1. The Income-tax Appellate Tribunal, Bombay (Bench C), has referred the following questions for our decision:
'(1) Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the notice under Section 22 (2) had been served on the assessee on 27-10-1958. as claimed by the Department?
2. Whether the order imposing the penalty is invalid on the ground that the notice issued to the assessee did not correctly specify the default committed by the assessee or that the notice was not signed by the Income-tax Officer?'
2. The assessee is a firm. For the assessment year 1958-59. it appears from the Income-tax Officer's record that the following order-sheet was recorded:
'12-6-58 Notice under Section 22 (2) issued.
Return to be filed. . .(blank).
The order-sheet is not signed by the Income-tax Officer: nor is any date specified on or before which the return was to be filed. After that date, there is no further record in the order-sheet to indicate that the notice wasserved on the assessee. Similarly, no acknowledgement was produced before the AppellateAssistant Commissioner or before the Tribunalto show that the notice under Section 22 (2) of theIncome-tax Act, 1922, was actually served. Eventhe office copy of the notice under Section 22 (2)is not on record. It further appears from therecord that a notice, dated 7-2-1959, was issuedby the Income-tax Officer under Section 22 (4) ofthe Act. That notice does not mention thedate on which the notice under Section 22 (2) wasissued/served on the assessee. In response tothe notice under Section 22 (4) the assessee sent areply, dated 24-2-1959, asking for time. Thefirst sentence of that reply is:
'We are in receipt of your notice for assessment of the year 1958-59 and beg to request.....'
Thereafter, the Income-tax Officer sent two more notices, dated 11-1-1960 and 9-2-1960, under Section 22 (4) of the Act. In the notice, dated 11-1-1960, the date of service of the notice under Section 22 (2) is mentioned. The assessee did not send any reply to the last mentioned notices but filed its return on 22-6-1960. The Income-lax Officer completed the assessment on 5-3-1963. The Income-tax Officer thereafter issued a notice under Section 274 read with Section 271 of the Income-tax Act, 1961; which was served on the assessee on 18-5-1963. That notice was not signed by the Income-tax Officer. The assessee, however, appeared before the Income-tax Officer and filed its reply. The Income-lax Officer thereafter passed an order, dated 29-6-1963. imposing a penalty of Rs. 4,954 for the default of the asscssee in not filing the return in time. In that order, the Income-tax Officer has mentioned that the notice under Section 22 (2) of the repealed Act was served on the assessee on 27-10-1958.
The assessee challenged the order of the Income-tax Officer imposing the penalty before the Appellate Assistant Commissioner as also before the Tribunal on the ground that no notice under Section 22 (2) of the repealed Act was served on it and that the return fded on 22-6-1960 was a voluntary return and that in the absence of a notice under Section 22 (2) no penally proceedings could have been initiated against it. It was also urged that inasmuch as the notice was not signed by the Income-tax Officer and inasmuch as the notice did not indicate correctly the alleged default committed by the assessee, the initiation of the penalty proceedings were invalid and no penalty could be imposed. Both the contentions were negatived by the Tribunal and the appeal was dismissed. On the request of the assesses, the two questions, reproduced above, have been referred to us for our decision.
3. In relation to the question of service of notice under Section 22 (2) on the assessee, the Tribunal held:
''It appears to us from the assessee's reply of 24-2-1959 that when it asked for time, the lime could only be with respect to Section 22 (2) and the suggestion that the return was filed voluntarily with respect to the provisions of Section 22
(1) has no substance. The words used at the commencement of the said reply that 'We are in receipt of your notice for assessment' may also be held to refer to the notice under Section 22
(2), although the immediate occasion for the reply was only the notice under Section 22 (4). Furthermore, we looked at the return filed on 22-6-1960. It is on the form printed by Government. It was yet explained to us by the assessee's representative that the form of the return was available in the lawyer's office, and it was contended that no inference could be drawn that the form had been received by the assessee along with notice under Section 22 (2).....
We hold that, although there is no direct evidence in the form of an acknowledgement slip, about the receipt of the notice under Section 22 (2) by the assessee, there is sufficient evidence about such receipt in the notice under Section 22 (4), daled 11-1-1960, and the reply which the assessee made on 21-2-1959 to the notice, dated 7-2-1959. The assesscc's contention that it did not receive any notice under Section 22 (2) is, therefore, rejected.'
4. Shri K.A. Chitale, learned counsel for the assesses, submitted that the Tribunal rightly came to the conclusion that the immediate occasion for sending the reply, elated 24-2-1959, was only the notice under Section 22 (4). But the Tribunal, by a curious mode of reasoning, came to the conclusion that the reply may also be held to refer to the notice under Section 22 (2). Shri Chitale further urged that if the reply is omitted from consideration, the only other factors considered by the Tribunal were (i) the mention of the dale of service of notice in the notice issued under Section 22 (4) on 11-1-1960 and (ii) the fad that the return was filed on the Government printed form. Both these factors are not conclusive of the matter that a notice under Section 22 (2) was actually served on the assessee.
