1. ' Saleem Akhtar, J.-- The petitioners are joint owners of a multistoreyed building known as Hamid Chamber situated at Zaibunnisa Street, Saddar, Karachi bearing property Units Nos. 4, 5 and 6 having purchased it on 25th June,1976. Originally it was a four-storeyed building including the ground floor. At the time of general assessment in the year 1968-69 the gross annual rental value
(GARV) of the building was assessed by the Excise & Taxation Officer on 20th June, 1968 at Rs,48,816 per annum. After this assessm ent two additional storeys were constructed and therefore, the GARV of the entire building including the additions was reassessed by the Taxation Officer on 27th November,1968, at Rs,54,912 per annum. On 7th August, 1980 the respondent No,3 called upon the petitioners to file the declaration on the prescribed Form PT7(A) showing therein the rents actually received by them from the tenants of the building. The petitioners accordingly filed a declaration stating that w,e,f, 1st July,1979 they are receiving Rs,1,08,000 as rent per annum. In March,1981 the petitioners made some construction on the 7th floor and started using it for their own commercial purpose.
2. ' On 3rd June,1981 the respondent No,3 issued a notice to the petitioner in Form PT 13 under rule IX as follows:- "In view of information received by me with regard to the undermentioned property owned/occupied by you, it is necessary to amend the valuation list for the reasons and in the manner indicated below so far as it relates to this property:
(1) On remand from D/G/Commissioner Property Excise b Taxation Government of Sind vide his remand No,DG/PT/Misc/80/494, dated 9th March,1981 the G.A.R.V. Of Rs,391,167 is proposed with effect from the date of occurrence from the date of construction whichever is earlier.
(2) You are hereby required to file objections, if any, in writing, to the proposed amendment within 14 days of the service of this notice."
3. ' The petitioners filed objections but the respondent No,3 by his order dated 15th October,1981 enhanced the GARV at Rs,3,91,167 with effect from 1st January, 1969 for ground floor to 6th floor and in respect of 7th floor it was effective from 1st July,1977. The petitioners filed Revision Application before the respondent No,2 who partly allowed it and on the basis of actual rent received plus rental value of 7th floor, fixed the GARV of the entire building at Rs,1,39,683 with effect from 1st July, 1979. The petitioners filed Revision Application against the said order before the respondent No,1 who by his order dated 10th May,1982 fixed the GARV for the entire building at Rs,1,15,972 w,e,f, 1st July,1979. The petitioners have challenged these orders in this petition.
4. ' Mr.Munawar Abbas the learned counsel for the petitioners has contended that after GARV had been assessed, during the currency of the valuation list such GARV cannot be enhanced because of increase in rent at a subsequent date. It was further contended that the 7th floor can be assessed only from the date of its construction.
5. ' Mr.Sarfraz Ahmed the learned Assistant Advocate-General has contended that on information that the property was under assessed, the respondent No,1 exercising suo motu powers under section 10(2) of the Urban Immovable Property Tax Act, 1958 (hereinafter referred to as the Act) ordered to reopen this case and in consequence thereof notice (Annexure 'A') was issued to the petitioners. The learned counsel supported the action of the respondents in re-opening the matter and re-assessing the GARV of the building.
6. ' The order passed by the respondent No,1 directing the respondent No,3 to make de novo assessm ent was not filed by any party. However, during argument Mr.Sarfraz has placed its photo copy on record. It seems that in February,1981 a note was submitted to the respondent No,1 that on physical inspection it was discovered that there was concealment in covered area of each floor as well as in the rent. According to this note the total rent from ground floor to 7th floor was Rs,12,043 per mensem. It was further stated that the onwers have charged handsome amount as 'pugree' for transfer of tenancy. The Director-General ordered that in view of the enquiry which reveals that the rent and the covered area were not correctly declared, the case may be remanded for de nono assessm ent to be made under section 5 of the Act. The basis of re-opening the case seems to be that according to the inquiry report the declaration given by the petitioners in respect of the covered area and the rent was not correct.
7. ' The main contention of the learned counsel for the petitioners is that the reassessment has been made on the ground that the petitioners are charging higher rent, than what Rey charged in 1968.
