MEHAR SINGH C.J. - A notice under section 34(1) (a) of the Indian Income-tax Act, 1922 (Act 11 of 1922), was given by the Income-tax Officer to the assessee on having gained knowledge that the assessee had brought a sum of Rs. 40,125 from abroad, the notice having been issued on October 20, 1956. The service of the notice was made by affixation on the outside of the house of the assessee according to the address given in the notice on March 3, 1967. In that notice the assessee was required to file return by April 8, 1957. On May 17, 1957, a further notice was given to the assessee under subsection (4) of section 22 of the Act for production of books and other documents by May 30, 1957. In the mean time, it appears the assessee had gone to England and on September 6, 1957, the Income-tax Officer wrote a letter to him in regard to the case arising out of the notice under section 34(1) (a) of the Act. The assessee made no return. On March 28, 1958, the Income-tax Officer made an assessment order against the assessee under sub-section (4) of section 23 of the Act; copy of that order is annexure 'A'. Against that order the assessee filed an appeal which was accepted by the Appellate Assistant Commissioner of Income-tax on November 4, 1959, on the ground that according to rule 28 of Order 5 of the Code of Civil Procedure, substituted service by affixation could only be made after the court had made a specific order to that effect, but in the case of the assessee the Income-tax Officer had made no such order, rather he merely endorsed the substituted service effected by the peon on the assessee as valid in view of the circumstances in which it was made. Another argument which was accepted by the Appellate Assistant Commissioner of Income-tax was that the assessee had gone to England in March, 1952, and the notice under section 34(1) (a) of the Act having been issued in 1956, the Income-tax Officer knew that the assessee was not in India and so service on the assessee was not effected in the manner as on a person outside India. The Appellate Assistant Commissioner of Income-tax then came to the conclusion that the Income-tax Officer had failed to effect service of the notice in a proper way. He, therefore, directed the Income-tax. Officer to make a fresh assessment qua the assessee according to law. On an appeal by the Income-tax, restoring that of the Income-tax Officer, on the ground that in the case of an assessment under sub-section (4) of section 23 of the Act the Question of the validity of that assessment could not be assailed in an appeal under section 30 of the Act when the assess had had no recourse to the proceedings under section 27 of the Act for cancellation of the order under sub-section (4) of section 23, the learned Tribunal, in this respect, relying on Naba Kumar Singh Dudhuria v. Commissioner of Income-tax, a decision by the Calcutta High Court.
On the application of the assessee, the Tribunal has referred this question, under sub-section (1) of section 66 of the Act, to this Court.
'Whether the validity of the service of notice under section 34 can be challenged in an appeal against an order under section 23 (4) when no proceedings under section 27 were taken to have the order under section 23(4) canceled ?'.
The learned counsel for the assessee contends that no assessment can proceed having regard to section 34 of the Act, without a due notice under that provision and thus without an opportunity to the assessee to answer such a notice. The learned counsel then says that in the present case there was really no notice under that provision to the assessee and none was really served no notice under that provision to the assessee and none was really served upon him. The first part of this argument is unexceptional, but the second part raises a question first of fact whether there was or was not actually service of notice under section 34(1) (a) of the Act on the assessee, and then of the validity of service of such a notice so as to challenge the validity of an assessment under sub-section (4) of section 23 of the Act. In the case, on which the learned Tribunal has relied upon, viz., Naba Kumar Singh Dudhurias case, the question arose directly. An argument was urged before the learned judges pointing out a parallel to the procedure in section 27 and the right of appeal in section 30 of the Act by reference to a right of appeal under section 92 and an opportunity to make an application under Order 9, rule 13, of the Code of Civil Procedure to have an expert decree set aside. It was urged before the learned judges that under the Code of Civil Procedure both remedies were concurrently open to the aggrieved person and that there was no reason who this should not be so in reference to the proceedings under section 27 and the right of appeal under section 30 of the Act. But this argument the learned judges specially rejected on consideration, among other matters, of the provisions of section 105 of the Code which, in brief, provides that whatever cannot be agitated in appeal may be made a ground of appeal in an appeal against the final decision of the case. No such situation really prevails so far as sections 27 and 30 of the Act are concerned and an appeal against an order refusing an application under section 27 of the Act is expressly provided by section 30 of the Act. So the learned judges held that the matter of the validity of an assessment under sub-section (4) of section 23 was not open to question in an appeal under section 30 where no recourse had been had to proceedings under section 27 of the Act In Mauladin Ayub Firm v. Commissioner of Income-tax the same view was taken. All these three cases were followed by a Division Bench of the Bombay High Court in Gaurishankar Kedia v. Commissioner if Income-tax and the same view has prevailed with the learned judges that in cases to which section 27 has application, the order made under sub-section (4) of section 23 can only be challenged in an appeal in respect of the quantum of income or quantum of tax as determined by the Income-tax Officer and not on the ground of validity of assessment. There is no case for the contrary view that has been referred to by the learned counsel for the assessee. While the argument of the learned counsel for the assessee that proceedings under section 34 of the Act cannot be taken without notice with regard to the same is without exception, but that does not lead to the inference that the service of notice under that provision, which the assessed considers is a defective service, entitles the assessee to have the assessment set aside on this ground in an appeal under section 30 when the assessment has been made under sub-section (4) of section 23 of the Act. He must have first resort to the proceedings under section 27 to have the assessment canceled and, if he is denied relief there, he may appeal against such an order. But he cannot directly appeal against the assessment order questioning the validity of the assessment on the ground that really no proper notice was served on him before the assessment under sub-section (4) of section 23 in the wake of notice under section 34 (1) (a) of the Act was given to him. The answer to the question is in the negative, but, in view of the circumstances of the case, we leave the parties to their own costs in this reference.
SHAMSHER BAHADUR J. - Agree