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Balkishan Das Vs. the Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 12 of 1968
Judge
Reported inAIR1967P& H103
ActsIncome Tax Act, 1922 - Sections 34, 63 and 66(1); Income Tax Act, 1961 - Sections 148, 256(1) and 282; Code of Civil Procedure (CPC) - Order 5, Rules 10 and 20
AppellantBalkishan Das
RespondentThe Commissioner of Income-tax
Appellant Advocate C.D. Dewan, Deputy Adv. General; assisted by Bhim Sen and;
Respondent Advocate D.N. Awasthy and; B.S. Gupta, Advs.
Cases ReferredS.C. Prashar v. V. Dwarkadas.
Excerpt:
.....the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply communication of a copy of the written order itself, a party who knows about the making of an order cannot ignore the same and allow grass to grow under its feet and do nothing except waiting for a formal communication of the order or to choose a tenuous plea that even though he knew about the order, he was waiting for its formal communication to seek redress against the same in appeal. if a party does not know about the making of..........of the residence of the assessee; and when the assessee had also declined to receive a copy of the notice, service of the notice should not be held to be invalid merely because of omission to affix a copy in the court-house or in the income-tax office.according to the counsel, order 5, rule 20, has to be construed in a practical way and being a rule of procedure, it should be so construed as to subserve the real purpose and should not be allowed to obstruct or defeat the cause of justice. the counsel has also controverted the submission urged on behalf of the assessee that the income-tax office should in the present context be considered to be a court-house within the contemplation of order 6, rule 20, c. p. code. in the alternative, it is submitted that the service of notice on the.....
Judgment:

I.D. Dua, J.

1. This income-lax reference has been placed before us in pursuance of the order dated 29-4-1965 passed by a Division Bench of which I was a member. The question which we are called upon to answer was formulated by the Income-tax Tribunal (Delhi Bench) in the following terms:

'Whether on the facts and in the circumstances of the case the service of the notice under Section 34 on the assessee was invalid at law as a copy of the notice was not affixed at any conspicuous place in the Court-House or at any conspicuous place in the Income-tax Office.'

The facts have been stated in the refering order, but I may briefly recapitulate them for our present purpose. The assessee Seth Bal Kishan Dass was assessed originally in February, 1948. Later, the Income-tax Officer had reason to believe that certain immovable property and shares in companies acquired by the assessee during the accounting period had escaped assessment because the same had not been disclosed in the original return. A notice for personal service under Section 34 (1) (a) of the Indian Income-tax Act (No. XI of 1922) was accordingly issued to the assessee on 28-3-1956. On the same day, a notice was also issued by registered post which was received by the assessee on 2-4-1956.

The process-server who had taken the notice for personal service reported to the Income-tax Officer on 28-3-1956 that he had tendered the notice to the assessee personally on the same day, but the assessee had declined to receive the same. The Income-tax Officer thereupon directed service of notice by affixation. The notice was accordingly affixed on the outer door of the residence of the assessee on 31-3-1956. No copy of the notice was, however, affixed on any conspicuous place in the Income-tax Office or in the Court-House. There is no controversy about these facts which are undisputed.

2. The submission strongly pressed before us by Shri Chetan Dass, learned Advocate for the assessee, is that the service which the department has relied upon is the service effected by means of affixation on the outer door of the residence of the assessee under the provisions of Order 6, Rule 20, Code of Civil Procedure, and this service is, in the absence of affixation of a copy of the notice on some conspicuous place in the Court-House or on some conspicuous place in the Income-tax Office, invalid. The learned counsel has based this contention on the plain language of Section 63, Indian Income-tax Act 1922 and of Rule 20 of Order 5, Code of Civil Procedure. According to him, Court-House, as used in Rule 20, should, for the purpose of the present case, be deemed to mean Income-tax Office because the word 'Court' has a varied Import.

The counsel has referred us to the Oxford English Dictionary, according to which the word 'Court' means the place, hall or chamber in which justice is administered. The place where the Income-tax Officer holds assessment proceedings may well, according to the learned counsel, mean Court-House. Stress hag in this connection been laid on the argument that the department did not care to rely on the refusal by the assessee to accept the service of the notice when personally tendered to him by the process-server; nor did the department rely on the notice despatched by registered post, which though issued on 28-3-1956, was received by the assessee on 2-4-1956.

Support for the challenge to the validity of the notice has been sought by Dewan Chetan Dass from two Bench decisions of this Court. The first case is reported as Jhabar Mal v. Commr. of Income-tax . This is followed in the second decision which is reported as Daulat Ram Khanna v. Commr. of Income-tax 1964 C LJ 528 (Punj). The contrary view adopted by a Bench of the Sau-rashtra High Court in Memon Aba Isa Haji Adreman Dharar v. Memon Mamad Haji Sule-man Chamadia AIR 1956 Sau 28, according to the counsel is unsound. On behalf of the assessee, it is also submitted that the jurisdiction which this Court exercises in reference proceedings is advisory and the only function this Court has to perform is to answer the precise question referred and not to consider or answer any other question of law. Reliance for this submission is placed on the Commr. of Income-tax v. Scindia Steam Navigation Co. Ltd. : [1961]42ITR589(SC) .

3. The respondents' learned counsel has on the other hand questioned the correctness of the view taken in the two Bench decisions of this Court mentioned above. He has for his submission placed reliance on the decision of the Saurashtra High Court in Memon Aba's case AIR 1955 Sau 28. The argument briefly put is that the procedural formalities requiring service of notice are not to be rigidly adhered to and they are mandatory only to the extent to which they may be considered necessary for effectuating the real purpose of informing the person to be served of the contents of the notice. In the case in hand, affixation in the Court-House or in the Income-tax Office could not have been more effective than affixation on the outer door of the residence of the assessee; and when the assessee had also declined to receive a copy of the notice, service of the notice should not be held to be invalid merely because of omission to affix a copy in the Court-House or in the Income-tax Office.