8. According to the learned counsel this cannot be a basis for increasing the GARV. In this regard the learned counsel has relied on Gulzar M. Chughtai v. Commissioner, Lahore Division and 2 others, PLD 1977 Lah.1060 where the following observation was made:- "A general assessm ent made under section 7 of the Act ordinarily remains in force until it is superseded by a new valuation list. The exceptions are provided in sections 9 and 10. Any alteration in the building such as may necessitate enhancement of the assessment, has been specifically provided for in section 9, clause (c), sub-clause (ii) and the statutory authority empowered in that behalf is the assessing authority and not the Commissioner. It is clear therefore that any variation in the actual rent received during the period, general assessment cannot be made the basis for revising the assessm ent or enhancing it unless of course the very first assessment is found to be defective either in law or on the ground of propriety"
9. ' The scheme of the Act is that a valuation list for every rating area is prepared which remains valid for a period of 5 years unless extended by the Provincial Government. Under section 7 of the Act the valuation list shall be made from time to time but the interval between the date of the enforcement of one valuation list and the succeeding list shall be a period of five years. Proviso (a) to section 7(1) provided that the Government may by order reduce the period not exceeding one year and extend the period not exceeding five years. It would be proper to point out that before amendment in the Act by Sind Act X of 1976 (PLJ 1976 Prov. St. Sind 155) the life of a valuation list could be extended for a period not exceeding three years. By the Sind Urban Immovable Property Tax (Amendment) Ordinance, 1978 (Ord. XVII of 1978) section 7A was added which provided that the valuation list of properties other than industrial properties existing on 30th June, 1978 shall continue to be in force from the said date and shall be the basis of levying the tax until the date on which the new lists are enforced in accordance with the provisions of section 7th or 31st December,1979 which ever is earlier. Again by Sind Ordinance, X of 1979, section 7A was replaced by a new section. By this provision the life of the valuation list of properties other than industrial properties existing on 30th June,1978 was to continue till the new list was prepared or 31st December,1979 whichever was earlier. It further provided that for the purposes of the said valuation list the annual value of the building shall be determined according to section 5 as it stood before the amendment on 1st July,1977. Finally by Sind Act V of 1980, section 7A was amended and the words "or 31st December,1979 whichever is earlier" were omitted. The effect of this amendment is that the valuation list of properties other than industrial properties existing on 30th June, 1978 shall continue in force until the date when a new list is enforced as provided by section 7. Therefore, all taxes are to be levied and assessed on the basis of the Valuation List as it existed on 30th June,1978.
10. ' Valuation list is prepared after ascertaining the gross annual rent on which such building could reasonably be let out. Section 5 and rule 6 (e) provide the manner in which the gross annual rent can be estimated. The assessing authorities should make enquiry about the gross annual rent earned or which could reasonably by earned. If the actual rent is not reasonable or fair then, the Assessing Officer may take into consideration such other facts as may be available for determining the gross annual rent. However, if the rent recovered by the owner is not fictitious or ridiculously low, the same is accepted for determining the annual rental valuation of the building.
11. In Lyallpur Cotton Mills Ltd. v. The Commissioner etc. PLD 1976 SC 615 referring to section 5 and rule 6(e) the following observation was made:- "The section read with rule 6(e) clearly contemplates that the basis of assessment should be either the actual gross annual rent or the gross annual rent that could reasonably be earned during the financial year immediately preceding the current financial year or might reasonably be expected to be let from year to year. In the present cases as there is no dispute as to the actual rents received for the disputed quarters, the basis of assessment should have been the gross annual rent earned. The interpretation sought to be put by the learned Assistant Advocate- General will result in an unreal and unreasonable situation which according to the accepted principle of interpretation of statutes cannot be accepted. The interpretation canvassed for disregards the actual position, and on the contrary accepts on basis a condition that does not exist, and the owner is called upon to pay tax on the basis of rents which he never received and perhaps never can receive. There is no allegation that the rents were deliberately kept low to illegally deprive the authorities of their rightful dues."
12. ' In the present case, the respondent while preparing the valuation list seems to have accepted that the building was rented out for Rs,54,912 upto 6th floor. As stated by the petitioners 7th floor was added in March,1981 but the respondent No,3 assessed it with effect from 1st July,1977 which has been changed to 1st July,1979 by the revisional authority.
