H.N. Seth, J.
1. Briefly stated, the facts giving rise to these three petitions, seeking relief under Article 226 of the Constitution, are that in the City of Agra, there is a firm which carries on business in the name and style of M/s. Ganeshi Lal & Sons, During the year relevant to the assessment year 1967-68, the firm had ten partners who used to be, in respect of their share income from the firm, assessed to income-tax as individuals. It isclaimed that during the year relevant to the assessment year 1968-69, some partners of the firm retired as a result of which the firm stood dissolved and a new firm consisting of the remaining partners came into existence and this new firm continued to carry on the business in the same name. Subsequently, there were other variations in the firm and the firm, as it stands today, is constituted of eight partners. Some of those partners are, in respect of the share income derived by them from the firm, being assessed as individuals, the remaining partners are, in respect of such share income, being assessed as members of their HUF.
2. In due course, the firm was assessed to income-tax for the assessment year 1966-67, and for the same year, its partner, namely, Shri Sheo Mohan Lal, representing his HUF, was assessed to tax under the provisions of the W.T. Act.
3. On 28th October, 1976, the main business premises of the firm, as also its show-rooms at Hotels Clerk, Shiraz and Holiday-Inn and the residential premises of its partners were searched by the I.T. authorities. As a result of the search, the I.T. authorities are said to have seized considerable amount of jewellary, etc., as also certain books of the firm.
4. On 31st March, 1976, the ITO issued notices under Section 148 of the I.T. Act to the firm, M/s. Ganeshi Lal & Sons, for reopening the firm's assessment for the year 1967-68, and requiring it to file a revised return of the income. Likewise, on the same day, the WTO issued notices under Section 17 of the W.T. Act to Sri Sheo Mohan Lal (HUF) and Shri Brij Mohan Lal for making fresh assessment of their wealth for the year 1967-68 which according to the WTO had escaped assessment.
5. The three petitioners then filed objections before the ITO and the WTO. They claimed that the proceedings initiated against them were illegal and, as such, they should be dropped. However, as the ITO and the WTO did not agree to drop these proceedings and they intended to continue the same, the petitioners approached this court for obtaining necessary relief under Article 226 of the Constitution.
6. Whereas the petitioner in Writ Petition No. 340 of 1976 is the firm, M/s. Ganeshi Lal & Sons, the petitioners in Writ Petitions Nos. 347 and 348 of 1976 are Sri Sheo Mohan Lal and Sri Brij Mohan Lal. All the three petitioners contend that the proceedings for reopening their assessments under the provisions of the I.T. Act and the W.T. Act are barred by time and that they have been initiated without serving a proper notice upon them. They further claimed that there was no material on the basis of which either the ITO or the WTO could reasonably believe either that the income or the wealth of the petitioners had, for the assessment year 1967-68, escaped assessment. The proceedings initiated by the ITO/WTO are, therefore, without jurisdiction and are liable to be quashed.
7. Learned counsel appearing for the petitioners contended that in order to reopen the assessment proceedings notice under Section 148 of the I.T. Act as also those issued under Section 17 of the W.T. Act; should not only be issued within eight years of the end of the relevant assessment year but they should also be served upon the persons concerned within the same time (See CWT v. Kundan Lal Behari Lal : 99ITR581(SC) ). He urged that in these cases, the notices which were issued to the petitioners by registered post were served upon them only on 2nd April, 1976, i.e., more than eight years after 31st March, 1968. These notices were thus clearly barred by time. The respondents do not deny that notices under Section 148 of the I.T. Act and Section 17 of the W.T. Act were issued to the petitioners by registered post and that those notices were served on the petitioners on 2nd April, 1976. They, however, contended that apart from sending notices to the petitioners by registered post, the notices had been sent to the assessees for being served in the ordinary course as well. Such notices were served upon the petitioners by affixation on 31st March, 1976. As, according to law, the petitioners had been served with the notices issued to them under Section 148 of the I.T. Act and Section 17 of the W.T. Act on 31st March, 1976, within eight years of the end of the assessment year 1967-68, the proceedings cannot be held to be barred by time.
