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A.A. Kochandi and ors. Vs. Agricultural Income-tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberO.P. No. 4626 of 1975
Judge
Reported in[1977]110ITR406(Ker)
ActsKerala Agricultural Income Tax Act, 1950 - Sections 64; Code of Civil Procedure (CPC) , 1908 - Order 5, Rules 17, 18 and 19
AppellantA.A. Kochandi and ors.
RespondentAgricultural Income-tax Officer and ors.
Appellant Advocate K.K. Usha, Adv.
Respondent AdvocateGovt. Pleader
Cases ReferredSee K. C. Tiwari & Sons v. Commissioner of Income
Excerpt:
.....not properly served on him - assessee cannot thereafter raise contention that there was no valid service of notice especially when he had participated in proceedings pursuant to notice received but not served - in such circumstances assessee must be deemed to have waived that irregularity. - - 1 and 2 through the village officer and served by affixture was not served on them as if it were a summons issued by a court under the code of civil procedure as required by section 64 of the agricultural income-tax act, 1950 (in short, the act ') and that a best judgment assessment without affording them an opportunity to explain the materials relied on by the first respondent is invalid as violative of the rules of natural justice. there may arise still worse situations where even service..........in short, therefore, it was held by this court, that in cases other than cases of personal service, service should be effected in a manner sanctioned or prescribed by law ; so far as the act is concerned, section 64 is the only provision therein relating to service of notices and that section in turn prescribes the mode of service of notice as that applicable to a summons issued by a court under the code. to this extent section 64 is certainly exhaustive. whether the provisions of the code governing personal service would govern personal service of notices under the act did not arise in that case, and does not in this case as well; it is, therefore, unnecessary to examine that aspect here, though i am inclined to say that compliance with rule 18 of order v in the code requiring.....
Judgment:

George Vadakkel, J.

1. Though the assessee, father of petitioners Nos, 1 and 2 and husband of the 3rd petitioner, filed the return on September 24, 1971, in respect of his agricultural income for the year 1971-72, the assessment was not completed till he died on November 4, 1972. After his death a pre-assessment notice was issued to petitioners Nos. 1 and 2 by post. This was not served-on them and was returned. Notice was, therefore, forwarded to the 3rd respondent, village officer of the village, in which the cardamom estate of the deceased is situated. According to the 1st respondent, Additional Agricultural Income-tax Officer, the village officer did not find the above persons (petitioners Nos. 1 and 2) and so he served them by affixture on March 3, 1973. No other circumstances relating to the said service by affixture are available in this case. The first respondent appears to have completed the assessment thereafter ; according to him, he sent the assessment order and demand notice by registered post, and these were returned with the endorsement that petitioners Nos. 1 and 2 refused to accept them. Petitioners deny that they so refused, their case being that no such order or notice was taken to them at Madurai where they are permanently residing and doing business. It is their case that they came to know of the assessment proceedings only when cardamom crops in the estate were attached under the Revenue Recovery Act, 1958. Exhibits P-1 and P-3 are copies of notices issued under Sections 7 and 34 of that Act, and exhibit P-2 is the copy, of attachment-mahazar.

2. It is contended that the pre-assessment notice issued to petitioners Nos. 1 and 2 through the village officer and served by affixture was not served on them as if it were a summons issued by a court under the Code of Civil Procedure as required by Section 64 of the Agricultural Income-tax Act, 1950 (in short, ' the Act ') and that a best judgment assessment without affording them an opportunity to explain the materials relied on by the first respondent is invalid as violative of the rules of natural justice. It is also argued that assessment proceedings with notice only to two out of the three legal, representatives of the deceased assessee could, hot bind the estate of the deceased, It is not disputed before me by the learned Government Pleader that an assessment without giving opportunity to the assessee (or his legal representatives) to meet the case on which the 1st respondent, rejecting the return, proposed to complete the assessment, is illegal and possibly he could not, in view of the decision of this court in Kunhammad Haji v. State [1960] KLT 930 and the decisions following it; the case of the first respondent is that an opportunity was given by service of the pre-assessment notice by affixture. However, there is no case before me that that notice was served as if it were a summons issued by a court under the Code of Civil Procedure. On the other hand, the argument advanced by the learned Government Pleader is that any notice could be served in some manner other than that provided for in Section 64 of the Act. In other words, the argument is that Section 64 of the Act is not exhaustive as regards the manner of service of notices and requisitions under the Act. To meet the second contention the learned Government Pleader relies on the principle of substantial representation.

