V.S. Desai, J.
1. This is a petition under article 226 of the Constitution praying for an appropriate writ for quashing the notice of demand and the consequent recovery proceedings instituted on the basis of the said demand.
2. The petitioner is a permanent resident of Jamnagar and has been all along doing business at Jamnagar. On March 30, 1955, he was served with a notice under section 34 of the Income-tax Act for the assessment year 1946-47 by the Income-tax Officer, B. ward, Jamnagar. Subsequently, in November, 1955, the case of the petitioner instituted on the said notice, which was served on him on March 30, 1955, was transferred by the Central Board of Revenue to the Additional Income-tax Officer, Section III (Central), Bombay, the first respondent herein. On or about January 27, 1956, the petitioner was informed of the said transfer and subsequently notices under sections 22(4) and 23(2) were issued on February 6, 1956, and served on the petitioner on February 9, 1956. The petitioner did not comply with these notices and the Income-tax Officer proceeded to make a best judgment assessment under section 23(4) of the Income-tax Act. On March 29, 1956, the petitioner was served with a notice of demand under section 29 of the Indian Income-tax Act intimating to him that a sum of Rs. 97,2223-7-0 had been determined as payable by him and calling upon him to make the payment in respect of the said demand as directed therein. No order of assessment, however, was supplied to the petitioner along with this notice of demand. The petitioner made repeated requests to respondent No. 1 to furnish him with the assessment order for the assessment year 1946-47 and ultimately on May 7, 1956, the petitioner was informed that the alleged assessment order of 1946-47 was not traceable. Thereafter if appears that recovery proceedings were commenced by the Department by issuing a certificate under section 46(1) of the Indian Income-tax Act to respondent No. 2 the Additional Collector of Bombay. On August 16, 1960, prohibitory orders were issued by the second respondent in the said recovery proceedings. The petitioner requested respondent No. 1 to withdraw the said recovery proceedings alleging that they were illegal but the first respondent declined to do so. The petitioner thereafter filed the present petition on November 12, 1960, praying for a writ to quash the notice of demand and the recovery proceedings and for directions restraining the respondents from taking any further action in pursuance of the said notice of demand.
3. The petitioner's case is that the notice of demand under section 29 can be issued only when any tax is due in consequence of any order passed under or in pursuance of the Act and where such order does not exist no notice of demand can be issued. The petitioner avers that in the present case there has been no assessment order passed by the Income-tax Officer and consequently he had no jurisdiction to issue a notice of demand or to institute recovery proceedings on the basis of the said notice of demand. In reply to the petition, an affidavit has been filed by the first respondent, the Additional Income-tax Officer, Section III (Central), Bombay. The first contention set up in this affidavit is that the petitioner is not entitled to maintain a writ application under article 226 of the Constitution because he has the remedy by way of an appeal available to him under the Income-tax Act. It is then contended that the petitioner's allegation that there was no assessment order passed is not correct. It was urged that in view of the letter, which was sent to the petitioner on May 7, 1959, informing him that the assessment order was not traceable and in view of the presumption applicable to the due performance of all official acts, it should be presumed that the assessment order as was required to be passed was duly passed in the present case. It was also contended in the alternative that under the provisions of section 23(4) what was required to be done by the Income-tax Officer was to make the assessment to the best of him judgment and determine the sum payable by the assessee on the basis of such assessment; and that such assessment was duly made by the Income-tax Officer and the sum payable by the petitioner on the basis of such assessment was also duly determined by him. An exact copy of the assessment form for 1946-47, which was available on the records of the office and which was signed by the officer who had made it, was sent to the petitioner by the Department on May 27, 1960. It was contended that the said assessment form which was duly signed by the Income-tax Officer and a copy whereof was served on the petitioner could be construed as an assessment order made under section 23(4) so as to enable the petitioner to avail himself of the remedies open to him in law. It was, therefore, contended that the notice of demand dated March 29, 1955, was not a nullity but was issued on the basis of a valid assessment order made by the Income-tax Officer.
4. Mr Joshi, learned counsel appearing of the respondents, has urged that the petition is also liable to be dismissed on the ground of delay. The notice of demand, which is sought to be quashed in the present proceedings, was served on the petitioner so far back as March 29, 1956, and the present application, which has been filed more than four years thereafter suffers from gross delay. We do not think that the petition could be dismissed on the ground of delay. It is no doubt true that the notice of demand was served on the petitioner on March 29, 1956, but the petitioner was not supplied with the assessment order although he had made repeated applications for the same and it was only in the month of May, 1959, that he was informed that the order of assessment was not traceable. Thereafter nothing was done until the prohibitory orders were issued and served on the petitioner on August 16, 1960. It is the petitioner's case that the notice of demand was a nullity and without jurisdiction. He was not affected by the said notice of demand until the prohibitory orders were issued in the recovery proceedings instituted by the Department. The present application has been filed without any unnecessary delay after the said prohibitory orders were served on the petitioner and his interest was seriously and effectively affected. It was not necessary for the petitioner to complain of the notice of demand, which, according to him, was a nullity, until some action was taken in pursuance of the said notice of demand, which really and effectively affected his interest. In our opinion, therefore, the petition is not capable of being rejected on the ground of delay.
5. As to the other contention taken by the Department in the affidavit that the petition is not maintainable on the ground of alternative remedy being available by the way of an appeal, the said contention also, in our opinion, cannot avail the Department in the present case. The remedy of appeal can hardly be regarded as an effective and efficacious remedy if the reasons for passing the order to be appealed from are not supplied to the party. In the present case the petitioner has not been supplied with the assessment order which should be expects to contain the main reasons. That being so, the said contention raised by the Department cannot be accepted.