8. In this connection, respondents produced the original record before us. The record shows that apart from sending notices to the petitioners by registered post, the ITO/WTO made an effort to, as permitted by Section 233 of the I.T. Act, serve notices dated 29th March, 1976, for reopening their respective income-tax/wealth-tax assessments for the year 1967-68, in accordance with the procedure prescribed under the Code of Civil Procedure as well. On 31st March, 1976, the process-server, who went to serve the notices on the petitioners, reported that each and every person whom he met at the address mentioned in the notices refused to accept the same. The same day, the ITO directed the inspector to serve the notices upon the persons mentioned therein by affixation. The process-server then reported that, as directed by the ITO/WTO, the notices were, in the presence of the inspector, Sri Suman Gupta, affixed at 5.50 p.m., on 31st March, 1976. At the same time, Sri Suman Gupta, inspector, gave, in writing to the ITO making a statement, on solemn affirmation and oath that when he visited the business premises of M/s. Ganeshi Lal & Sons, 3, M. G. Road, Agra, several employees of the firm were available. On being asked about the partners of the firm, some employees said that they were at their residences. On enquiries being made at the residence, he was told that the partners had just gone out. At the same time, some of the employees told him that they were inside the house. This state of affairs made it clear that regular service of notices was being avoided. Finding no other alternative, the service was effected by affixing the notices on the left hand side of the gate of the office of M/s. Ganeshi Lal & Sons, 13, M. G. Road, Agra. It was also mentioned that the service had been effected by the inspector in the presence of Sri R. D. Pathak, notice-server, at 5.30 p.m., on 31st March, 1976. Thereafter the ITO/WTO made an endorsement 'seen' on the written statement given by Sri Suman Gupta in the three cases. He also made an order on the order sheet of each ease stating that the relevant notices had been served by affixation and that the inspector's report was being placed on the file. Even though the officials of the I.T. Dept. were keen to see that the notices issued to the petitioners were served upon them on 31st March, 1976, there is no reason to think that the respondents have fabricated the documents on record concerning service of notice on the petitioners or that either the report submitted by the process-server or the statement on oath made by Sri Suman Gupta, inspector, was false. The only ground, therefore, that survives for consideration is as to whether the service of notice thus effected on the petitioner is in accordance with law.
9. Section 282(1) of the I.T. Act, 1961, lays down that anotice or requisition under the Act may be served on the person therein named either by post or as if it were a summons issued by a civil court under the Code of Civil procedure. Applying the provisions of Order V, Rule 9 of the Code, the service of notices had to be effected by delivering the same to M/s. Ganeshi Lal & Sons (Writ Petition No. 340 of 1976), Sri Sheo Mohan Lal (Writ Petition No. 347 of 1976) and Sri Brij Mohan Lal (Writ Petition No. 348 of 1976) or their agents empowered to accept the same. It is also clear that the notices meant for M/s. Ganeshi Lal & Sons could be served on any person who was a partner of the firm during the period relevant to the assessment year 1967-68. The record shows that an attempt was undoubtedly made by the process-server to serve the notices on the firm, M/s. Ganeshi Lal & Sons, in the aforesaid manner but neither the partners of the firm nor any person authorised to receive notices on their behalf was willing or available to accept the same. It appears that when the process-server and the inspector went to the offices of M/s. Ganeshi Lal & Sons they were informed that the partners were at their residences. The inspector and the process-server then went to the residences of the partners which were in the same compound and there also the partners were not available. Whereas some of the employees informed the inspector that the partners had gone out, some other employees told him that they were inside their house. The fact, however, remains that the partners of the firm, M/s. Ganeshi Lal & Sons, including the petitioners, Sri Sheo Mohan Lal and Sri Brij Mohan Lal, on whom the notices under the I.T. Act and W.T. Act could be served, were not available and that, in the circumstances, the inspector had undoubtedly diligently taken all steps to effect service on the petitioners but then nobody on behalf of M/s. Ganeshi Lal & Sons and the other two petitioners was available to accept service of the notices.
