1. ' This Revision under section 115, C.P.C. Is directed against concurrent judgments and decree passed in Suit No, 861/1984 (re-numbered as Suit No,776/1985) and Civil Appeal No, 33/1993, dated 17-12-1992 and 17-5-1993, respectively, whereby the suit filed by the deceased applicant-plaintiff has been dismissed.
2. ' The case of the deceased applicant-plaintiff, who had expired during the pendency of proceedings, is that he had booked Flat No, 31 on third floor in a building constructed on Plot No, 34- 35/VII, Saddar, Karachi, hereinafter referred to as the subject flat, under an agreement dated 27-10- 1977 in the sum of Rs,1,35,000 with M/s. Suleman Enterprises. The possession of the flat was received by the deceased applicant-plaintiff after completion of construction through registered deed dated 21-6-1981. According to the deceased applicant plaintiff, by such time he had changed his plans to settle at Karachi and shifted to Nawab Shah. The subject flat remained' un-used and locked for almost 1-1/2 years and on 16-1-1983 the deceased applicant-plaintiff entered into an agreement to sell the subject flat to one Qureshi Alam for a sum of Rs,1,40,000. According to the deceased applicant-plaintiff, though not necessary, the Registrar of registration demanded production of Capital Gains Clearance Certificate for effecting registration of the Conveyance Deed in terms of section 16 of the West Pakistan Finance Act, 1963 (Act IX of 1963). The deceased applicant-plaintiff, accordingly, applied for issuance of Certificate to the respondent No, 1 claiming exemption from payment of Capital Gains tax since the net profit earned by him was Rs, 5,000 and no. Capital Gains tax was payable on gain upto a sum of Rs,10,000. It is further the case of the deceased applicant-plaintiff that the respondent No, 1 arbitrarily and without providing proper opportunity of hearing determined depreciated market value of the subject flat at Rs,2,08,000 and after allowing deduction therefrom of the cost value of Rs, 1,35,000 found the deceased applicant- plaintiff to have made net gain of Rs,67,400 assessable to capital gains tax of Rs,4.740. Such order was passed on 17-1-1983 mechanically by filling up pro forma of a printed order. The appeal preferred by the deceased applicant-plaintiff before the respondent No, 2 was dismissed for non- prosecution on 26-3-1983 and application for restoration of the appeal was also dismissed on 6-4- 1983. The deceased applicant-plaintiff preferred Revision before the respondent No,3 without success and challenged all the abovereferred orders by filing Civil Suit No, 861/1984 in the XIVth Court of Senior Civil Judge Karachi South. Declaration was sought that the orders passed by the respondent were illegal, ultra vires, perverse and mala fide and were contrary to the law and spirit of the Capital Gains "Fax Act. Decree was also sought in the sum of Rs, 4,740 with interest at 2% above the bank rate.
3. ' The respondents Nos. 1 to 3 filed a joint written statement and denied the claim preferred by the deceased applicant-plaintiff. Legal pleas with regard to maintainability of the suit and bar of jurisdiction of the Civil Court were also taken on behalf of the respondents Nos. 1 to 3.
4. ' On the pleadings of the parties the following issues were settled by the Court.
(1) Whether this Court has no jurisdiction?
(2) Whether the suit is not maintainable?
(3) Whether the assessm ent of defendant No, 1 is not arbitrary, illegal and ab initio void, if so what is effect?
(4) Whether payment of capital gain is not as explained in para. 7 of the plaint?
(5) Whether dismissal of appeal of plaintiff by defendant No, 2 in nonprosecution dated 26-3-1983 is not illegal and in excess of jurisdiction?
(6) Whether order of defendant No, 3 shifting the burden of proof on plaintiff is not against all norms of equity, mala fide against law?
(7) Whether the defendants are not liable to refund Rs, 4740 jointly and severally to the plaintiff above 2% Bank rate within the meaning of section 34-A, C.P.C?
(8) Whether the plaintiff is entitled to the relief claimed?
(9) What should the decree be?
