1. In this reference under section 66(1) of the Indian Income-tax Act, 1922, (hereinafter referred to as the Act,), the following question has been referred by the Tribunal at the instance of the Commissioner :
'Whether, on the facts and in the circumstances of the case, the reassessment made against the assessee on the basis of the notice issued by the Income-tax Officer in the name of the assessee under section 22(2) read with section 34(1) (a) and served on Kumbhar Nameri, is valid and legal ?'
2. However, in order to bring out the real controversy between the parties we reframe the question as follows :
'Whether, on the facts and in the circumstances of the case, the notice under section 22(2) read with section 34(1) (a) of the Income-tax Act, 1922, was validly served on the assessee ?'
3. The assessee is an individual and the relevant assessment year is 1951-52, the previous year being Samvat year 2006. The assessee was carrying on business in tobacco, bidi leaves and other goods at Anjar in Kutch District. The original assessment on the assessee for the assessment year 1951-52 was made on January 11, 1952, on a total income of Rs. 11,284. Thereafter, the Income-tax Officer received some information, which led him to believe reasonably that the income chargeable to tax had escaped assessment so far as the assessment year 1951-52 was concerned; and after obtaining the sanction of the Commissioner of Income-tax the Income-tax Officer reopened the assessment for the year 1951-52, by a notice issued under section 34(1) (a). This notice was issued on April 16, 1959, and was served on May 4, 1959, on Kumbhar Nameri, a part-time employee of the assessee. The assessee filed a return under protest and objected to the validity of the reopening of the assessment under section 34(1) (a). The assessee did not contest issued by the Income-tax Officer the validity of the service of the notice issued by the Income-tax Officer under section 22(2) read with section 34(1) (a). This return under protest was filed on June 29, 1959. The income-tax Officer found that the aggregate amount of Rs. 51,093 had escaped tax in the year 1951-52 and he, therefore, completed the assessment on that basis under section 23(3) read with section 34(1) (a). The assessee thereafter filed an appeal against this assessment and before the Appellate Assistant Commissioner the assessee for the first time raised a legal obligation urging that the notice issued by the Income-tax Officer under section 22(2) read with section 34(1) (a) was not validity served upon him and the reassessment was, therefore, bad in law. The Appellate Assistant Commissioner accepted that contention and cancelled the assessment. The department appealed t the Income-tax Tribunal against this order of the Appellate Assistant Commissione. The Tribunal set aside the order and restoed the appeal to the Appellate Assistant Commissioner and directed him to dispose of the legal objection after giving due and reasonable opportunity of the Income-tax Officer of beine heard. In pursuance of that order, the appeal went back to the file of the Appellate Assistant Commissioner and after hearing the parties, the Appellate Assistant Commissioner held that the notice for the reopening of the assessment issued by the Income-tax Officer was validly served on the assessee and that the reopening of the assessment under section 34(1) (a) was quite in order. On merits the Appellate Assistant Commissioner held that only an amount of the Rs. 16,592 had escaped income-tax and he accordingly revised the order of the Income-tax Officer. Against this decision of the Appellate Assistant Commissioner after remand the assessee filed an appeal to the Tribunal and it was conteded before the Tribunal once again that the notice issued under section 22(2) read with section 34(1) (a), though with correct details, was imporperly severd on the temporary servant of the assessee, viz., Kumbhar Nameri. It was further contended that the reassessment made in pursuance of such improperly served notice was invalid. The Tribunal upheld this contention of the assessee and cancelled the assessment on the ground that the reassessment having been made in pursuance of such notice, which was improperly served, and, therefore, an invalid notice, was invalid and void and hence the assessment was cancelled. Thereafter, at the instance of the Commissioner, the question which has been set out above has been referred to us.
4. In its order in paragraph 3, the Tribunal has pointed out the contention which was urged on behalf of the assessee and the contention was that, though Kumbhar Nameri was neither specifically authorized by the assessee in writing not verbally so authorized, the filing of he return by the assessee after somehow getting the notice would not make an improperly served notice a valid notice. This contention urged before on bahalf of the assessee was accepted by the Tribunal.