3. Taking up the first point, the question whether Section 64 of the Act is exhaustive or not was considered by a Division Bench of this court to which I was a party in ITRs. Nos. 119 and 120 of 1971 (Agrl). Therein on behalf of the Bench I had occasion to say as follows :

' Canons of natural justice demand that a decision in which a person has a concern cannot be taken against him without affording him an opportunity to be heard ; statutory provisions regarding service of notice are only codifications of this principle of natural justice. However, there may arise very many situations when actual personal service is not possible, and, therefore, provisions are made for giving notice of a matter to a person through methods other than personal service, as for example by service on an agent, or on an adult member of one's family. There may arise still worse situations where even service on another person like an agent is also not possible. Statutes, therefore, authorise service by affixture, and substituted service. In all these cases it is presumed that the concerned person would come by the notice or summons, and thereby come to know of the proceedings, even though, as a matter of fact, he may not know about them at all. In other words, constructive knowledge or notice of the proceedings is attributed to him. But for imputing constructive notice it is essential that there should be some provision of law in that behalf ; and, further, it is also necessary that service of notice must have been in accordance with the procedure prescribed. Therefore, if the service by affixture in the instant case is, as is contended, not as provided in Section 64, it will be a case where law has not provided for imputing constructive knowledge or notice of the proceedings which have been initiated against the assessee. Oh the other hand if the service by affixture was effected by calling in aid Section 64 which provides that a notice can be served as if it were a summons issued by a court under the Code of Civil Procedure, then the procedure prescribed by that Code relating to service by affixture of summons has to be followed. Provisions of the Code relating to service by affixture are those contained in Order V, Rules 17, 18 and 19. Rule 19 provides that where summons is returned under Rule 17, if the return has not been verified by the affidavit of the serving officer, the court shall examine the serving officer on oath touching his proceedings, and may make such further enquiry in the matter as it thinks fit, and shall either declare that the summons has been duly served or order such service as it thinks fit. This rule requires that the court must be satisfied from the affidavit accompanying the return, or the statement on oath of the serving officer that summons had been duly served. This is what is ordinarily known as ' proof of service '. The Tribunal was, therefore, right in holding that service by affixture had to be proved, and that, in the absence of proof, such service could not be treated as valid service.'

4. In short, therefore, it was held by this court, that in cases other than cases of personal service, service should be effected in a manner sanctioned or prescribed by law ; so far as the Act is concerned, Section 64 is the only provision therein relating to service of notices and that section in turn prescribes the mode of service of notice as that applicable to a summons issued by a court under the Code. To this extent Section 64 is certainly exhaustive. Whether the provisions of the Code governing personal service would govern personal service of notices under the Act did not arise in that case, and does not in this case as well; it is, therefore, unnecessary to examine that aspect here, though I am inclined to say that compliance with Rule 18 of Order V in the Code requiring the serving officer to endorse on or annex to the summons a return stating the details made mention of therein would be a wholesome practice; it would, to a large extent, check false returns.

