Karnataka High Court Issues Guidelines To Be Followed While Reopening Self-Assessment Of Property Tax

The Karnataka High Court has issued guidelines to be followed by Bruhat Bengaluru Mahanagara Palike (BBMP) while reopening self-assessment of property tax against property owners where returns are not filed and in cases of random scrutiny.A single judge bench of Justice S Sunil Dutt Yadav said “It is noticed that in most of the petitions filed by the property owners, the contention that is taken is that the demand notice raised as well as the show cause notice issued, are not preceded by the procedure stipulated under the Bruhat Bengaluru Mahanagara Palike Act, 2020 and accordingly, it is submitted that unless there is an inspection in their presence, the consequential notices and orders are required to be set aside.” Further it said, “In light of numerous petitions filed questioning the correctness of the procedure followed by BBMP while reopening the self-assessment returns, need has arisen to lay down the procedure that is required to be followed in cases of reopening self-assessment where returns are not filed and in cases of random scrutiny.” Accordingly it issued the following directions: 1: Section 144 (13) of the Act provides for the procedure in cases of random scrutiny where returns are already filed and in cases where returns are not filed as stipulated under sub-section (7) of Section 144 of the Act, the Chief Commissioner or any person authorised by him may enter, inspect, survey or measure any land or building after giving notice to the owner or occupier. It is the first step as stipulated under Section 144(13) of the Act which would come into play either in case of random scrutiny or in case of evasion where though properties are constructed and liable for tax and returns under self-assessment ought to have been filed, such returns are not filed. 2: In such of the above cases in terms of Section 144(13) of the Act, the Chief Commissioner or person authorised by him may inspect, survey and take measurement of the building. However, it is clear that such inspection, survey or measurement must be after giving notice to the owner or occupier. 3: In terms of Section 144(13) of the Act, at the time of inspection, owner or occupier is bound to furnish necessary information required, which would be the basis for the purpose of reassessment.4: Even where there is an incorrect self-assessment return filed by the property owners, resort to inspection under Section 144(13) of the Act is required to be conducted.5: At the time of inspection, if the property owner or occupier refuses to allow the authorised officer to inspect the premises even after the officer has given reasonable opportunity, such refusal shall be recorded and the officer shall proceed to assess the property to the “best of his judgment”. 6: The power of the officer to proceed on the premise of “best judgment assessment" would also come into play where the property owner refuses to furnish information required, as such information would be only in the knowledge of the property owner. This requirement of furnishing of information in the event of reassessment would arise where there are disputes relating to the year and the month when the property was let out as in many disputes it is found that the self-assessment made declaring portion of the property as self-occupied and tenanted, is disputed by the respondent – BBMP. However, such necessity of furnishing information will also arise regarding the usage of the premises, i.e., whether the premises is used for residential or non-residential use.7: At the time of inspection if the Chief Commissioner is seeking to reopen the self-assessment, he is required to ascertain relevant facts making out grounds for reopening of self-assessment including relating to the applicable zone. 8: Subsequent to the report prepared after the procedure to be followed under Section 144(13) of the Act as referred to above, procedure under Section 144(15) would then come into operation.9: For the purpose of reopening such assessment in terms of the contingencies referred to above i.e., (i) random scrutiny (ii) where no returns are filed and (iii) where self-assessment is found to be faulty, proceedings under Section 144(15) of the Act will have to be followed.10: In terms of the procedure under Section 144(15) of the Act, it is clear that procedure under Section 144(15) (a) to (e) of the Act will have to be followed, in the event on the basis of the physical inspection and information gathered and preparation of report by the officer as contemplated under Section 144(13) of the Act, it is found that reassessment of the self-assessment property tax return is required to be made. 11: In terms of the reassessment made by the authority on the basis of the report after inspection, the penalty as contemplated under Section 144(15)(b) of the Act will come into play along with interest to be paid on the fresh demand. 12: Right is conferred upon the property owners for notice under Section 144(15)(c) of the Act...

Karnataka High Court Issues Guidelines To Be Followed While Reopening Self-Assessment Of Property Tax

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