Municipal Corporation Of Delhi vs Shri D.P. Gupta And Ors.
2003 Latest Caselaw 532 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. A notice under Section 126 of the DMC Act, 1957 (hereinafter referred to as 'the said Act') was issued on 20th January, 1973 by the petitioner Corporation to respondents No. 1 and 2 seeking to increase the rateable value of the property bearing No. A-41, DDA Friends Colony, New Delhi w.e.f. 1st September 1972. The respondents No. 1 and 2 filed objections on 30th January 1973 and by an assessment order dated 10th January 1986 the rateable value was increased. It may be noted that the property was earlier assessed to vacant land tax in view of the fact that the plot was not constructed upon and a notice had been issued in view of the construction on the plot.

2. The assessing authority found that though respondents No. 1 and 2 had applied for a completion certificate on 30th July 1973, admittedly the property was occupied from 1st April 1973 and had been let out. It was further noted that even an insurance policy was taken out in respect of the building in question on 3rd January 1973.

3. Respondents No. 1 and 2, aggrieved by the said order, filed an appeal before the appellate authority. The appellate authority by an order dated 29th September 1988 accepted the said appeal and set aside the impugned assessment order. The principal reason for setting aside the assessment order was the fact that the notice under Section 126 of the Act was issued for the assessment year 1972-73 and since the construction on the property of the petitioner was not completed during the said period of time and even the completion certificate was applied for later, the property could not be subjected to increase in rateable value in the said assessment year. It may be noticed at this stage that though the completion certificate was applied on 30th July, 1973, according to respondents No. 1 and 2, they occupied the property from 1st April 1973 and let out the property. It was further held that the fixation of the rateable value from 1st April 1973 could not be held to be legal in view of the fact that no notice was issued for the said assessment year.

4. The petitioner Corporation aggrieved by the said order has impugned the same in the present writ petition.

5. The controversy in question in the present writ petition, as contended by learned counsel for the parties, is limited to the issue as to whether the absence of any notice under Section 126 of the Act for the assessment year 1973-74 onwards would absolve the respondents No. 1 and 2 from paying any property tax since the notice dated 20th January, 1973 was issued for the assessment year 1972-73.

6. Learned counsel for the petitioner contends that in terms of Section 126(4)(b) of the Act, a notice issued under Section 126 of the Act continues to be valid till an order is passed on the same or there is requirement of issuance of subsequent notice under the said Section on account of increase in rateable value. It is submitted that the said amendment came into force w.e.f. 1st April 1988 by Act 10 of 1989 and provided for a period of three years for the same. It is thus contended that after the said enactment came into force, the notice issued under Section 126 of the Act would be valid for a period of three years and would thus cover even the subsequent period of assessment. Since the matter in question relates to a period prior to the said amendment, even this limitation of three years is not present.

7. Learned counsel for the petitioner has further relied upon a judgment of this court in Ansal Hotels Limited v. Municipal Corporation of Delhi, and has specifically referred to para 21 which is as under:

"...The present case has to be dealt with taking into consideration the general principal, but applicable to its own facts being a case of initial assessment of a plot in question. I am of the considered view that the petitioner cannot be permitted to evade liability to pay the property tax from the date when the petitioner himself admits the liability to pay such tax. The plea of the petitioner, in fact, was that the liability would arise only from 12.04.1996. Merely because the notice was issued purportedly under Section 126 of the said Act on 15.03.1995 while the liability to pay property tax arise from 12.04.1996 cannot the basis to defeat the liability of the petitioner for payment of such tax as also for the subsequent years, which is sought to be denied only on the ground that the notice was issued in the previous year. I am unable to accept the contention of the learned counsel for the petitioner that the effect of issuance of the notice dated 15.03.1995 and the subsequent order is that for the said assessment year, there would be 'nil' liability and, thus, for the subsequent assessment years also, in the absence of any proper notice, the same liability is liable to be adopted, which would be 'nil'. "