5. ' On behalf of the deceased applicant-plaintiff his attorney was examined. However, no evidence was led on behalf of the respondents. It is pertinent to mention that before settlement of the issues, an application was made under Order 7, Rule 11, CPC on behalf of the respondents Nos. 1 to 3 for rejection of plaint and by order dated 26-7-1989 the plaint was rejected by the learned Senior Civil Judge. It was held by the learned Senior Civil Judge that in view of the bar created by sectibns 15 and 17 of the Capital Gains Tax Act, the jurisdiction of the Civil Court was barred and the orders passed by the Authorities under the Capital Gains Tax Act were final. In Civil Appeal No,197 of 1989, which was preferred by the deceased applicant-plaintiff, it was urged that the order passed by the respondents Nos. 1 to 3 were without any legal justification and that by virtue of section 16(2) of the Sindh Finance Act, 1963 it was the duty of the Taxation Authority to have enquired about the value of the subject flat with reference to market value of the properties similarly situated. After hearing the arguments, the appeal was allowed by judgment dated 11-2-1990 and the matter was remanded with the following observations: "I repeat here that in, the instant case it has specifically been pleaded that the impugned assessm ent is contrary to the specific provision of law and that it has been passed with a mala fide intention. Moreover, the order passed by the assessing authority is also without any reasons whatsoever and without following the procedure as laid down in the relevant law. Accordingly, the allegations made in the plaint need thorough probe by recording evidence etc. In this view of the matter, the impugned order is not sustainable in law."
6. ' After remand the issues-,were settled and the evidence was led, as above, and after holding under issues Nos. 1 & 2 that the deceased applicant-plaintiff had failed to prove that the market value of the subject flat had not increased to what had been determined by the respondent No, 1, the suit was dismissed by judgment dated 1-12-1992. As to the question of hearing, it has been held by the learned Senior Civil Judge that the deceased applicant-plaintiff was heard in Revision and the defect was, thus, sufficiently cured. In appeal which was dismissed by the impugned judgment dated 17-5-1993, the learned District Judge, Karachi South, after referring to the relevant provisions of law, has held as follows"
7. "Mere fact that the respondents/defendants have not lead any evidence would not exempt the appellant/plaintiff from proving his case under the law considering that the onus was upon him to show that the impugned order passed by the respondents were illegal or without jurisdiction. I do not find that the impugned orders passed are either illegal, or without jurisdiction. As the orders passed by the respondents are within the provisions of law and within jurisdiction, therefore, the said orders would be final within the meaning of rule 17 of the West Pakistan Capital Gains Tax Rules, 1964."
8. At hearing, the attorney of the legal heirs of the deceased applicant plaintiff has urged that the two Courts below have failed to exercise jurisdiction without appreciating the contentions raised by him to the effect that the respondents had failed in their duty to determine the value of the subject flat with reference to the market value of similar properties in the concerned area and have arbitrarily determined the cost value of the subject flat. According to the said attorney, the guidelines prescribed by Rule 8 of the West Pakistan Capital Gains Tax Rules, 1964, were not considered at all which require the respondents to ascertain the price at which properties situated in the vicinity and used for the same purpose may have been sold or transferred at the relevant time. It was further argued that the respondent No, 1 has passed order' dated 17-1-1983 mechanically and without application of mind. In support of the above submission reliance was placed on judgment in the case of M/s. Abid & Sons Limited v. Excise & Taxation Officer, reported in P.L.D. 1985 Kar. Page 546. It has also been urged that on behalf of the respondents no witness was examined and therefore the written statement filed on their behalf could not have been considered with the result that the case of the deceased applicant plaintiff had remained unrebutted. Relianec in support of the last submission was placed on the judgment in the case of Mst. Khairul Nisa v.
9. Malik Muhammad Ishaq reported in PLD 1972 SC 25.
10. ' On behalf of the respondents, the learned counsel urged that the matter may be remanded for re-consideration by the respondent No, 1 in accordance with the requirements of the West Pakistan Capital Gains Tax Act and the Rules framed thereunder.
