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Gopiram Agarwalla Vs. First Additional Income-tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 125 of 1958
Judge
Reported inAIR1959Cal420,[1959]37ITR493(Cal)
ActsConstitution of India - Article 226; ;Code of Civil Procedure (CPC) , 1908 - Order 5, Rule 17; ;Income Tax Act, 1922 - Sections 22, 22(4), 34 and 63
AppellantGopiram Agarwalla
RespondentFirst Additional Income-tax Officer and ors.
Appellant AdvocateAdv. General
Respondent AdvocateMeyer and B. Pal, Advs.
DispositionAppeal allowed
Cases ReferredIn Subramania v. Subra
Excerpt:
- .....provisions of section 34 of the indian income-tax act, on the ground that there had been no proper service of notice under that section. it appears that in connection with assessment of income-tax for the assessment year 1948-49 the income-tax authorities intended to proceed against the appellant under the provisions of section 34(1)(a) of the income-tax act. that section requires that as the first step for further action the income-tax officer has to serve a notice containing certain requirements as indicated therein. it is also clear that ordinarily such a notice has to be issued within eight years after the expiry of the assessment year in question. the position till recently was that the notice had also to be served before eight years had expired. whether such service of the notice.....
Judgment:

K.C. Das Gupta, C.J.

1. This appeal is against the order of Sinha, J., discharging a rule that had been issued on the respondents to show cause why certain writs should not be issued under the provisions of Article 226 of the Constitution of India, the purpose being to enable the appellant to resist the proceedings that had been started against him under the provisions of Section 34 of the Indian Income-tax Act, on the ground that there had been no proper service of notice under that section. It appears that in connection with assessment of Income-tax for the assessment year 1948-49 the Income-tax authorities intended to proceed against the appellant under the provisions of Section 34(1)(a) of the Income-tax Act. That section requires that as the first step for further action the Income-tax Officer has to serve a notice containing certain requirements as indicated therein. It is also clear that ordinarily such a notice has to be issued within eight years after the expiry of the assessment year in question. The position till recently was that the notice had also to be served before eight years had expired. Whether such service of the notice within eight years after the expiry of the assessment year is still necessary or not after the recent amendment of the Income-tax Act need not be considered in the present appeal. Clearly, however, before service of the notice has been effected, the Income-tax Officer has no jurisdiction to take the further steps necessary for assessment of the income. In the present case a notice was actually issued before the expiry of eight years. A return of service was submitted to the Income-tax Officer and on the basis of this return the Income-tax Officer proceeded to issue a notice on the appellant under the provisions of Section 22(4) of the Income-tax Act calling upon the appellant to produce books and accounts as mentioned therein. The appellant's case being that there has been no proper service of the initial notice under Section 34 of the Act, he sought the aid of this Court under the provisions of Article 226 of the Constitution to prevent the Income-tax Officer from proceeding further in the matter on the assumption that there had been proper service of the notice. As I have already indicated, a rule was issued on the respondents to show cause why the writs as prayed for should not be issued. The only point raised at the hearing of the rule was whether there had been service in accordance with law of the notice under Section 34. Sinha, J., came to the conclusion that, in the facts and circumstances of the case, the service should be taken as having been effected in accordance with law. Accordingly, he dismissed the application and discharged the rule which had been issued.

2. The real question for decision in appeal is whether the learned Judge was right in his conclusion that there had been a valid service in accordance with law. If that conclusion is right, the appellant must fail. If, however, that conclusion is found to be wrong, the appellant will be entitled to appropriate directions so that the Income-tax Officer may not proceed on the basis of the invalid service.

3. Before, however, we can consider the merits of the question whether there has been service or not, it is necessary to decide a preliminary objection that has been raised on behalf of the respondents that no appeal lies against the order made by the Court below. Relying on the authority of the decision of this Court in The Justices of the Peace for Calcutta v. Oriental Gas Co. Ltd., 8 Beng LR 433, Mr. Meyer argued that in the present case the decision of Sinha, J., holding that the service has been effected, does not determine the proceedings, but only allows the proceedings to be continued before the Income-tax Officer. He contends that unless the result of the lower Court's decision is that the proceedings themselves are terminated, the decision is not a judgment within the meaning of Clause 15 of the Letters Patent.

4. The decision in 8 Beng LR 433, has for long been considered to be at least so far as this Court is concerned, the classic authority on the question as to what a 'judgment' is. In that case where an appeal was preferred against a decision of Phear, J., in the High Court, directing the issue of mandamus on the Justices of the Peace, it was argued that any order affecting the interest of the parties would amount to a judgment. This Court rejected that contention and after referring to a decision of the Madras High Court that the word 'judgment' could not be limited to the final judgment in a suit, nor indeed to a judgment in a suit at all, but must be held to have the more general meaning of any decision or determination affecting the right or the interest of any suitor or applicant observed:

'We are not, however, prepared to go to this extent. Such an interpretation would, as it seems to us, and as the learned Judges in that case seem to admit, put it in the power of a vexatious litigant to appeal against all the discretionary orders which the Judge of original jurisdiction may make in the course of the suit; and (as the learned Judges of the Madras High Court pointed out) with no result, as such orders would have to be, as a matter of course, confirmed. It would also give far more extensive right of appeal against the orders of a Judge of original jurisdiction in this Court than exists against the orders of a Judge of original jurisdiction in the mofassil; which we do not think at all probable that Her Majesty intended. We think that 'judgment' in Clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability. It may be either final, or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.'