8. Learned counsel for respondents No. 1 and 2 assesseds, on the other hand contends that the petitioner Corporation was duty-bound to have issued a notice for the subsequent year of 1973-74 and onwards once it came to know that the property was not subject to tax for the assessment year 1972-73. It is thus contended that the consequence of the failure of the petitioner to issue the notice would be that for the subsequent years also, respondents No. 1 and 2 would not be liable to pay property tax other than the tax which would continue to operate in view of the earlier assessment as vacant land tax. Learned counsel strongly relied upon the observations of the Supreme Court in Shyam Kishore & Ors. v. Municipal Corporation of Delhi & Anr., 48 (1992) DLT 277 in para 21 of the said judgment which reads as under:

" 21. What do we understand when it is said that the Commissioner may adopt the rateable values contained in the list for any year for the year following? This really refers to adopting the ratable values given in the previous year in respect of land or building. Once a notice under Section 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 Section 127 it is that rateable value which is adopted for the following year. When the proceedings under Section 126(2) get finally determined, the assessment list gets amended with effect from the date as found in the assessment order and since the adoption of rateable value date as found in the assessment order and since the adoption of rateable value for any year was of the previous year in which the notice was given, as soon as, the assessment order for the previous year gets finalised, the demand is raised for the year in which the rateable value of the previous year was adopted for any year, on the basis of the finalisation of the assessment of the previous year."

9. I have considered the submissions advanced by learned counsel for the parties.

10. The aforesaid facts show that though the notice was issued under Section 126 of the Act on 20th January, 1973 the liability to pay increased property tax only arose from 1st April, 1973 in view of the findings of the appellate authority, there was no proof of the respondents No. 1 and 2 assesseds occupying the property prior to 1st April 1973. It may, however, be noticed that the insurance policy was taken up on 3rd January 1973 but this was sought to be explained by learned counsel for the assesseds stating that taking out of the insurance policy does not imply that the assessed has occupied the property. It is only on occupation of the building or the completion certificate that the incidence of taxation would arise taking into consideration the provisions of Section 129 of the Act.

11. In so far as the judgment in Shyam Kishore & Ors.' case (supra) is concerned, the same was considered in Ansal Hotels Limited case (supra). The Supreme Court has only observed that the assessment list gets amended from the date as found in the assessment order on the basis of the finalization of the assessment of the previous year. In my considered view, the observations in para 21 of the judgment cannot be construed to imply that even though it may have been found in a particular case, as in the present case, that the incidence of property tax would be applicable from the subsequent year, no assessment order can be passed in pursuance to the notices issued under Section 126 of the Act. It was this aspect which was considered in para 21 of the judgment in Ansal Hotels Limited case (supra) where it was observed as mentioned above.

12. The various judgments in this behalf have all been considered in the case of Ansal Hotels Limited case (supra) and I am thus of the considered view that the same principles would apply to the present case. Thus, the mere fact that the notice was issued on 20th January 1973 for the assessment years 1972-73 will not imply that an assessment order cannot be passed holding the assessed liable for tax from 1st April 1973 onwards. I am unable to accept the proposition in law that the consequence of the notice in question will mean that petitioner cannot recover property tax at all for number of years subsequently merely because no specific notice under Section 126 of the Act was issued for the subsequent year even though the basis of the assessment order is the material before the assessing authority in pursuance to the notice under Section 126 of the Act for the assessment year 1972-73. It is thus open to the assessing authority to pass an assessment for the subsequent year on the basis of the said notice.

13. In view of the aforesaid, the impugned order dated 29th September 1988 as also the assessment order dated 10th January 1986 are set aside and the matter is remanded back to the assessing authority to re-determine the rateable value in accordance with law taking into consideration the aforesaid directions. It will be open to the assesseds to produce the material relating to further developments which have taken place in respect of the property in question for the relevant assessment years in question.

14. At the cost of repetition, it may be stated that the principles of parity will apply in the present case also from the date it became self-occupied, since it is stated by the learned counsel for assesseds that the property was subsequently self-occupied.

15. Writ petition is allowed in the aforesaid terms leaving the parties to bear their own costs.

16. The assesseds to appear before the Joint Assessor and Collector on 21st July 2003 at 3.00 PM.