11. Having considered the above submissions, it may be observed that no scientific process is required to be followed in determining valuation of immovable property. The process of evaluation of the cost value and/or the market value is generally in the nature of guess work. However, arbitrariness in decision by the Authorities invested with the discharge of quasi-judicial functions which is loathe to any system of law cannot be ignored either. While it is true that a bar of jurisdiction is created by attaching finality to the orders passed by the respondents, such bar can hardly be urged when the orders passed by the respondents can be shown to have been passed in abuse of the authority which is manifest from the lack of application of mind in the present case.
12. The order dated 17-1-1983 passed by the respondent No, 1 which is base of the subsequent orders passed by the Appellate and Revisional Forums, was evidently passed of the absence of any supporting material. It seems that a printed pro forma of the order was available with the respondent No,1 and the data with regard to the subject flat and the figure work has been filled up therein. Such decision was patently arbitrary and the exercise of jurisdiction in such a manner can be equated with abuse of jurisdiction. Such abuse of jurisdiction manifests itself by making it patent that the respondent No, 1 who had the lis before him had proceeded by reason of pre- conceived notions and mis-directed himself in reaching the conclusions with regard to the market value. The findings of the respondent No,1 in the absence of any evidence is simply perverse. To say that the deceased applicant-plaintiff had failed to produce any material to rebut the findings of the respondent No, 1 leaves a lot to be desired and provides merely a cloak for the arbitrary decision as was observed in the case of Miss Fasree Fatima Awan v. The Principal Bolan Medical College, reported in P.L.D. 1978 Quetta 17; "very often a cloak is provided for arbitrary decision by mention of the words that some better evidence or the best evidence has not been produced, but the fate of the matter may well be that the available evidence is over looked."
13. The principles with regard to assessment of valuation are quite explicitly laid down in a Division Bench judgment of this Court in M/s Abid & Sons Limited (supra) in the following words: ' The first principle enunciated in rule 8 is that the value of consideration of sales, or, transfers of similarly situated and similarly used urban immovable property could be adopted for assessing the cost. In that respect, it may be said that the correct criterion to be followed is that the price at which properties situated in vicinity and used for same purposes could be taken into consideration.
14. 'We would wish to make it clear that the price at which one property may have been sold would also not be sufficient, for the use of plurals viz. Sales and transfers is significant, and would point out that the statutory authorities must take into consideration a number of sales and transfers. One of the methods of valuation, which has been recognised by various judicial decisions, is by reference to the following factors:-
(i) The price paid within a reasonable time for the land.
(ii) Rates and profits of land received shortly before the sale.
(iii) Price paid for adjacent lands possessing similar advantages.
(iv) The opinion of valuater or experts."
15. ' The consideration of the aforesaid factors would in a vast majority of cases be correct guidelines and save a statutory functionary from criticism on ground that the decision is arbitrary."
16. ' Besides, the West Pakistan Capital Gains Tax Act being a fiscal Statute has to be considered with some exactness. Indeed, if the authorities are of the view that the value disclosed is incorrect, they can form their own estimates, but such estimates too have to be in accordance with the rules, reasonableness and best judgement. In the present case the respondent No, 1 had evidently ignored even the guidelines provided in rule 8 of the West Pakistan Capital Gains Tax Rules, 1964, Such aspect, despite an observation contained in the remand order dated 11-2-1990 passed in Civil Appeal No, 197/1989 has not been considered in the judgments impugned in this Revision.
17. The attorney of the legal representatives of the deceased applicant-plaintiff has further drawn my attention to the provisions of section 16 of the Act IX of 1963 and Rule 8 of the West Pakistan Capital Gains Tax Rules 1964 which being relevant are reproduced hereunder: {{PAGE CUT IN BOOK}} "16.(1) A capital gains tax shall be levied on any profits or gains arising from the sale, exchange or transfer of immovable property effected after the 30th day of June, 1963, within urban areas specified by Government under section 3 of the West Pakistan Urban Immovable Property Tax Act, 1958 (West Pakistan Act No, V of 1958); Providec that the tax shall not be levied on the transfer of immovable property it conseqUence of the compulsory acquisition thereof under any law fo: the time being in force relating to compulsory acquisition of propert) for public purposes, or the distribution of immovable property on tfu total or partial partition of a Hindu undivided family or the distribution of such property for the dissolution of a firm or other association o persons or on the liquidation of a company or under a deed on gift bequest, will or transfer on irrevocable trust.