5. The Tribunal in coming in its conclusion relied upon the decision of the Mysore High Court in C. N. Nataraj v. Fifth Income-tax, City Circle II, Bangalore, and some other decision of the Kerala High Court, where also, according to the Tribunal, a similar view was taken. A decision of the Bombay High Court directly in point does not appear to have been cited before the Tribunal. That decision is in K. C. Tiwari & Sons v. Commissioner of Income-tax. There the assessee was a firm of four partners with equal shars manufacturing and selling bidis at Nasik. For the assessment year 1952-53, corresponding accounting yea being S. Y. 2007, the assessee submitted a return of its total income on 19th February, 1953. Thereafter notices under section 22(4) and 23(2) for the production of the assessee's books of account were issued to the firm by the Income-tax Officer andas many as sixteen adjournments were given for the purpose at the request of the assessee. Finally, an ex parte assessment order was made under section 23(4) on January 31, 1957. After the ex parte assessment was made, an application was filed by the assessee under section 27 and from that application the reference ultimately went to the High Court. In this application, the allegation of the assessee was that the Income-tax Officer's letter, dated January 24, 1957, fixing the appointment for January 30, 1957, ws served on the gumasta of the assessee on January 29, 1957; and that the gumasta, who was then sick, could not intimate the date to the assessee and it was, therefore, contended that the assessee had sufficient reason not to be present before the Income-tax Officer on January 30, 1957. It was found by the Appellate Assistant Commissioner that on January 29, 1957, the gumasta was not ill as alleged by the assessee. On the facts of the case, the Tribunal held that Parasare, the gumasta, was acting as a duly accreditted agent in his dealings with the Income-tax Officer throughout and, therefore, had the implied authority to accept service of the notice on behalf of the firm. The question was then referred to the High Court :
'Whether, on the facts and circumstances of the case and in view of the past conduct of Parasare, the service of the notice dated January, 4, 1957, and letter dated January 24, 1957, on Parasare is a valid service ?'
6. After considering the provision of section 63(1) of the Act, the Bombay High Court came to the conclusion that the mode of service of notice or requisition provided in section 63(1) of the Income-tax Act is not exhaustive and it is permissible to have the service effected in a way other than the two modes mentioned in section 63(1). In an earlier decision of the Bombay High Court in Ramnivas Hanumanbux Somani v. Venkataraman, the same view was taken. The Bombay High Court pointed out that the receipt of the notice, dated January 4, 1957, was admitted by the assessee and then observed :
'Even assuming, therefore, that there was some procedural irregularity with regard to the service of that notice, the assessee must be deemed to have waived that irregularity by admitting that he had received the same and having, thereafter proceeded to obtain a further adjournment. For these reasons, in our opinion, the contention raised by Mr. Palkhivala that there was not a proper and valid service of notice i the present case, because the manager on whom the notice and the letter were served had no authority in wiriting to receive the same is unsustainable.'
7. This judgment of the Bombay High Court was delivered before the bifurcation of the bilingual State of Bombay on May. 1, 1960, and is, threfore, binding on us. Apart from the said decision being binding on us, we are in respectful agreement with the principle laid down in that decision. The mode of service which has been prescribed in section 63(1) of the Act provides for the mode of service of a notice or a rquisition as if it were a summons issued by a court under the Code of Civil Procedure, 1908. If a notice or requisition has bee served in a maner other than the manner laid down for the service of a summons under the Code of Civil Procedure, the question might arise for consideration whether in fact the assessee had received the notice or not and on the facts of each case, it will have to be decided whether even though the notice was not served in the manner laid down for the service of a writ or summons under Order V, Civil Procedure Code, notice had come to the knowledge of the assessee or whether the assessee had in fact receied the notice. In the instant case, Kumbhar Nameri was neither and accredited agent of the assesse nor an aurhotized agent for the purpose of receiving the notice. It is clear tha the notice srved on Kumbhar Nameri was not propertly served on the assessee on the date on which it was served on Kumbhar Nameri; but it is clear from the facts found by the Tribunal that the assessee himself filed a return in pursuance of that notice served on Kumbhar Nameri and, therefore, the notice must have been receivd by the asseessee before he filed the return on June, 29, 1959. In our opinoin, it would be taking too hyper-technical a view to hold that the notice served on the employee like Kumbhar Nameri, which is ultimately received by the assessee himself, could not be siad to be properly served on the assessee. We agree with the view of the Bombay High Court that the two modes, viz., (1) by registered post, and (2) in the manner similar to sevice o writ or summons under the Code of Civil Procedure, are not exhaustive and that it is permissible to hagve the otice served in a way not metioned in section 63(1) of the Act. We furthe agree that even if there is a procedural irregularity in the service of notice, if the assesee admits that he had received the notice orfrom the facts it can be found that he must have received the notice even later on, the contention urged on behalf of such an assessee that the notice was impropetly served must be rejected. The very fact that in the instant case the assessee filed the return indicates the thnotice mjust have bee receive by him. In the instant case, no possibility of any argument regarding the entire proceedings under section 34(1) (a) becoming time-barred could even arise because the limitation in the instant case woudl have expired under section 34(1) (a) as it then stood, on 31st March, 1960, and the return was filed on June 29, 1959.
