Municipal Corporation Of Delhi vs Dharam Bhushan Jain And Ors.
1987 Latest Caselaw 115 Del

JUDGMENT

B.N. Kirpal, J.

(1) In this writ petition the challenge is to the order dated 1st June 1985 whereby the Additional District Judge, Delhi had allowed the respondents' appeal and had fixed rateable value of the property in question in respect of the assessment year 1984-85.

(2) It is alleged in the petition that property No. 1, Darya Ganj, New Delhi was purchased by late Lala Raj Kishan Jain vide sale-deed dated 25th March 1946. Out of the said property late Raj Kishan Jain gifted about 300 Sq. yards of land and building vide gift-deed dated 31st March 1965 in favor of respondent no. 1. The value of the property which was gifted was shown as Rs. 25,000.00 .

(3) Respondent No. 1 is stated to have made additions, alterations and repairs to the property which was gifted to him. Portion of the property was let out to various parties from time to time. It appears that sometime in March 1976 notice was issued by the petitioner under Section 126 of the Municipal Corporation Act (hereinafter referred to as the Said Act) in which it was proposed to fix the rateable value of the said property at Rs. 41,000.00 with effect from 1st April 1975. Objections to this notice were filed within the prescribed time but the same have not been disposed of till now.

(4) In respect of the assessment-year 1984-85 the petitioner prepared assessment list under Section 124(1) of the Act. The said list was published and objections were invited. Respondent No. 1, in response to the said public notice, filed his objections on 30th November 1983. These objections were disposed of by the Deputy Assessor and Collector vide his order dated 30th June 1984 where in he held as follows :- "Ageneral objection was received from Sh. D.B. Jain vide diary No 172 dated 30.11.83. Since the general objection was validly received the assessed was called for personal hearing on 8.6.84. Sh.B.B. Jain, Advocate and general attorney brother of the objector presented himself. Sh. Jain has again attended this office on 28.6.84 and filed certain documents. He has been heard indetail. He has stated that a decision about the R.V. of this property may be taken on the cost of construction bases. I find from the records that a case u/s 126 is pending proposing the R.V. of this property atRs.41040.00 p.a.w.e.f. 1.4. 1975 being the first construction. In view of the fact that the case fixing the R.V. of this property at the time is still pending and has to be decided first. The spirit of the general objection filed and now under consideration can be met only after due procedure for fixing of the R.V. u/s 126 w.e.f. 1.4. 1975 is decided, I , order for proceeding the case further over the proposed R.V. of Rs. 41040.00 p.a. w.e.f. 1. 4. 1975 so that the spirit of the general objection could also be met. The general objection is, therefore, filed for the time being."

(5) Being aggrieved an appeal was filed to the Additional District Judge Delhi against the aforesaid order of 30th June 1984. This appeal was filed under the provisions of Section 169 of the said Act. A number of contentions were raised in the appeal one of them being that the rateable value had to be fixed on the basis of costs of land and costs of construction thereon.

(6) Vide order dated 1st June 1985 the appeal which was filed was allowed. The Additional District Judge Delhi computed the cost of construction and the cost of the land .and then, by applying the provisions of Section 6(1) of the Delhi Rent Control Act determined the standard rent at Rs. 3001.00 and that is the rate which was fixed for rateable value of the property in question.

(7) The Municipal Corporation of Delhi has filed the present writ petition challenging the aforesaid decision of the Additional District Judge. It is contended on behalf of the petitioner that no appeal was maintainable under Section 169 of the Act because there had neither been any levy nor assessment to tax in the present case. The learned counsel submits that by virtue of the impugned order passed by the Deputy Assessor and Collector the objections which had been filed by the respondent have been kept pending. Till decision is taken on the objections filed by the respondents to the notice issued under Section 126 in respect of the year 1975-76 no further action is contemplated to be taken for the realisation of any property tax. It is also submitted that on merits the Additional District Judge fell in error inasmuch as, while computing the cost of construction and the value of the land he has proceeded on the basis of the valuation contained in the Gift Tax Act whereas he ought to have determined what was the actual cost of construction of the property in question.