According to the counsel, Order 5, Rule 20, has to be construed in a practical way and being a rule of procedure, it should be so construed as to subserve the real purpose and should not be allowed to obstruct or defeat the cause of justice. The counsel has also controverted the submission urged on behalf of the assessee that the Income-tax Office should in the present context be considered to be a Court-House within the contemplation of Order 6, Rule 20, C. P. Code. In the alternative, it is submitted that the service of notice on the facts and circumstances of the present case is, in any event, valid independently of the provisions of Order. 5, Rule 20, Code of Civil Procedure.

It has been emphasised that the question framed for answer by this Court is very comprehensive and the real controversy to be considered in answering the question is whether the service of notice on the facts and circumstances of this case is valid, notwithstanding the fact that no copy of the notice was affixed on some conspicuous place in the Court-House or in the Income-tax Office. The question referred, according to the counsel, is not confined within the narrow limits of the scope and effect only of Order 5, Rule 20, Code of Civil Procedure, for the purpose of determining the validity of the notice. For this submission support is sought from a decision of the Supreme Court in Banarsi Debi v. Income-tax Officer : [1964]53ITR100(SC) , and also from the decision of the Supreme Court in the case of Scindia Steam Navigation Co. Ltd. : [1961]42ITR589(SC) , mentioned above.

The learned counsel has fortified his arguments from another decision of the Supreme Court in Commr. of Income-tax v. Ogale Glass Works Ltd. : [1954]25ITR529(SC) , and from a decision of the Bombay High Court in Commr. of Income-tax, Bombay v. Breach Candy Swimming Bath Trust, Bombay : [1955]27ITR279(Bom) . Passing reference has also been made to p. 919 of the Law and Practice of Income-tax by Kanga (5th Edition), where it is stated that it is open to the Court without raising new and different questions to resettle or reaffirm the question formulated by the Tribunal before answering them so as to bring out the real issue between the parties.

4. It is argued by Shri Awasthy that according to the decision of the Supreme Court in S.C. Prashar v. V. Dwarkadas. : [1963]49ITR1(Bom) , it is the date on which the notice is issued which is important for the purpose of determining the validity of reassessment from the point of view of the period of limitation postulated by Section 34 (1). If, therefore, the notice in the instant case was issued by registered post on 28-8-1956, then merely because it was actually received by the assessee on 2-4-1956, would not invalidate the notice on the ground of its having been served after the expiry of 8 years. It may at this stage be pointed out that the objection to the validity of the notice in question at the instance of the assessee is apparently designed to found the plea of time bar against reassessment on the ground that 8 years prescribed for reopening the assessment of 1948 expired on 31-3-1956. It is in this context that Shri Awasthy has invited our attention to the Supreme Court decision in the case of S.C. Prashar : [1963]49ITR1(SC) which clinches the matter in his favour.

5. In our opinion, it is unnecessary to express any opinion on the challenge to the correctness of the two Bench decisions of this Court dealing with the question whether affixation of a copy of notice on the Court-House or the Income-tax Office is mandatory when service in assessment proceedings is sought to be effected under Order 6, Rule 20, Code of Civil Procedure. Section 68 of the Indian Income-tax Act of 1922, so far as relevant for our purpose, lays down that a notice 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 Court under the Code of Civil Procedure. Merely because the authorities concerned took the double precaution of issuing notice both by post and through the process-server would not, in my opinion, invalidate the service of the notice effected by post. If, therefore, the notice was actually issued within 8 years, as it was in the present case the service of the notice would be perfectly valid, and we so hold. Incidentally, I may point out that even under the Code of Civil Procedure service can in the very first instance be effected by registered post as is clear from the proviso added by this Court to Rule 10 of Order 5. Code of Civil Procedure.

6. The objection that the question refer-red does not justify this Court in taking the view we propose to take appears to me to be untenable. The question referred merely relates to the validity of the service of notice tinder Section 34 and is not confined to the consideration of Order 5, Rule 20, Code of Civil Procedure, alone. In the statement of the case forwarded to this Court by the Appellate Tribunal, the fact of a notice having been sent to the assessee by registered post on 28-3-1956 and received by the assessee on 2-4-1956 is clearly stated. Indeed, this fact also appears from the order of the Appellate Tribunal dated 20-3-1962 passed on appeal by the Revenue.

It is true that the Tribunal only proceeded to consider the provisions of Order 5, Rule 20, but merely for this reason it cannot be said that the validity of the notice served by registered post does not arise as a question of law from the order of the Tribunal and the facts admitted or proved. The question relates to the validity of the notice under Section 34 of the Indian Income-tax Act, 1922 and each aspect of the question of validity of notice cannot be a distinct question of law for the purpose of Section 66 (1) of the Income-tax Act so as to require it to be separately formulated and stated for answer by this Court. The contention that the question formulated has implicit in its language read in the context, a limitation restricting its consideration only from the point of view of Order 5, Rule 20, Code of Civil Procedure, is unacceptable because except for the bald assertion at the bar, we find no cogent reason for thus restricting the scope of the question framed and for declining to answer it on all the facts established on the record.

The notice was, in our opinion, validly served on the assessee and is not tainted by any invalidity. The answer to the question referred must, therefore, be tat the negative and we so answer the reference. The Revenue to entitled to its costs which we fix at Rs. 250

Reference answered in the negative.


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