10. According to Rule 17 of Order. V of the CPC, in such circumstances, the serving officer could affix a copy of the summons (notices) on the outer door or some other conspicuous part of the house in which the petitioners ordinarily resided or carried on business or personally worked for gain. After affixing the notice in the manner aforesaid, he was to return the original notice to the ITO/WTO concerned with a report endorsed on the notice or annexed thereto stating that such affixation had been done, the circumstances in which it was done and the name and addresses of the person (if any) by whom the house was identified and in whose presence the copy was affixed. According to Rule 19, where such notices are returned under Rule 17, the ITO is to, if the return is not verified by the affidavit of the serving officer and he may, if it has been so verified, examine or cause to be examined the serving officer on oath and after making such enquiries, as he thinks fit, he may declare that the notices have been duly served.
11. In the instant case, the process-server, despite due diligence, was notable to find the petitioners or any other person who was willing to accept the notices on their behalf. He accordingly, as provided in Rule 17, affixed a copy of the same on the gate of the business premises of M/s. Ganeshi Lal & Sons, which premises was the place of business of not only M/s. Ganeshi Lal & Sons but also of the other petitioners, namely, Sheo Mohan Lal and Brij Mohan Lal, who admittedly were partners in the firm, M/s. Ganeshi Lal & Sons. Thereafter, a statement verified on oath explaining the circumstances in which the noticees could not be found and the notices had to be affixed was submitted to the ITO who, as provided in Rule 19, declared that the notices had been served by affixation. We are, therefore, satisfied that the notices on the petitioners had been served in the manner laid down in the CPC and that the proceedings in none of the cases can be said to be barred by limitation.
12. Learned counsel for the petitioners relied upon the case of CIT v. Satya Narain Poddar : 89ITR136(All) and urged that the notices cannot be held to be validly served upon the petitioners by affixation unless the ITO/WTO had examined the serving officer with a view to satisfy himself as to whether the circumstances justified affixation of notices and whether the service had been effected in accordance with the provisions contained in Order V of the CPC. Since the ITO/WTO did not examine either the inspector or the process-server, he could neither declare the notices tohave been served nor can it be said that the notices have been served upon the petitioners on 31st March, 1976, within the period of limitation. We are unable to accept this submission. All that has been laid down in the aforesaid decision is that where the serving officer claims to have served the notice by affixation and he does not file an affidavit indicating the circumstances in which he had affixed the notices, it is obligatory upon the court to examine on oath the serving officer before declaring the service to be duly effected. It does not lay down that even in a case where the serving officer makes a statement on oath, the ITO is bound to examine the serving officer before holding the service to be sufficient. In the case before us, we find that the inspector made a statement on oath before the ITO/WTO explaining precisely the circumstances in which (to receive the notices) the petitioners or any person on their behalf were not found and the notices were affixed on the business premises of the petitioners. In the face of the affidavit filed by the inspector, it was not necessary for the ITO/ WTO to have examined Sri Suman Gupta personally before holding the service of the notices issued to the petitioners as sufficient. In our opinion, the provisions of 0. V, Rule 19 has been fully complied with.
13. In the case of Jagannath Prasad v. CIT : 110ITR27(All) , a notice of demand was sent for service through a process-server. The process-server returned the notice with the endorsement that the assessee could not be found. The ITO thereupon directed the notices to be served by affixation and the notices were affixed accordingly. The question that arose for consideration was whether the service by affixation was sufficient service as contemplated by the I.T. Act. The court pointed out that the notices issued otherwise than by post had to be served in the manner provided by Order V, Rule 20 of the CPC. The mere fact that the process-server could not find the assessee would not lead to the conclusion that the assessee was keeping out of the way for the purpose of avoiding service or that for any other reason the notices could not be served. The report made in that case did not indicate that more than one attempt was made by the process-server. In the circumstances, it could not constitute sufficient material for the satisfaction of the ITO that conditions requisite for application of Order V, Rule 20 of the CPC existed.
14. However, in the case before me, the inference that the assessee was evading service or was keeping itself out of the way for avoiding service, is not based merely on the circumstance that the process-server was not able to meet the assessee. The inference was being drawn also in the background that when the process-server went to the assessee's place of business, no one was prepared to accept the notice. Thereafter when the inspector was sent to effect service, the employees at the business premises informed him that all the partners had gone to their residences. When the inspector went to their residences, some employees informed him that the petitioners had gone out. On the other hand, some of the employees informed him that the partners were inside their houses. Facts of this case are, therefore, distinguishable and the petitioners cannot, derive any advantage from the observations made in the aforesaid judgment.