(8) Learned counsel for the respondents however has submitted that the appeal was maintainable. It has been submitted by the respondents that objections had been validly filed on 30th November 1983 and by ordering that the same be 'filed' tantamounts to an order being passed pertaining to levy of or assessment of tax and therefore the appeal was maintainable. It is also contended by the learned counsel for the respondents that the view of the Deputy Assessor and Collector that objections to the proposed assessment list under Section 124 are not to be finalised till objections under Section 126 are disposed of is not correct.

(9) Before dealing with the merits of the case I think it would be appro- pirate to refer to the relevant provisions of the Act and to try to determine the scheme of the levy of property tax.

(10) Under Section 113(l)(a) the Corporation is entitled to levy property tax. For the purposes of determining the said tax Section 116 provides that rateable value shall be ascertained and tax will be levied on the same. Rateable value is regarded being the annual rent at which the land or building is reasonably expected to be let out from time to time, after deducting there from such amounts which are permissible to be deducted under the said provisions. It is not necessary at this stage to deal with at any great length as to how the rateable value is to be determined except to notice that the principles for determination of the same have now been made clear by two decisions of the Supreme Court in the cases of Dewan Daulat Ram Kapur Vs. N.D.M.C. XVIK1980) and Dr. Balbir Singh and others Vs. Municipal Corporation of.Delhi .

(11) What is necessary to determine in the present case however is the procedure which is followed in ascertaining the rateable value. Four sections namely Sections 124 to 127 of the said Act are relevant for this purpose. The said provisions read as under:- "124(1)Save as otherwise provided in this Act, the Corporation shall cause an assessment list of all lands and buildings in Delhi to be prepared in such form and manner and containing such particulars with respect to each land and building as may be prescribed by bye- laws. (2) When the assessment list has been prepared the Commissioner shall give public notice thereof and of the place where the list or a copy thereof may be inspected, and every person claiming to be the owner, lesses or occupier of any land or building included in the list and any authorised agent of such person, shall be at libarty to inspect the list and to take extracts there from free of charge. (3) The Commssioner shall, at the same time,give public notice of a date, not less than on month thereafter, when he will proceed to consider the rateable values of lands and buildings, entered in the assessment list, and in all cases in which any land or building is for the first time assessed, (for the rateable value of any land or building is increased), he shall also give written notice thereof to the owner or to any lessee or occupier of the land or building. (4) Any objection to a rateable value or (any other matter) as entered in the assessment list shall be made in writing to the Commissioner before the date fixed in the notice and shall state in what respect the rateable value, (or other matter) is disputed, and all objections so made shall be recorded in a register to be kept for the purpose. (5) The objections shall be inquired into and investigated, and the persons making them shall be allowed an opportunity of being heard either in person or by authorised agent, by the Commissioner or by any officer of the Corporation authorised in this behalf by the Commissioner. (6) When all objections have been disposed of, and the revision of the (rateable value) has been completed, the assessment list shall authenticated by the signature of the Commissioner or, as the case may be, the officer authorised by him in this behalf, who shall certify that except in the cases, if any, in which amendments have been made as shown therein no valid objection has been made to the(rateable values) or any other matters entered in the said list. (7) The assessment list so authenticated shall be deposited in the office of the Corporation and shall be open, free of charge during office hours to all owners, lessees and occupiers of lands and buildings comprised therein or the authorised agents as such persons, and a public notice that it is so open shall forthwith be published. 125. Subject to such alterations as may thereafter be made in the assessment list under Section 126 and to the result of any appeal made under the provisions of this Act, the entries in the assessment list authenticated and deposited as provided in section 124 shall be accepted as conclusive evidence : (a) for the purpose of assessing any tax levied under this Act, of the rateable value of all lands and buildings to which entries respectively relate, ... 126. (1) The Commissioner may, at any time, amend the assessment list: (a) by inserting therein the name of any person whose name ought to be inserted ; or (b) by inserting therein any land or building previously omitted ; or (e) by striking out the name of any person not liable for the payment of property taxes ; or (d) by increasing or reducing for adequate reasons the amount of any rateable value and of the assessment thereupon ; or (e) by making or cancelling any entry exempting any land or building from liability to any property tax ; or (f) by altering the assessment on the land or building which has been erroneously valued or assessed through fraud, mistake or accident; or (g) by inserting or altering an entry in respect of any building erected, re-erected, altered or added to, after the preparation of the assessment list ; Provided that no person shall by reason of any such amendment become liable to pay any tax or increase of tax in respect of any period prior to the commencement of the year (in which the notice under sub-section (2) is given). (2) Before making any amendment under sub-section (1), the Commissioner shall give to any person affected by the amendment, notice of not less than one month that he proposes to make the amendment and consider any objections which may be made by such person. 127. It shall be in the discretion of the Commissioner to prepare for the whose or any part of Delhi a new assessment list every year or to adopt the rateable values contained in the list for any year, with such alterations as may in particular cases be deemed necessary, as the rateable values for the year following, giving the same public notice as well as individual notices, to persons affected by such alterations, of the rateable values.. .as if a new assessment list had been prepared."

