Capital value under building tax law must follow statutory valuation; mistaken return entries are not conclusive.

Under the Kerala Building Tax Act, 1975, the capital value of a building must be determined in accordance with the statutory scheme, with the assessing authority forming an opinion on relevant materials, giving the assessee an opportunity of being heard, and not mechanically adopting the figure stated in the return. A mistaken admission in the return is relevant but not conclusive, and the assessee may resile from it, including at the appellate stage, by showing that it was made under a mistake. An assessment based solely on such a mistaken return, without independent application of mind or disclosure of the basis of valuation, is inconsistent with Article 265 and is invalid.

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Issues: Whether an assessee who mistakenly stated the capital value in the return under the Kerala Building Tax Act, 1975 could resile from that admission and require the assessing authority to determine the capital value in accordance with the Act, and whether an assessment based solely on the mistaken return was valid.

Analysis: The base of levy under the Act is the capital value of the building, which is statutorily linked to the annual value and is to be determined in accordance with the Act. Where the local authority's annual value is considered too low, the assessing authority must form an opinion on relevant materials, give the assessee an opportunity of being heard, and then determine the annual value and capital value under the statutory scheme. The assessment in question was made by mechanically adopting the figure stated in the return, without independent application of mind, without disclosing the basis of assessment, and without following the procedure required for departure from the municipal valuation. An admission in the return is relevant but not conclusive, and an assessee is entitled to show that the statement was made under a mistake. Such a plea can be raised even in appeal. An assessment contrary to the statutory basis prescribed for the levy is inconsistent with Article 265 of the Constitution of India.

Conclusion: The assessee was entitled to resile from the mistaken statement in the return, and the assessment based solely on that mistaken admission was invalid.

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