A report filed by the D.C. Auditor's Office claims that city tax officials cost the city $2 million through inadequate commercial assessments - and then lied about their actions to a Superior Court judge.

In papers filed Friday before Superior Court Judge John Garrett Penn, the auditor's office says about 200 buildings in a dense, expensive, commercial section of downtown Washington were arbitrarily excluded from reassessments that raised land values on may surrounding buildings. Tax officials knew that, the report charges, when D.C. finance director Kenneth Back told Penn six months ago that the whole downtown area had been reassesse.

Back was not available for comment yesterday, but he denied the auditor's charges in a written response that was also filed before Judge Penn.

"The auditor's findings are based upon a misinterpretation of the reassessment process," Back wrote. The properties in question were studied and revalued, he insisted, by junior assessors and a supervisor who based his findings on "the real estate market data and other data available to him. If this is not a reassessment, I am at a loss to know what is."

In fact, the city has been embroiled for three years now in a complicated public controversy over just what does constitute proper assessment procedure. Friday's report is the most recent knot in a legal and administrative tangle that has left almost everybody - official and taxpayer alike - either angry or very confused.

Three years ago, a Washington couple named Tom and Marguerite Kelly sued the District on behalf of themselves and some 60,000 other homeowners. The suit charged that tax assessors were working haphazardly throughout the city, revaluing some properties every year while others were ignored, and that as a result many homeowners had suffered what they considered unfair tax increase.

Judge Penn heard the case, and his finding, referred to now as "Kelly I," supported the homeowners. The city had argued that it simply did not have enough assessors to revalue each property yearly, so Penn ordered the District to divide its properties into two groups for assessment purposes. Each group, Penn ruled, would be assessed every other year.

Properties assessed in 1973, Penn ruled, would constitute "Group A," and they were not to be reassessed until 1975. All remaining properties would be called "Group B," and Penn ordered that they be assessed in 1974.

In 1975, then, following Penn's order, city tax assessors said they were revaluing only Group A properties. That same year, Congress passed a law requiring D.C. to conduct annual property assessments.City officials, saying they had to abide by the congressional law, then reassessed citywide in 1976 - bringing new, and frequently higher, properly values to owners in both Groups A and B.

The city went back to Judge Penn, asking that his two-year assessment plan be abandoned. Group A taxpayers protested. They had been promised biennial assessments, they said.

Penn upheld the taxpayers. Canceling the cyclical assessments "would result in an arbitrary and discriminatory action against Group A property owners," he wrote, in a ruling now referred to as "Kelly II." Allowing the city to once again assess yearly. Penn declared, "would undo what was accomplished in Kelly I."

The 1976 Group A assessments, Penn ruled, had not been justified. He ordered the city to roll back its assessments to the 1975 level, and before doing so, he asked whether tax assessors had in fact reassessed all the properties included in Group A.

Back told him they had.The assessments were rolled back. Then in May, at the request of the City Council's finance and revenue committee, assistant D.C., auditor Carl Bergman began examining the levels of 1975 and 1976 assessments.

"Lo and behold," Bergman said, in an interview yesterday. "I found a significant number that had not changed . . . I found some that hadn't changed since fiscal 1971."

Bergman's findings, which made up the report filed Friday, suggested that Back had been wrong in saying assessors had revalued all Group A properties during 1975. They suggested, in fact, that a sizable and very expensive chunk of Group A buildings had been systematically excluded from the reassessment - and that in some cases, the owners were paying taxes on assessments seven years out of date.

West of 15th Street NW, south of Massachussetts Ave., north of Pennsylvania, and east of Rock Creek Park - this is the section, most of it heavily developed commercial property, that Bergman's report says was not assessed when it should have been.

The result was a $2 million loss of as valuable properties were undervalued. In some cases, the report says, the exclusions led to starting disparities in 1975 assessments for buildings that apparently stood on opposite the area allegedly excluded from assessments) was valued in 1973 at $6,910,572, and in 1975 at $6,903,670, the report says - a difference Bergman says is small enough to be accounted for simply by an error in rounding off. By contrast, a buil-ing across the street on the south side was assessed in 1973 at $3,694,891, and in 1975 at $7,500,000, the report said.

Not all disparities were this large, and in some cases the assessments outside the alleged "boundary areas" dropped rather than increased. Officials in auditor's office believe that the overall loss to the city in tax revenues can be put at about $2 million.

Back's response to the auditor's report denies completely the suggestion that tax assessors ignored certain parts of the Group A area.