(2) The amount of the capital gains shall be computed after making the following deductions from the full value of the consideration for which the sale; exchange or transfer of property is made:---
(a) expenditure incurred solely in connection with each transaction, and
(b) actual cost to the assessee of the property including any expenditure of a capital nature incurred and borne by him in making any. Additions or alterations thereto?
18. ' Provided that:---
(i) Where a person who acquires a property from the assessee, whether by sale, exchange or transfer is a person with whom the assessee is directly or indirectly connected or where the authority making the assessm ent has reason to believe that the sale, exchange or transfer was effected with the object of avoidance or reduction of the liability of the assessee the full value of the consideration for which the sale, exchange or transfer is made shall be taken to be the fair market value of the property on the date on which the sale, exchange or transfer took place;
(ii) Where the immovable property was acquired by the assessee before the first day of January, 1950, he may on proof of its fair market value on the said date to the satisfaction of the assessing authority, substitute for the actual cost such market value which shall be deemed to be the actual cost to him of the immovable property;
(iii) where the immovable property became the property of the assessee by succession, inheritance or devolution, or under any of the circumstances referred to in the proviso to subsection (I) its actual cost allowable to him for the purpose of this subsection shall be its actual cost to the previous owner thereof.
(3) The tax shall be levied according to the scale set out in the Seventh Schedule to this Act.
(4) Government may by notification exempt any class of immovable property from the levy of tax under this section."
19. ' Rule 8 of West Pakistan Capital Gains Tax Rules runs:--- ' "If in the opinion of the Excise and Taxation Officer, the actual cost of property, as stated by the assessee is not correct and is to be determined in pursuance of clause (ii) of the proviso to subsection (2) of section 16 of the Act, or the value of the consideration in terms of money is to be determined in pursuance of rule 7, the excise and Taxation Officer may, among other factors, take into consideration--
(i) the value of consideration of sales or transfers of similarly situated and similarly used urban immovable property made in the year 1950, or as the case may be, made on or about the time of the sale or transfer in question; or
(ii) the gross annual value of such property in the year 1950, or as the case may be, in the year of sale or transfer, ascertained, for the purposes of any law relating to tax on urban immovable properties then in force in the urban area, and fix the actual cost or, as the case may be, the value of consideration, at an amount exceeding fifteen times but not exceeding twenty times the gross annual value."
20. It is contended on behalf of the applicants/plaintiffs that the orders passed by the respondents Nos. 1 to 3 are not in conformity with the above provisions. Such provisions require issuance of notices in the prescribed form and giving opportunity to lead evidence to the proposed assessee.
21. Reliance was placed to substantiate the above contention again on the judgment in the case of Abid & Sons Limited (supra) wherein the salient features of the abovereferred legal provisions have been noted down as follows: ' "Having stated the relevant salient features, appearing in the West Pakistan Finance Act of 1963 and the West Pakistan Capital Gains Tax Rules, 1964, the following results emerge:---
(i) That, after a sale is completed, the seller shall disclose all the particulars as are stated in CGT-I form.
(ii) The Assessing Authority shall examine that form to find out the correctness, or, otherwise of the disclosures.
(iii) That out of the sale price, the assessee can conduct the actual cost incurred, or, borne by him for the initial purchase of the property, together with expenditure of capital nature borne by the seller in making any additions or alterations.
(iv) If the Assessing Authority is satisfied with the disclosures in form CGT-I, he shall call upon the seller to pay the tax, which is payable on the basis of such disclosures,
(v) If the Assessing Authority, on examination of form CGT-I, comes to the conclusion that the seller and purchaser are directly or indirectly connected, or, if he comes to believe that the transaction has been effected with the object of avoidance and reduction of the liability to pay the tax, then he can open the case by issuing a notice in form CGT-_ III.
