Sabyasachi Mukharji, J.
1. This is an application challenging a notice under Section 148 of the Income-tax Act, 1961, for the assessment year 1966-67. The impugned notice was issued on the 25th February, 1975. The case of the petitioners is that the petitioner No. 1 is a foreign nonresident company. It has its registered office at Singapore. According to the petitioners the petitioner No. 1 did not have any place of business or establishment or connection with India Up to 1955, the petitioner No. 1 held all the shares of Messrs. Turner Morrison & Co. Ltd. and since 1956 the petitioner No. 1 being Hungerford Investment Trust Ltd. has been holding 51% shares in the said company. One Mr. B. N. Garg, petitioner No. 2, was appointed a director of the petitioner No. 1 for the purpose of looking after certain pending litigations according to the petitioners. On the 6th December, 1974, the petitioner No. 2 for and on behalf of the petitioner No. 1 was written to by the Income-tax Officer, Company Dist. II, Calcutta, in which it was stated that it appeared that the income had escaped assessment in terms of Clause (a) of Section 147 of the Income-tax Act in respect of income of the petitioner No. 1 and the petitioner No. 2 was asked to show cause why the assessments for the years 1965-66, 1966-67 and 1967-68 should not be reopened. In the said letter it was also stated that the Income-tax Officer intended to treat the petitioner No. 2 as the principal officer of the company under Section 2(35)(b) of the Income-tax Act, 1961, as, according to the Income-tax Officer, the petitioner No. 2 was looking after and managing the affairs of the petitioner No. 1 because there was no other person other than the petitioner No. 2 to look after and manage the affairs of the company including the legal affairs. The petitioner No. 2 was asked by the said letter to submit his representation by the 28th December, 1974. The petitioner No. 2 on the 24th February, 1975, wrote back to say that the said letter dated the 6th December, 1974, had been received by the said petitioner No. 2 on or about 19th February, 1975, and it was stated that the petitioner No. 2 was only looking after the legal cases of the company in India and could not be made the principalofficer of the company. On the 25th February, 1975, the impugned notice under Section 148 of the Income-tax Act, 1961, was issued. The said notice was addressed as follows :
M/s. Hungerford Investment Trust Ltd.,
represented by Sri B. N. Garg, Director,
3, Park Mansion, Park St., Calcutta.'
2. Counsel for the petitioner contended that the notice was invalid. It was submitted that a notice to the company could not be served in the manner done. Under Section 282 of the Income-tax Act, 1961, a notice or requisition can be addressed in the case of a company to the principal officer thereof. In this case the notice was to the company. Therefore, it could have been addressed and served on the principal officer of the company. Section 2(35) of the Income-tax Act, 1961, defines the 'principal officer'. Under Clause (a) of Section 2(35) he may be a secretary, treasurer or manager or agent of the company, and under Clause (b) may be a person connected with the management or administration of the company and upon whom a notice has been served by the Income-tax Officer intimating his intention to treat the person concerned as the principal officer. In this case the petitioner No. 2 is not the secretary nor the treasurer nor the manager of the petitioner No. 1 but the notice had been given on the 6th December, 1974, by the Income-tax Officer of his intention to treat the petitioner No. 2 as the principal officer of the petitioner No. 1. The question is whether such a notice was valid or not. It was contended that in the facts and circumstances of the case the petitioner No, 2 could not have been treated as the principal officer of the petitioner No. 1. Unlike the provisions of Section 2(12)(b) of the Indian Income-tax Act, 1922, the present provision requires that the person must be connected with the management or administration of the company. Under the Act of 1922 connection with the company as such would have been sufficient. Under the present Act in order to make a person the ' principal officer ' the connection must be for the management or administration of the company.