13. ' Mr.Sarfraz the learned counsel for the respondents has contended that under section 9 the respondents are entitled to make amendments in a valuation list in order to bring the list in accord with the existing circumstances. Such circumstances will not include the fact that after valuation list had been prepared the rent has been increased by the landlord. If this argument is accepted then in case where after the enforcement of the valuation list, the rent is decreased the landlord would be entitled to claim the reduction in the GARV. The intention of the legislature is not to change the valuation list during its currency. However, amendment may be made where circumstances permit which include clerical error or misdescription. If after enforcement of a valuation list a new building has been erected or a building is destroyed, substantially damaged or altered the list can be amended to bring it in accord with the existing circumstances. As the petitioners had raised 7th floor, the respondent No,3 with a view to bring the list in accord with the existing circumstances could increase the GARV of the building. But this addition of 7th floor did not warrant the reopening of the entire case and disturb the GARV of the building which existed before such construction. The change should have been restricted to the assessment of the 7th floor. If the alterations or additions are so substantial that they change the accommodation or character of the existing building then amendments can be made under section 9.
14. ' Mr.Sarfraz further contended that in view of section 10(2) the respondent No,1 was entitled to suo motu revise and reopen the assessment. The petitioners have challenged the orders passed on 15th October,1981, 19th March,1982 and 10th May,1982 by the respondents. The suo motu order of the Director-General for reopening the case on the basis of the alleged misdeclaration by the petitioners with regard to the actual rent received by them and the area of the building has not been challenged. It is therefore, not necessary to deal with this aspect of the case.
15. ' We will examine how the respondents have proceeded with the matter after the remand. The petitioners filed objection and maintained that according to their declaration dated 1st September,1980 the rent upto 6th floor was Rs,1,08,000 per annum, i,e, Rs,9,000 per mensem. This was not accepted by the respondent No,3 as the petitioners did not produce any evidence. The respondent No,3 assessed the GARY on the basis of a formula but where actual rent in respect of any tenement was higher than the rent calculated according to departmental formula then the actual rent was accepted. There is nothing on record to show how and under what provision this formula was prepared and from which date it was effective. Again in revision the respondent No,2 relying on a report of the Inspector that for the entire building including 7th floor the petitioners are receiving actual rent of Rs,1,39,683 amended the GARV to this amount with effect from 1st July,1979.
16. The respondent No,1 accepted the petitioners' declaration dated 1st September,1980 that from sixth floor they are receiving rent for Rs,1,08,000 but he added to it Rs,7,972 being the annual rent for the 7th floor occupied by the petitioners. He, therefore, fixed the GARV to Rs,1,15,972 from 1st July,1979.
17. ' At this stage it will be pertinent to state that when the respondent No,3 served notice on the petitioners they filed objections to it. The petitioners have referred to this objection, but neither its copy was filed nor its contents were stated in the petition. During arguments we asked the learned counsel for the parties to produce a copy of the objections. Mr.Sarfraz has filed a photo copy of the petitioner's objection which has not been denied by them. We reproduce the petitioner's prayer as follows:- 'In the circumstances, the appellant prays that the said assessment proposed by the Assessing Authority may kindly be revised and the gross annual rental value of the said property may be reduced to the extent as shown in the returns dated 1st September,1980."
18. ' It is thus clear that the petitioners themselves accepted the revision of the GARV to Rs,1,08,000. This was acceded to by the respondent 3 who merely added the rent for the seventh floor which was not included in Rs,1,08,000. The fact that the petitioners were occupying the seventh floor did not debar the respondents from estimating the rent which could reasonably be earned. The petitioners did not lead any evidence to prove the rent for the 7th floor or the date of construction therefore the respondent No,1 was justified in assessing its rent which cannot be challenged. The fact that the petitioners had agreed for the assessment at Rs,1,08,000 which was not disclosed in the petition, leads to the conclusion that petitioners have not come with clean hands. Having conceded to a position which was accepted by the respondent No,1, the petitioners cannot resile from their stand.
19. Although the impugned order may be defective we are not inclined to exercise our discretion in favour of the petitioners as their conduct lacks bona fide inasmuch as after agreeing to an assessm ent for Rs,1,08,000 they are challenging it by concealing these facts. In these circumstances we dismiss the petition with no order as to costs.