitted by the petitioner. I must confess that the earlier part of the report is not borne out by the assessing authority’s file as he had merely adopted the petitioner’s statement of capital value for the assessment, without anything more, as that was higher than the capital value determined otherwise. The appellate authority acted on this report and dismissed the appeal by his order Ext. P3.
7. The further challenge to the assessment by way of revision to the District Collector was not successful, the revision being dismissed by the order Ext. P6. The District Collector preceded on the basis that the capital value disclosed by the petitioner could not be the cost of construction as contended by it inasmuch as the petitioner had expended a sum of Rs. 248 lakhs in the construction to which had to be added the land value taking the total cost of construction to Rupees 272.6 lakhs. But I may straightway dispel this line of reasoning which proceeds on a miscon–ception. A bare perusal of Ext. P5, the letter of May 31, 1988 will show that the petitioner had claimed Rs. 208 lakhs as the cost of the civil construction, the rest of the amounts spent being on fittings. There was therefore nothing wrong in the petitioner’s claim that the amount mentioned as capital value in the return was in fact the cost of (civil) construction and not the capital value. The order Ext. P6 is not therefore valid for the reason stated therein to sustain the assessment.
8. But the fundamental question remains whether the petitioner could resile from what it stated in the return and contend that the capital value of the building is not what is stated therein, but something else. This is the point that arises for consideration in the case and counsel for the petitioner would urge that
the petitioner should not be pinned down to the mistake committed by it and assessed on an amount, which does not really represent the capital value of the building.
9. In Commissioner of Income Tax v. Bharat General Reinsurance Co. Ltd., (1971) 81 ITR 303 (Delhi) the assessee had included the dividend income received by it in its return for purposes of assessment to income tax for the year 1958-59, but resiled from this position and contended in the appeal filed against the assessment that the amount was not taxable during that year. The Appellate Tribunal upheld the contention, holding that the income was liable to be taxed in the year 1953-54 and not in 1958-59. The High Court of Delhi accepted this conclusion observing.
“There is no estoppel in the Income Tax Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resiled from the position which it had wrongly taken while filing return. Quite apart from it, it is incumbent on the income-tax department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year.”
10. These observations mutatis mutandis, must apply to assessments under the Kerala Building Tax Act as well.
11. The base of the assessment under Subsection (1) of Section 5 read with the Schedule to the Act (prior to its amendment by Acts 3 of 1992 and 13 of 1993) was the capital value of the building as defined in Section 2(f). It is with reference to this capital value that the tax is computed. Capital value is defined in Section 2(f) as meaning the value arrived at by multiplying the annual value of the building by ten. “Annual value”, under Section 2(a) is the gross annual rent at which the building may at the time of completion of the construction be expected to let from month to month or from year to year. Sub-section (1) of Section 6 of the Act provides that for
determining the capital value for purposes of the Act, the annual value of a building shall be the annual value fixed for it in the assessment books of the local authority within whose area the building is situate. But Sub-section (2) vests the assessing authority with an option to deviate from the annual value fixed by the local authority and fix the annual value differently, if he is of opinion that the annual: value fixed by the local authority is too low. The assessing authority may, in such cases, fix the annual value himself, having regard to the factors enumerated in Sub-section (4) and after giving the person, affected an oppor-tunity of being heard, the factors mentioned being (a) the location of the building, (b) the nature and quality of the structure of the
building, (c) the capability of the building for profitable use, (d) amenities provided in the building, (e) access to the building from
public roads or waterways, (f) the value of the land on which the building is constructed, (g) the estimated cost of construction of the building and (h) such other matters as may be prescribed. I may also refer to Section 9 which prescribes the machinery for making the assessment. If the assessing authority is satisfied that the return made by the owner of the building is correct and complete, he may, under Sub-section (1) assess the amount payable as building tax on the basis of trie return. !f however he is not so satisfied, he has to follow the procedure laid down by subsections (2) to (4), issue notice to the assessee, afford him an opportunity of being heard and then complete the assessment on the basis of the materials available. Rule 8(3) of the Rules framed under the Act requires the order of assessment inter alia to specify the basis of the assessment.
12. An order of assessment so made, even if it be under Section 9(1) on the basis of the return, is subject to appeal to the appellate authority under Section 11, and to a further revision to the District Collector under Section 13.