6. Mr. Joshi then contended that is is not necessary that there must be an order before a notice of demand can be issued under section 29 of the Indian Income-tax Act. He urged that on the construction of section 29 when any tax was due in pursuance of the Act, a notice of demand could be issued under section 29. He invited our attention in that connection to the provisions of sections 23(1) and 23(4) and pointed out that neither to these two sub-sections refer to an order of assessment. It was only in section 23(3) that an order in writing assessing the total income of the assessee and determining the sum payable by him on the basis of such assessment was required to be passed. On the construction of section 29, it seems to us impossible to hold that except in consequence of an order passed under or in pursuance of the Act a notice of demand is capable of being issued. That section reads as follows :
'29. When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable.'
7. There can be no doubt whatever that the words 'due in consequence of any order passed under or in pursuance of this Act' must be taken together and it is not possible to split these words and read them as suggested by Mr. Joshi, because if that construction is accepted, it will be not only an ungrammatical construction but will also leave the words 'in consequence of any order passed under' hanging in the air. On a plain and proper reading of the language used in the section, therefore, it seems to us clear that it is only when a tax is due in consequence of any order passed under or in pursuance of the Act that the Income-tax Officer will be expected to serve on the assessee or other person liable to pay the tax, a notice of demand in the prescribed form.
8. Mr. Palkhivala, the learned counsel for the petitioner, has urged that even apart from the construction of section 29, sections 23(1) and 23(4) as well as several other sections of the Income-tax Act make it abundantly clear that even in cases falling under section 23(1) and section 23(4) an order of assessment is necessary to be passed.
9. We do not wish to go into a detailed discussion of the argument advanced by the learned counsel in that connection because it seems to us clear beyond doubt on a plain reading of section 29 itself that no notice of demand can be issued in the absence of an order passed under or in pursuance of the Act. In order that the tax determined under section 23(1) and 23(4) should be recoverable by the issue of a notice of demand under section 29, an order declaring the tax to be due will have to be passed even in the cases covered by section 23(1) and 23(4) of the Act.
10. The next question then is whether such an order was passed in the present case before the notice of demand was issued to the petitioner on March 29, 1956. Now, no affidavit of the officer, who had made the said assessment, has been put in on behalf of the respondents in the present case. Respondent No. 1, who has made the present affidavit, has no personal knowledge as to whether such an order was made by his predecessor or not. His denial, therefore, of the petitioner's allegation that the assessment order was not passed has no meaning. As we have already pointed out, an order in consequence of which the tax is due is required to be in existence before a notice of demand under section 29 can be issued. The petitioner has alleged that no such order exist. His allegation receives considerable support from the facts that although within a short time of his having received the notice of demand he had applied for a copy of the order and although thereafter he had repeated his demand from time to time, he was not supplied with a copy of the order and three years later he was informed that the order was not traceable. In these circumstances, it would be for the Department to satisfy us that an order an was required to be passed under the law was passed in the present case. The respondent No. 1 wants to rely on the existence of such an order, firstly, relying on the presumption relating to the due performance of the official acts. The argument in this connection is that since a notice of demand with an assessment form in the prescribed manner, which follow on the making of the order, have been sent to the petitioner in the present case, the antecedent act of making the order should be presumed to have been done. We do not think that the presumption relating to the due performance of the official acts can be availed of in the manner in which the respondents want to avail of the same. The said presumption only relates to the proper performance of the act where the act is proved to be done. It does not relate to the doing of the act itself, which, it is alleged, has not been done. The issuing of the notice of demand along with the assessment form in the prescribed manner will not, therefore, suffice to raise a presumption that the assessment order was duly and properly made.
11. It is then contended that since an exact copy of the assessment form signed by the officer, who made the assessment, exists on the record of the office, it should be presumed that an assessment order was also made by the officer.
12. Now, we do not see how the existence of this document can raise a presumption as to the existence of the assessment order prior to the sending of the demand notice along with the assessment form in the absence of material put before us showing in what circumstances this copy of the assessment form signed by the officer came to be on the record of the Income-tax Department. The contents of this assessment form are the same as those contained in the assessment form which was sent to the petitioner along with the notice of demand. Whether this document, on which the Department wants to rely, was made earlier, later or contemporaneously with the assessment order is not possible to be known. It is not, therefore, possible to raise an inference that an assessment order as is required for the purpose of enabling the officer to issue a notice of demand existed in the present case before the notice of demand was issued. Since the notice of demand requires a condition precedent to its issue, an order of assessment, and since the said condition is not shown to have been satisfied in the present case, we must uphold the petitioner's case that the notice of demand, which has been issued to him, is not in conformity with the provisions of section 29 of the Indian Income-tax Act and is, therefore, illegal and without jurisdiction. The consequent recovery proceeding must also, therefore, be held to be without jurisdiction. In our opinion, therefore, the petitioner is entitled to succeed in the present petition which he has filed.
13. We accordingly order that the notice of demand issued on March 29, 1956, demanding the payment of Rs. 97,223-7-0 and the consequent recovery proceedings in so far as they relate to the recovery of the said amount be quashed and the respondents be restrained from taking any action in pursuance of the said notice of demand and the recovery proceedings instituted on the basis of the said demand.
14. The rule is accordingly made absolute. The petitioner will get his costs from respondents Nos. 1 and 2.
15. Petition allowed.
16. Rule made absolute.