(12) The aforesaid four provisions are inter-linked and inter-connected. The same have to be read together in order to ascertain the scheme of the Act with regard to the procedure which is to be followed for determination of tax.

(13) As I read the said provisions the following seems to be the scheme which emanates there from :- (A)Section 124 read with Section 127 indicates that an assessment list has to be in existence for each year. Section 127 makes it clear that for each year either an assessment list will be prepared or an assessment list of an earlier year will be adopted with such alterations as may be necessary. (b) The assessment list which is prepared and/or adopted under Section 124 and/or 127 is to be in respect of the following year in which this list is prepared or adopted. (e) If an assessment list has been prepared for a year, but amendment is to be made therein, then recourse has to be had to provisions of Section 126 of the Act. In other words. Section 126 is applicable to the current year and not to the years succeeding the year in which the notice proposing change is issued under Section 126. (d) Under provisions of Section 124 a list under sub-section (1) is first prepared. Objections are invited to the said list under sub-section (3) by a public notice and if land and building is going to be assessed for the first time, or if rateable value is proposed to be increased, then individual notices have to be given to the owners or to the lessees or occupiers of the land or building. (e) When notice is issued under Section 124(3) objections can be filed to the same under Section 124(4). These objections are to be enquired into and investigated, and only after they are disposed off, can the assessment list be authenticated under Section 124(6) of the Act. If no objections are filed then again the list prepared under Section 124(1) can be authenticated under Section 124(6). It is only thereafter that tax would become payable. (f) Section 125 provides that the list authenticated under Section 124(6) shall be conclusive subject to such alterations which may be made thereto under Section 126 or as a result of any appeal which may be filed against the authenticated list. (g) Under Section 126 the amendment in the assessment list for the current year can only be made after deciding the objections which may be filed to the notice issued under Section 126(1). Thereafter the liability to pay tax would arise.

A full bench of this Court in the case of Lok Kalyan Samiti vs. Municipal Corporation of Delhi was concerned with a case where notice under Section 126 had been issued and an increased rateable value was proposed. This increased rateable value was thereafter indicated in the list for the subsequent years which were prepared under Section 124 of the Act. One of the questions which arose for consideration before the full bench was as to whether the assessment list for the subsequent years could be modified after the disposal of objections under Section 126 or not. At page 197 of the report it was observed by this court as : - "The he effect of S. 125 is that the assessment list finalised and authenticated and deposited under sub-sees. (6) and (7) of S. 124 of the Act is subject to such alterations as may be made under the provisions ofS. 126/or the result of any appeal under the provisions of this Act. Once the list so authenticated under S. 124(6) is, by virtue of S. 125, made subject to the provisions ofS. 126, the assessment list for any year where it is subject to a notice under S. 126 is really finalised only after the investigation to the proposed enhancement has been completed and finalised; authentication and deposit of the list under S. 124(6) and (7) is subject to such finalisation."

Taking the aforsaid reasoning to its logical extent, and considering the fact that the objections under Section 126 are never decided within the year in which notice is issued, and in this particular case they have not been decided for the last 12 years, it must follow that as and when objections under Section 126 are decided then if any list has been prepared under Section 124 for the subsequent years the rateable value for those years would stand automatically amended or altered as a result of the dicision of the said objections. It must of course stand to reason that no amendment of an authenticated list under Section 124 can take place, even under the provisions of Section 125, without complying with the principles of natural justice and this would mean that if as a result of decision of objections under Section 126 for a particular year amendment is sought to be made in the duly authenticated list for the subsequent years, by virtue of Section 125, then notice will have to be given of the amendment proposed to be made before final action is taken.