13. The Act while making the capital value of the building as the base of the levy, also meticulously makes provision for the mode of determining the capital value in cases
where the fixation of the annual value made by the local authority is considered too low. This is evident from the enumeration in Subsection (4) of Section 6 of the factors to be considered by the assessing authority in fixing the annual value himself. The tax payable is reckoned with reference to the capital value and therefore a proper assessment of the capital value in accordance with the provisions of the Act is called for. When a statute prescribes that the tax is to be assessed on a particular basis, it cannot be assessed on a different basis. Such an assessment will be violative of Article 265 of the Constitution of India. Therefore an assessment made on the basis merely of an admission in the return, when that admission has been resiled from as made by mistake and when there is nothing to indicate that the amount mentioned could be the capital value computed in accordance with the Act is not valid in law. In such cases, the statutory authorities have to determine the annual value and the capital value in accordance with the provisions of the Act, where the assessment is made by resort to Sub-section (2) of Section 6. The position will no doubt be otherwise where the assessee does not dispute what is stated in the return nor resile from it. The question will arise only if he disputes its correctness as one made under mistake.
14. An admission is no doubt a relevant piece of evidence, but it is never conclusive. (Basant Singh v. Janki Singh, AIR 1967 SC 341). It is all the more so in the matter of an assessment to tax which has to conform to Article 265 of the Constitution of India. So far as an assessment to tax is concerned, it is open to the assessee who made an admission to show that it is incorrect. If he puts forward such a plea, he should be given a proper opportunity to show that it is so. Pullangode Rubber Produce Co. Ltd. v. State of Kerala, (1973) 91 ITR 18 (SC). When the assessee contends that he has committed a mistake in making the admission, it cannot be relied on without first considering the said contention. Satinder Kumar v. Commissioner of Income-tax, (1977) 106 ITR 64 at page 72 (HP). Thus while an admission made by an assessee is relevant, it is not conclusive. It is open to the
assessee to explain or clarify under what circumstances it was made, or to prove that what was stated did not reflect the true state of affairs. But in the absence of any demur or explanation therefor, an admission is almost conclusive regarding the facts contained therein. Deputy Commissioner of Sales Tax v. Imperial Trading Co., (1990) 76 STC 183 (Ker). Having regard to this state of the law, it was open to the petitioner to plead that the admission contained in its return was made under a mistake and to have the capital value fixed in accordance with law.
15. I must also note here that before a departure is made from the annual value of the building fixed by the local authority, the assessing authority has to form an opinion that the said capital value is too low. The formation of this opinion, which has necessarily to be on materials, is a condition precedent for resorting to Section 6(2) to make a determination of the annual value by the assessing authority himself. No doubt the assessee’s admission in the return is a valid piece of evidence in the formation of such an opinion, but the opinion has to be formed after application of the mind. The assessing authority is not entitled to make an assessment on the capital value mentioned in the return merely because it happens to be the highest amongst the values arrived at on different bases, as was done in this case.
16. A further question which arises is whether the assessee could plead his mistake in the return in appeal. So far as this case is concerned, the question may not arise as the petitioner was not called for a hearing as required by Section 6(2) in the view that the assessment was being completed on the basis of the return, under Section 9(1), and therefore the petitioner did not have the opportunity to plead its mistake at the stage of assessment. But I am of the opinion that the petitioner is entitled to raise this point even in an appeal. I do not find any reason why the question should not be raised in an appeal, though the validity of such contention might lose its force if not raised at earlier points of time despite opportunity. In fact, in the case of Bharat General Reinsurance Ltd. already
adverted, the mistake in the return was pleaded for the first time in appeal. The further fact that the assessment was one completed under Section 9(1) does not preclude the mistake from being pleaded in appeal. All that it means is that the assessing authority is less at fault for acting on the return, though as mentioned by me earlier, this will not exonerate him from complying with the conditions prescribed by Section 6(2) which are in the nature of conditions precedent for departing from the annual value fixed by the local authority.
17. I therefore hold that it was open to the petitioner to establish that the mention of the amount of Rs. 20810330/- as the capital value in its return was by mistake. I am also satisfied that this amount represented the cost of civil constructions as explained in the letter Ext. P5. The District Collector’s conclusion in Ext. P6 that this amount did not really reflect the cost of construction, though correct to a limited extent, is not sufficient to overrule the plea of mistake made by the petitioner.
18. If the return was mistaken — and I have mentioned that even otherwise the assessment has to follow the pattern prescribed by Section 6(2) — it was incumbent on the authorities to determine the capital value of the building in accordance with the provisions of the Act and having regard to the factors mentioned in Section 6(4) if the annual value fixed by the Aluva Municipality was considered too low. Neither the appellate nor revi-sional authorities applied their mind to this aspect. Nor the assessing authority whose order of assessment, as already mentioned does not disclose the basis of the assessment, or comply with Rule 8(3).
The orders Exts. P2, P3 and P6 have therefore to be quashed. I do so. The second respondent assessing authority is directed to make an assessment afresh in accordance with law with opportunity to the petitioner to be heard as expeditiously as possible. The amount, if any, paid by the petitioner will be retained by the second respondent to be adjusted towards the tax as assessed afresh. No costs.