(vi) After giving the notice in form CGT-III the Assessing Authority shall afford to the seller a hearing and also give him an opportunity to lead evidence on the point.
(vii) After hearing and examination of witnesses, the Assessing Authority shall determine the full value of the consideration for the sale, which shall be taken to be the fair market value of the property on the date of sale.
22. (viii)For the purposes of arriving at such conclusions in regard to the full value, or, consideration, the Assessing Authority shall have to consider the price at which sales, or, transfers of similar situated properties have been effected,
(ix) That the decision of the Assessing Authority shall be according to best judgment."
23. Applying the above principles, in the present case, the respondents have not placed on record any material to establish due compliance with the above referred legal provisions. The sole witness examined in the matter did make following statements during his evidence in Court: ' The defendant No, 1 innovated its own sale and purchase to make out a case for recovery of tax of Rs,4,740."
24. ' "The plaintiff filed an appeal before the Director Collector Excise and Taxation, Karachi which she dismissed without a notice to the plaintiff as the notice posted by her reached with the plaintiff advocate after the date of hearing."
25. ' "The plaintiff filed a Revision before the Director General Excise Sindh, Karachi which he also dismissed shifting the burden of proof on the plaintiff."
26. ' "The orders of the defendants Nos. 1, 2, 3 are arbitrarily illegal, and or in violation of the judgment of the Honourable High Court passed in his behalf. "
27. ' The above statements made in the examination-in-chief were not questioned in the cross- examination. No evidence, whatsoever, was led on behalf of the respondents with the result that even the written statement filed on behalf of the respondents lost its evidentiary value. With such position on record, there was hardly any justification to uphold the orders passed by the Taxation Authorities. It is an established position of law that the Civil Courts being the Courts of plenary jurisdiction have the inherent jurisdiction to strike G down an order which is patently illegal and in excess of jurisdiction. Reference in this behalf may be made to the case of Federation of Pakistan v.
28. Malik Ghulam Mustafa Khar, reported in P.L.D. 1989 SC 26.
29. ' The stand taken on behalf of the respondents for remand of the matter to respondent No, 1 also cannot be accepted since these proceedings have arisen out of the civil suit seeking declaration and decree for money in following terms:
(a) If he declared that order of defendants Nos. 1 to 3 viz dated 17-1-1983, 26-3-1983 and 20-12-1983 respectively are illegal, ultra vires, perverse and mala fide and are passed against law and spirit of Capital Gains Tax Act.
(b) Decree for a sum of Rs,4740 with 2% above Bank rate till the date of realization against the defendants be passed jointly or severally."
30. ' Since I have already found that the order dated 17-1-1983 passed by respondent No, 1 cannot be sustained at the touchstone of law laid down in the case of Abid & Sons Limited (supra) with the result that the subsequent orders based on the said order passed by the respondent No, I also fall to the ground. The deceased applicant-plaintiff, therefore, was entitled to declaration and decree for money, as claimed, subject to the modification that interest would be payable from the date of the decree. The principles laid down in the case of Abid & Sons Limited had apparently escaped the notice of the two Courts below and are applicable to the present proceedings.
31. ' In the circumstances, this revision application is allowed, the judgments dated 17-12-1992 and 17- 5-1993 passed in Civil Suit No,776 of 1985 and Civil Appeal No, 33/1993 by the learned Vth Senior Civil Judge Karachi South and the District Judge, Karachi South are set aside and it is declared that the order dated 17-7-1983 passed by respondent No, 1 and the subsequent orders based thereon dated 26-3-1983 and 20-12-1983 passed by the respondents Nos. 2 & 3 respectively are unlawful, of no legal effect and contrary to law. The suit of the applicants is decreed in the sum of Rs, 4,740 with simple interest at the rate of 14% from the date of decree till realisation against the respondents Nos.1 to 3 who are liable to pay the same jointly as well as severally. The applicants shall also be entitled to the costs throughout.