(14) I think the scheme of the Act, which has been referred to herein above, may best be understood by taking a hypothetical illustration which is as follows: Let us assume that a house has been constructed and is ready for occupation as on 1st January 1976. For the assessment year 1975-76, let it also be assumed, that there is a duly authenticated list prepared under Section 124 which is in existence. It is then proposed to subject this house to property tax. What are the steps which has been or can be taken ?

(I)If it is proposed to tax this house for the year 1975-76 then notice will have to be issued under Section 126 of the Act. Assuming that such a notice is issued proposing that the Corporation intends to amend the assessment list and to determine the rateable value of the house in question at Rs. one lakh. Then the owner will have an opportunity to file objections to the proposed amendments. Assume for the sake of arguments that objections are filed but they are not decided till 1st January 1980 then by virtue of provision of bye-law 9(v) no tax becomes due in respect of the year 1975-76 till 1st January 1980 when the objections are finally determined. Bye-law 9(v) reads as under :- "Property taxes on the basis of the amended Assessment list shall be due on the day in which the amendment is formally made in the Assessment list. Provided that payment of taxes on the basis of the Assessment List, existing before such amendment cannot be withheld on the ground that some amendment is to be made in the List under this bye-law." (ii) For the year 1976-77 i.e. year subsequent to the one in which the notice under Section 126 had been issued in respect of the said house, if it is proposed to subject the said house to tax when the same will have to be included in the list prepared under Section 124(1). If such a list is prepared and a rateable value is again proposed as Rs. one lakh, which was mentioned in that notice under Section 126 even for the year 1975-76, then notice has to be issued under Section 124(3). Objections to such a notice will have to be filed under Section 124(4) within the time prescribed in such a notice. (iii) If no objections are filed under section 124(4) in respect of the years 1976-77 then the list prepared under Section 124(1) can be authenticated under Section 124(6). lf however objections are filed under Section 124(4) then the list cannot be authenticated unless and until those objections are disposed of. (iv) If objections are filed under Section 124(4) then by virtue of provisions of bye-law 3 no demand can be raised till the list is authenticated under Section 124(6) which can only be done after the disposal of objections filed under Section 124(4). Bye-law-3 reads as under: "Save as otherwise provided in the Act, property taxes shall be payable in respect of each year on the day on which the assessment list is authenticated under sub-section (6) of Section 124." As has been already pointed out Section 124(6) itself stipulates that the list shall be authenticated only after the objections have been disposed of. Therefore, the question of a person being required to pay tax till such authentication is made does not arise.

(15) From the aforesaid will follow that if objections are filed under Section 126 for the year 1975-76 and in respect of 1976-77 and onwards whenever a list under Section 124(1) is prepared and objections are filed under Section 124(4) then in neither of the cases will a person be required to pay any property tax till the objections filed either under Section 126 or under Section 124 are disposed of. This is clearly in consonance with the principles of natural justice. Both under Sections 124 and 126 opportunity is granted to file objections. It will be travesty of justice if on an assesement proposed under Section 126 an assessed is required to pay taxes for that/or future years without the Corporation first determining the objections which are filed. One thing further should be made clear. From the aforesaid example it will be seen if for the year 1976-77, on the basis of the assessment which was proposed in the notice under Section 126 for the year 1975-76, notice is issued under Section 124(3), but no objections are filed then the assessed would be liable to pay tax when a list under Section 124(6) is authenticated. Such authentication for the year 1976-77 can be done without waiting for the disposal of the objections filed under Section 126 in respect of the earlier year namely 1975-76. If the assessed had been vigilent and if a notice under Section 124(3) is given then he is given an opportunity to file objections and thereby avoid payment of taxes till the objections decided. If the assessed chooses not to file the objections despite notice being given under Section 124(3) then he will have to pay taxes on the authentication of the list, which list may be revised after the objections under section 126 are disposed of.

 (16) The next question which arises for consideration is that if for a particular year, say 1975-76, individual notice is issued under Section 126 then would it be necessary to again issue individual notice under Section 124(3) of the list prepared under Section 124(1) for the subsequent year or will the issuance of a public notice under Section 124(3) be sufficient. The Full Bench of this Court in Sok Samiti's case (Supra) has observed that :-    "ONCE a notice under S. 126 proposing an increase has already been given in respect of the land or building by virtue of bye-law No. 9, the assessment list in the year in which notice is given automatically gets amended and under S. 127 it is that rateable value which is adopted for the following year."  