Shri Chitale pointed out that in the first notice issued under Section 22 (4) there was no mention about the date of service of the notice under Section 22 (2). It i.s not known on the basis of what record the Income-lax Officer mentioned the date in the notice sent subsequently. He also urged that it is a mailer of common knowledge that the printed forms of returns are available in the office of income-tax practitioners and elsewhere also. In the circumstances of the case. Shri Chitale urged that there was no material before the Tribunal on the basis of which a finding could be reached that the notice under Section 22 (2) was served on the assessee. In any case, according to him, on the facts found by the Tribunal the inference drawn by it was not justified. It was also said that the best proof of the service of notice is the acknowledgement signed by the assessee. No other evidence or facts can be legitimately considered.
In support, a decision reported in Ramcoomar Singh v. Ramsoondur Singh, (1872) 17 Suth WR 362 was relied on. In that case, it was held that the best proof of service is the return which the serving officer is bound to send to the Court and which must contain all that he has done in the matter of effecting service. In that case, the effect of provisions analogous to Order 5, Rule 19, Civil Procedure Code, were under consideration. Under that rule, the officer effecting the service of the summons is required to return it with an affidavit regarding the steps taken by him. In the absence of such an affidavit, the Court is allowed to take evidence to satisfy itself whether the service was properly effected or not. It is thus clear that though the affidavit of the serving officer is the best evidence, when that is not available, other evidence can be taken into consideration and the Court is not precluded from relying on such evidence. The contention of Shri Chitale that no other evidence could be considered by the Tribunal apart from the acknowledgement of the assessee. is without force. The only question that remains to be considered is as to whether the factors considered by the Tribunal warrant the conclusion reached by it.
5. Shir M. Adhikari, learned counsel for the Department, submitted that the finding as to whether a notice under Section 22 (2) was served on the assessee or not is a finding of fact which is not open to challenge in these proceedings. It is urged that there was material on record on the basis of which the Tribunal could come to the conclusion it reached. Unless it is shown that the finding was perverse, the same cannot be interfered with, Shri Adhikari pointed out to us that the Income-tax Officer in his order, dated 29-6-1963, had mentioned that the notice under Section 22 (2) was served on the assessee on 27-10-1958. In addition to that, there is also mention of the service of the notice in the notice issued under Section 22 (4). These facts, considered along with the reply of the assessee, can legitimalely lead to the conclusion that the notice under Section 22 (2) was actually served on the assessee as there is also a presumption that official acts are performed properly. In any case, it was urged that the finding of the Tribunal could not be treated as perverse and was not open to challenge in these proceedings.
6. It is no doubt true that adequacy or sufficiency of evidence is not a matter open for consideration before this Court. It is also true that this Court is not entitled to question a finding of fact if it is based on evidence. But this Court has certainly jurisdiction to question a finding recorded by the Tribunal if it is based on no evidence or if it is based on facts which cannot lead to the conclusion arrived at by it. The reply sent by the assessee was in response to the notice under Section 22 (4) The inference that it was in response to the notice under Section 22 (2) is. to say the least, unwarranted. The mention in the notice issued under Section 22 (4) that the notice under Section 22 (2) was served on a certain date is equally inconclusive. The fact that the return was filed on a printed form, which is also available elsewhere, cannot lead fo any conclusion that the form was sent along with the notice under section 22 (2). That factor is also equally inconclusive.
The facts relied on by the Tribunal, individually or cumulatively, are not such as would warrant an inference that a notice under Section 22 (2) was served on the assessee. The most appropriate evidence would have been that of the Income-tax Officer who could have stated before the Assistant-Appellate Commissioner that the notice under Section 22 (2) was, in fact, issued by him and that the acknowledgement was also obtained, though it was not available, when the complaint was made before the appellate-authority. That evidence was neither tendered before the Tribunal; nor was the same considered by it. On the facts considered by the Tribunal, the conclusion could not have been legally reached. We have therefore, come to the conclusion that the Tribunal was not justified in holding that the notice under Section 22 (2) had been served on the assessee on 27-10-1958. Our answer to the first question would. Iherefore. be in the negative.
7. On the second question, Shri Chitale conceded that the assessee was given an opportunity as contemplated under Section 274 of the present Act and that the requirements of that section were satisfied; and that the defect in the notice, if any. would not render the penalty proceedings or the order passed in those proceedings invalid. Section 274 only requires that no penalty should be imposed without giving adequate opportunity to the assessee to show cause why the penalty should not be imposed. That was done in this case. In response to the notice, the assessee appeared before the Income-tax Officer and made submissions. No prejudice was caused to the assessee because of any defect in the notice. We. therefore, conclude that the Tribunal was right in holding that the defect in the notice did not invalidate the imposition of the penalty. Our answer to the second question is. therefore, in the negative.
8. The reference is answered as indicated above The Commissioner of Income Tax, M. P.shall pay the costs of this reference. Hearing 1fee Rs. 100/-.