5. In Ramendra Naih Ghosh v. Commissioner of Income-tax : [1967]66ITR414(Cal) with reference to Section 63 of the Indian Income-tax Act, 1922, it was held :

' Since in this case the notices could not admittedly be served on the petitioner by post, the only other way they could be served is by the procedure laid down for service of summons under the Code of Civil Procedure.' (Underlining* by me)

6. And, dealing with an argument that what is required of the Commissioner by Section 33B of Income-tax Act is to give the assessee an opportunity of being heard and that, therefore, the impugned service of notice, though not in accordance with Section 63, is valid, the same decision pointed out at page 434 :

' The statutory notice under Section 63(1) of the Income-tax Act readwith Order V, Rule 17, of the Code of Civil Procedure has one advantagethat even though such notice may not be served personally on the assesseethere is a statutory presumption attached to such service. Once it can besatisfactorily proved that all the requirements of Section 63(1) of theIncome-tax Act and Order V, Rule 17, of the Code of Civil Procedure, havebeen satisfied, there would be a statutory presumption that the service hasbeen done properly and regularly.'

7. In dismissing the appeal preferred against the above decision, the Supreme Court said in Commissioner of Income-tax v. Ramendra Nath Ghosh : [1971]82ITR888(SC) as follows :

' Admittedly, the assessees have not been personally served in these cases. Therefore, we have to see whether the alleged service by affixation was in accordance with law. It is necessary to mention that, according to the assessees, they had no place of business at all. They claim that they have closed their business long before the notices were issued. Hence, according to them, Mr. Neogi must have gone to a wrong place. This contention of the assessees has been accepted by the Appellate Bench of the High Court. Bearing these facts in mind, let us now proceed to consider the relevant provisions of law.......'(Underlining* by me)

' As seen earlier the contention of the assessees was that at the relevant time they had no place of business. The report of the serving officer does not mention the names and addresses of the persons who identified the place of business of the assessees. That officer does not mention in his report nor in the affidavit filed by him that he personally knew the place of business of the assessees. Hence, the service of notice must be held to be not in accordance with the law. The possibility of his having gone to a wrong place cannot be ruled out. The High Court after going into the facts of the case very elaborately, after examining several witnesses, has come to the conclusion that the service made was not a proper service.' (Underlining by me).

8. These decisions, I think, support the view taken by this court in I. T. Rs. Nos. 119 and 120 of 1971 (Agrl).

9. The learned Government Pleader relied on Ramnivas Hanumanbux Somani v. Venkataraman, Income-tax Officer : [1959]37ITR329(Bom) K. C. Tiwari & Sons v. Commissioner of Income-tax : [1962]46ITR236(Bom) Commissioner of Income-tax v. Bhanji Kanji's Shop : [1968]68ITR416(Guj) and Commissioner of Wealth-tax v. Mrs. Illa Pal Choudhury : [1971]82ITR936(Cal) in support of his contention that Section 64 is not exhaustive. In the first and last of these cases, it was as a matter of fact found that service of notice was in accordance with the provisions of the Code of Civil Procedure, Really, therefore, these two decisions arc of no assistance to the learned Government Pleader. The other two cases no doubt hold that the mode of service of notice provided in Section 63(1) of the Indian Income-tax Act, 1922, is not exhaustive, but it appears to me that the decisions in these two cases are based more on the principle that when it is proved, by admission or evidence, that an assessee has, as a ' matter of fact, received notice though not properly served on him, he cannot thereafter raise the contention that there was no valid service of notice, especially when he had participated in the proceedings pursuant to the notice received but notserved ; in such circumstances, the assessee must be deemed to have waived that irregularity. [See K. C. Tiwari & Sons v. Commissioner of Income-tax : [1962]46ITR236(Bom) and Commissioner of Income-tax v. Bhanji Kanji's Shop : [1968]68ITR416(Guj) ]. That question does not arise in the case on hand and, therefore, need not be examined any further.

10. In view of the above discussion, the petitioners are entitled to all the reliefs prayed for. I do not, therefore, propose to consider the alternative contention raised by them on the basis of non-service of notice on the third petitioner. This petition is allowed. Parties shall suffer their costs.


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