 Again it has been observed in the same decision as follows :    "THEREFORE,as soon as a notice is given proposing enhancement, the assessment list, if one may say "stands provisionally amended" and rateable value is as stated therein with effect from the date proposed in the notice."  

This would mean that, taking the aforesaid example, the assessment list for the year 1975-76 would be deemed to be amended when notice is issued under Section 126. In such a case when list is prepared under Section 124(1) for the year 1976-77 this house will have to be included therein and it will be sufficient to give public notice under Section 124(3) in that case. Where, however, public notice in respect of the year 1976-77 has already been issued under Section 124(3) and it is subsequent thereto that notice for the current year, namely 1976-77 is issued under Section 126 then it would be necessary either to specify in that very notice, or to issue another notice, that it is upon to the assesses to file objections to the list prepared under Section 124(1) for the following year also. The principle is simple. The list under Section 124 for 1975-76 is deemed to be amended by virtue of the notice issued under Section 126 for that year then that house is not included in the list for 1976-77 for the first time and therefore individual notice is not necessary under Section 124(3) but if, as already mentioned above, the notice under Section 126 is issued after the time has elapsed within which objections should have been filed under Section 124 then an opportunity has to be granted to the petitioner to file objections under Section 124. Looking at the practical aspect of the case it will usually happen, or atleast it should happen, that if a notice is issued under Section 126 for the current year and thereafter a list under Section 124(1) is prepared for the subsequent year then, on the basis of the said notice issued under Section 126, the property in question should be included in the list prepared under Section 124(1) for the subsequent year. Because, as held in Lok Kalyan Samiti's case (Supra), the assessment list gets amended to the year in which notice is issued under Section 126, therefore, in law, when that property is included in the list under Section 124(1) for the subsequent year it cannot be said that the property is included in the list for the first time. Therefore, in such a case, individual notice under Section 124(3) will not be necessary. Where, however, a building is not included in the list originally prepared under Section 124(1) and is thereafter sought to be included, by reason of the notice issued under Section 126, then to my mind opportunity to file objections has to be granted by giving individual notice under Section 124(3) either by mentioning about such inclusion in the list issued under Section 124(1) in the notice under Section 126 itself or by a separate notice. The right to file objections under Section 124(4) is a very valuable right and the these ame cannot be taken away by an opportunity not being given to an assessed to file objections.

(17) Coming back to the facts of the present case, it is very sorry state of affairs which is disclosed. Notice was issued under Section 126 to the respondents way back in March 1976. 11 years have elapsed and the objections filed thereto have not yet been decided. Uptill now no demand has been raised by the petitioner because no assessment list has been authenticated. It is a Corporation which is losing revenue because of its own inefficiency and default. The assessed is also afraid that he may be asked to pay the entire amount of property tax in respect of number of years at one single point of time when the assessments are finalised. The provisions for filing the appeal also provide that it is not to be entertained till the tax in dispute is deposited. I hope that the objections which have been filed will be disposed of within a reasonable time.

 (18) Counsel for the petitioner however is right in contending that there is no levy or assessment in the present case and, therefore, no appeal could have been filed under Section 169 of the Act. Section 169(1) reads as under :    "An appeal against the levy or assessment of any tax under this Act shall lie to the court of the District Judge of Delhi."  

 It is not disputed by the counsel for the respondent that till today there is neither levy nor assessment of any tax and no demand has been raised by the petitioner. Tax can be levied or assessed only after rateable value is determined. In the present case rateable value has not been determined so far for any of the years and 1984-85 in particular. There being no such determination of levy the question of petitioner filing an appeal did not arise. It is true that this question was not urged before the Additional District Judge but it is a question of law which goes to the very jurisdiction of the lower appellate Court to entertain the appeal. On this ground alone, therefore, the order of the Additional District Judge is liable to be set aside.   

 (19) In this view of the matter I do not think it is proper to express any view or opinion on the merits of the case because the assessing authority has still to determine the rateable value which I am sure it will determine in accordance with law and keeping in view the principles which have been enunciated by the Supreme Court in Dr. Balbir Singh's case and Dewan Daulat Ram Kapur's case (Supra).   

 (20) For the aforesaid reasons this writ petition is allowed. The impugned order of the Additional District Judge is quashed. The petitioners are however directed to dispose off the objections within six months from today. Parties will bear their own costs.