3. It has been alleged that the petitioner No. 2 was only a director. It is also the case of the petitioners that petitioner No. 2 looks after the litigations and the pending work of the petitioner No. 1 in India. It is indisputable that there is no other authority in India to deal with the affairs of the petitioner No. 1. In these circumstances, if the Income-tax Officer treats the petitioner No. 2 as one connected with the management or administration of the company, can it be said that the Income-tax Officer was acting without material or whimsically. It is not necessary that the person concerned should be actually managing or administering the company. What is required is connection with the management or theadministration of the company. In the facts and circumstances of this case, in my opinion, it cannot be said that the finding that the petitioner No. 2 was connected with the management or administration of petitioner No. 1 is based on no material or is wholly arbitrary. It is the Income-tax Officer's intention that is important on this aspect of the matter provided his intention was based upon some material. At one point of time, there was some argument that the address of the petitioner No. 2 was given as the address of the petitioner No. 1 and in this connection reference was made in the affidavit-in-opposition on behalf of the revenue to the entries in the telephone directory for June, 1972. On the last occasion when the application was heard in part, counsel for the revenue contended that the said directory was at that moment not available. Therefore, delivery of judgment was postponed till to-day in order to enable the revenue to produce the directory if such directory had any relevance to the issue in this case. To-day on behalf of the revenue, solicitor for the Central Government states that they are unable to procure such directory for 1972. Such performance of efficiency from a Government department is of course not uncommon that the solicitor for the income-tax department cannot from the Posts & Telegraphs Department of the Central Government produce the telephone directory in court upon which the Central Government wishes to place some reliance. Such a directory, however, was produced on behalf of the peti-tioners and no such entry as contended for by the counsel for the revenue was apparent from the entries in the said telephone directory. Be that as it may, the question is whether the impugned notice treating the petitioner No. 2 as the principal officer can be challenged as bad. Counsel for the petitioner drew my attention to the provisions of Section 163 of the Income-tax Act, 1961, for the purpose of contending that the petitioner No. 2 could not be treated as the agent of petitioner No. 1. In this case, in my opinion, provisions of Section 163 will have no application. Indeed, it does not appear that the revenue was treating the petitioner No. 2 ss the agent of petitioner No. 1. Reliance in this connection was placed on the decision of the Andhra Pradesh High Court in the case of Income-tax Officer v. Official Liquidator : 100ITR44(AP) , where the learned single judge of the Andhra Pradesh High Court had held that the official liquidator acting under Section 497(6) of the Companies Act was in no manner connected either with the management or administration of the company in voluntary liquidation and was not the principal officer as defined under Section 2(35) of the Income-tax Act, 1961. The position of the liquidator is, in my opinion, different from the position of the petitioner No. 2 functioning as he was in the peculiar way as a director of the petitioner No. 1. Even then I have my doubts whether an official liquidator cannot be treated as a person connected with the administration or management of the company.Indeed, I find in some of the cases a contrary view about the role of the official liquidator has been taken. Reference in this connection may be made to Mysore Spun Silk Mills Ltd. (In liquidation), In re : 68ITR295(KAR) . It is not necessary for me to go into this aspect of the matter in the facts and circumstances of this case.
4. It was then contended that before treating a person concerned as a principal officer under Section 2(35) of the Income-tax Act, 1961, the Income-tax Officer should determine that question upon hearing the submission or representation by the person concerned. I am unable to accept this contention. For treating a person as the principal officer for the purpose of Section 2(35) of the Income-tax Act, if on prima facie materials which have rational connection with that finding, the Income-tax Officer indicates the intention to the person concerned treating him as the principal officer, in my opinion, the requirements of law are fulfilled. It is a part of the machinery provision and must be construed and viewed in that light. The fact that the expression ' principal officer ' was scored out in the notice actually served does not, in my opinion, affect the position. In the facts and circumstances of the case it is manifest that the petitioner No. 2 was being treated as the principal officer and the notice was served upon him in that capacity. In the aforesaid view of the matter, the contentions urged in support of this application cannot, therefore, be accepted.
5. The application is, therefore, rejected. The rule nisi is discharged. Interim order, if any, is vacated.
6. Therefore, there will be no order as to costs.
7. There will be a stay of operation of this order for four weeks.