15. Next case cited by the petitioners is the case of M. O. Thomas v. CIT : 47ITR775(Ker) . In this case, the Kerala High Court held that before a notice sent otherwise than by post can be said to have been served on the assessee, it must be shown that the provisions of Order V of the CPC had been strictly observed. We have already indicated that in the case before us there has, in fact, been strict compliance with the provisions of Order V of the CPC. In Gopiram Agarwalla v. First Addl. ITO : 37ITR493(Cal) , it was held that the mere fact that the serving officer did not find the party to be served with the notice at his address was not sufficient to establish that he could not be found. It must be shown not only that the serving officer went to a place at a reasonable time when he would be expected to be present but also that he was not found and proper and reasonable attempts were made to find him either at the address or elsewhere. If after such reasonable attempts the position is still that the party is not found, then only can it be said that he cannot be found. In our opinion, in the cases before us, the petitioners cannot derive any assistance from this case either for, the process-server did make all reasonable attempts to find the person on whom the notices could be served. First of all they went to the business premises of the firm, M/s. Ganeshi Lal & Sons, and when they did not find the petitioners there, they went to their respective residences where they were again given conflicting information.
16. The facts of our case are somewhat similar to those in the case of CIT v. Thaydballi Mulla Jeevaji Kapasi : 66ITR147(SC) , in which the process-server, to whom the notices under Section 34(1)(a) were given for service, made enquiries about the presence of the assessee at Calicut. He was informed that the person on whom the notices were to be served was at Bombay and that he was expected to return to Calicut within one week. Again, after a week the process-server was informed that the notice was either in Bombay or in Ceylon. The process-server thereafter affixed the noticee on a conspicuous part of the business premises. The High Court held that in such circumstances the service by affixation had been validly effected on the noticee in accordance with the provision of Order V of the CPC.
17. In view of the aforesaid discussion, we are of opinion that the notices had been validly served upon the petitioners on 31st March, 1976, and the proceedings were not barred by time.
18. Learned counsel for the petitioners then contended that there was absolutely no material on the basis of which the ITO, in the case of M/s. Ganeshi Lal & Sons, and the WTO, in the cases of Sheo Mohan Lal and Brij Mohan Lal, could have reason to believe that their income/wealth had, for the assessment year 1967-68, escaped assessment. He contended that in the circumstances the notices issued under Section 148 of the I.T. Act, / Section 17 of the W.T. Act, and the proceedings following thereon were without jurisdiction and are liable to be quashed.
19. There was some controversy between the parties on the question whether the ITO/WTO was bound to disclose to the petitioners the ground on which he thought their income/wealth had, in the relevant year, escaped assessment. However, the respondents have produced before us the files which indicates the reasons why the ITO/WTO thought that the income/ wealth of the petitioners had for the year 1967-68, escaped assessment.
20. According to the records produced by the respondents, search operations under Section 132 of the I.T. Act, 1961, was carried out and certain books of account of the firm were seized. Information was given to the ITO that M/s. Ganeshi Lal & Sons were, during the previous year relevant to the assessment year 1967-68, alleged to have made certain cash sales to M/s. Barjeet and Company. One Sri Jitendra Narottam Das Shah, trading in the name of M/s. Barjeet and Company, filed an affidavit stating that purchases to the tune of Rs. 99,720 purported to have been made by him from M/s. Ganeshi Lal & Sons were fictitious. A scrutiny of the balance-sheet of the firm, filed at the time of the assessment, revealed that the name of the said Jitendra Narottam Das Shah did not appear therein. The name of the said party also did not appear in the details of over Rs. 10,000 filed by the assessee during the course of the assessment proceedings. This made the ITO believe that the alleged sales which had been shown by the firm, M/s. Ganeshi Lal & Sons, as cash sales in its books of account amounting to Rs. 99,720 were nothing but the firm's own income which has been introduced by it in the garb of sale proceeds. In our opinion, the record discloses material on the basis of which the ITO could have reason to believe that income of the firm, M/s. Ganeshi Lal & Sons, had for the assessment year 1967-68 escaped assessment.