8. In C. N. Nataraj v. Fifth Income-tax Officer, what happened was that the notices were addressed to the minor children of one Nagappa, the minor children being the assessee, were issued in the individual names of the minor assessee and not in the name of their guardian. These notice were served on one K. Shivanna, a clerk of Nagappa, the father of the minor assesseee; and thereafter the question arose whether the notices were properly served on the assessee. It was on these facts that the notices issued under section 148 of the Income-tax Act o 1961 were held not to have been properly served on the assessee. At page 255 of the report it has been pointed out that the notices served on the minor assessee, which formed the basis of the proceedings uder secion 147 of the Act, were wholly invalid notices and the petitiones could not be assessed in pursuance of those notice. The decision in Ramnivas's case, being the earlier decisio of the Bombay High Court, was cited before the Mysore High Court but on the facts of the case before it the Mysore High Court took the view that it was not necessary to consider the correctness of the decision of the Bombay High Court in Ramnival's case. Thus, the view taken by the Bombay high Court in Ramnivas's case and followed in K. C. Tiwari's case has not been dissented from or has not in any way been adversely commented puon by the Mysore High Court. Under these circumstances, the decision of the Mysore High Court in C. N. Nataraj's case can be clearly distinguished nad it must be borne in mind that immediately after the notices were served, the minor assessee had filed writ petitions challenging the validity of the notices issued under section 148 of the Act of 1961, similar to section 34 of the Act of 1922.
9. The two decisions of the Kerala High Court in Commissioner of Income-tax v. Thayaballi Mulla jeevaji Kapasi and Suseela Sadaandan v. Additional Income-tax Officer, Kozhikode can also be distinguished on the facts of each of these two cases. In Thayballi's case the notice was served upon the so of the assessee though the place of residece o the assesee had been intimated to the Income-tax Officer. The questio which arose before the Kerala High Court in that case was basically the questio of waiver of a notice, the otice being invalid. The Karala High Court came to the conclusion that the service of teh requisite notice on the assessee is a condition precedent to the validity of any reassessment under section 34; and if a valid notice is not issued as drequired, proceeding taken by the Income-tax Officer in pursuance of a invalid notice and cosequential orders of reassessment passed by him woudl be void and inoperative. In Suseela's case what happened was that A, an assessee, agianst whom an assessment order had been made, died leavig several heirs and a will by which he made various provision with regard to the distribution of his estate among the heirs and appointed three persons including B, one of his sons, as executors of the will, and a notice for reassessment under section 34 of the Income-tax Act, 1922, was adressed to 'the late A by legal heirs B and others' and was served on B only. Under these circumstances, the Kerala High Court held that the notice was not a valid notice under the law as it was not served on all the three executors and the proceedings for reassessment and recovery of tax taken in pursuance of the notice were illegal and avoid. We may point out that against this decision of the Kerala High Court, an appeal was filed by the revenue to the Supreme Court and, as has been pointed out by the Andhra Pradesh High Court in Income-tax Officer, Gudur v. Muramreddy Sulochanamma at page 112 of the report, the Supreme Court had set aside the judgmet of the Kerala High Court in Suseela's case and remanded the case to the High Court for consideration of certain matters; but so far as the question of issue of notice to all the legal representatives was concerne, the Supreme Court has not set aside the decision of the Kerala High Court. The Andhra Pradesh High Court has observed :
'It follows, therefore, that what is required is that notices have to be served on all the legal representatives if there are more than one, unless it is shown that any one person represents the entire estate'.
10. On this principle, as pointed out at page 112 of the report, it is obvious that the conclusion of the Kerala High Court that the notices were not properly served on all the persons who represented the estate of the deceased assessee, was correct. Thus the above three decisions, one of the Mysore High Court and two of the Kerala High Court, on which the Tribunal relied for its conclusion in the instant case, can all be distinguished.
11. In our opinion, on the facts of the instant case, particularly in view of the fact that the return was filed by the assessee in pursuance of the notice which was served on the temporary employee, Kumbhar Nameri, it is clear that the notice must have been received by the assessee; and that being the case, the proceedings under section 34(1) (a) must be deemed to have been properly instituted and there was no invalidity so far as the notice under section 34(1) (a) is concerned.
12. We, therefore, answer the question is reframed above in the affirmative. The assessee will pay the costs of this reference to the Commissioner.