21. So far as the case of Sri Sheo Mohan Lal, petitioner in Writ Petition No. 347 of 1976, is concerned, he did not originally file any wealth-tax return for the assessment year 1967-68. He was a partner with 5% share in the firm, M/s. Ganeshi Lal & Sons. According to the WTO, as a result of search operations carried out in the business premises and show-room of M/s. Ganeshi Lal & Sons, certain books of account of the firm were seized. According to the books of account, tax paid on the articles of stock revealed that the value of the firm's stock, as computed for income-tax purposes, was throughout less than 20% of its market price. The WTO, therefore, estimated the market value of the stock as Rs. 30,05,981 as against Rs. 10,05,981 shown in the balance-sheet on 8th April, 1967. After making certain adjustments he concluded that the value of the interest of Sri Sheo Mohan Lal in the stock of the firm came to Rs. 1,15,728 which, in his opinion, had escaped assessment. In our opinion, the material on the record provided enough justification for the WTO to believe that the wealth of Sri Sheo Mohan Lal had escaped assessment and it cannot be said that proceedings were initiated without there being any material to support such a belief.
22. So far as the petitioner, Brij Mohan Lal, in Writ Petition No. 348 of 1976, is concerned, he was assessed to wealth-tax in the year 1967-68. His interest in the assets of the firm, M/s. Ganeshi Lal & Sons, was calculated on the basis that the value of the stock held by M/s. Ganeshi Lal & Sons at the relevant time was Rs. 10,05,981, However, a raid was made on the business premises of M/s. Ganeshi Lal & Sons and certain account books were seized from which it appeared that the net asset value of the stock held by the firm was Rs. 30,05,981 instead of Rs. 10,05,981. The interest of Sri Brij Mohan Lal thus came to Rs. 4,96,377 as against Rs. 1,53,681. Thus, wealth amounting to Rs. 3,42,716 had, on this account, escaped assessment. He also held that an amount of Rs. 2,75,000 had escaped assessment because of undervaluation made by the valuer of Sri Brij Mohan Lal's property at the time of original assessment. In our opinion, there was material on the record on the basis of which the WTO could entertain a belief that a part of the wealth of the petitioner, Brij Mohan Lal, had escaped assessment and he had ample jurisdiction to issue notice under Section 17 of the W.T. Act.
23. In the end, learned counsel for the petitioner, M/s. Ganeshi Lal & Sons, invited our attention to Section 282(1) of the I.T. Act, which lays down that a notice or requisition under the Act can be served on the person named therein either by post or as if it were a summons issued by a court under the Code of Civil Procedure and as provided in Sub-section (2) any such notice or requisition may, in the case of a firm, be addressed to any member of the firm. He contended that according to this section all notices meant for service on a firm must necessarily be addressed and served upon one or the other partner of the firm. The notices cannot be addressed to the firm itself, more so in the case of a dissolved firm (the petitioner claimed that the firm, as it stood prior to 1967-68, was dissolved in the following year). This view, according to him, is fortified by the provision of Section 223(2) which lays down that service in respect of such a firm is required to be effected on any person who was a partner in the firm immediately before its dissolution.
24. It is significant to note that the provisions contained in Section 282(2) are permissive in nature and not mandatory. The word used therein is 'may' and not 'shall'. See CIT v. Devidayal and Sons : 68ITR425(Bom) . In the case of Sonu Lal v. CIT : 6ITR94(Patna) , it has been held that in a case where the HUF continued to carry on business in the name of certain members who had been dead for some years, notice addressed to the family in such trading name and served upon the karta was quite valid. On the same principle, a notice addressed in the firm's name if served upon a partner would also be quite valid. The proceedings, in our opinion, are, therefore, not vitiated on the ground that they were addressed to the firm, M/s, Ganeshi Lal & Sons, and not to one of such persons who was its partner in the year relevant to the year 1967-68.
25. As none of the submissions made on behalf the petitioners has been found to have any merit, the petitions fail and are dismissed with costs.