This Court has consistently followed the pronouncement of Sir Richard Couch, C. J., and the other Judges in the above case and has considered the question, whether the decision affects the merits of the question by determining some right or liability, as the real index of a judgment in Clause 15'. In a recent case Asrumati Debi v. Rupendra Deb, : [1953]4SCR1159 the Supreme Court of India has also accepted as correct the view first laid down in 8 Beng LR 433, that to be a judgment under Clause 15 it is not sufficient that a decision will affect some question between the parties, but it must, while so affecting, determine some right or liability as between the parties.

5. The real question, therefore is whether the present decision determines any right or liability. I do not think it reasonable to look in this connection at the right or liability in the assessment proceeding itself. What has to be considered is whether the right or liability which the Court was called upon to determine has been determined. In the proceeding under Article 226 of the Constitution before Sinha, J., the question that was raised on the right of one party and the liability of the other was whether the Income-tax Officer was entitled to proceed to assess the appellant on the basis of service of notice under Section 34. If this question was left undetermined, there would not have been any determination of any question of right or liability. Once, however, this question is determined, as it had to be for a decision of the application under Article 226, I cannot see how it can be said that there has not been a determination of a right or liability as between the parties. There has, on the face of it, been such a determination and so, on the authority of 8 Beng LR 433, we are bound to say that the decision of Sinha, J., is a judgment within the meaning of Clause 15 of the Letters Patent and so an appeal lies.

6. But, says Mr. Meyer, the Oriental Gas Company's case 8 Beng LR 433 was itself a case where a mandamus had been issued by Phear, J., and still it was held that no appeal lay. One has only to examine the special procedure followed in mandamus proceedings in those days to understand that, the fact that no appeal was held to lie against the order issuing a writ of mandamus in that case can be no reason for thinking that an appeal would not lie in the present case. We have to remember that under the procedure as followed at present, a rule nisi is first issued on the opposite party, against whom relief under Article 226 of the Constitution is sought, to show cause why an order as prayed for should not be made commanding the opposite party to do something or prohibiting them from doing something or directing records to be called for under the writ of certiorari and quashing the proceedings or some other suitable direction given. At the hearing of the rule, the question whether such a commandment or direction should be made is finally determined. As against these two stages of mandamus proceeding as under the present procedure, the procedure followed in the old days, under which Phear, J., ordered the issue of a writ of mandamus, had three stages. First, a rule nisi was issued to show cause why mandamus should not be issued. At the hearing of this rule the question whether a command or prohibition should issue was not finally decided. What was decided at the hearing of this rule was whether a first mandamus should issue. The opposite party would have an opportunity to make a return to this mandamus also and at the second hearing the question whether the final command or peremptory mandamus, as it used to be called, would be issued was determined. In the case which had to be considered by this Court in 8 Beng LR 433, Phear, J., made only the preliminary order. Reference to the concluding words of his judgment makes this very clear. The concluding portion of the judgment is in these words:

'The mandamus of course will be based on a careful recital of the facts which constitute the case set forth by Mr. Blackburn. To that the Justices will have an opportunity of making a return, and it is possible, though they have made so poor a case on the affidavit before me, that they may be able in the return honestly to allege facts, which may shew that they are not liable under the Act to compensate for the damage which Mr. Blackburn alleges and complains of. If that be so, it will be a question hereafter whether an issue of that kind can in this Court be tried on a return to a mandamus, as it can be in England, and, as I may say, it ought to be under any reasonable procedure. If it cannot be tried on that return, it will have to be made the subject of a separate suit. In my judgment on the facts disclosed by the affidavit, the rule for a mandamus ought to be made absolute'.

What Sir Richard Couch, C. J. and Markby, J., who was sitting with him, had to consider was whether an appeal lay against the order of this issue of a preliminary mandamus, if one can use that description, that had been ordered by Phear, J, In holding that such an order is not a judgment Couch, C. J., pointed out :

'The mandamus which will be issued under it will not be a peremptory one, but merely to do certain things, or to show cause to the contrary; so that the order of the learned Judge does not determine any question whatever between the parties; it only initiates the proceedings by which the liability of the Justices to make compensation will be ascertained and determined'.

It is worth noting that the proceedings which are said to be initiated by the order of Phear, J., were proceedings before this Court in connection with the issue of mandamus. The position was that the question whether peremptory mandamus should issue or not had not been determined and unless that had been determined, the Court held there had been no such determination of a right or liability which could make the decision a judgment.

7. Mr. Meyer pointed out that in Asrumati's case : [1953]4SCR1159 the Supreme Court has taken the view that the fact that there has been a determination of the proceedings in the High Court was not sufficient and as even after the order of transfer of a suit under Clause 13 of the Letters Patent, the suit itself still remained to be decided, the order of transfer' or refusal to transfer would not amount to a judgment. I am unable to see how that decision in any way helps the respondents contention. If the proceeding in the application for an order for transfer could be considered to be an independent proceeding as distinct from a proceeding ancillary to the suit itself, there would be some force in the argument that Asrumati's case : [1953]4SCR1159 decides that the final determination of the proceedings in the High Court does not make the decision a judgment, if some connected proceeding still remains to be determined. It appears to me, however, wholly unreasonable to consider the proceedings commenced by an application for transfer of the suit under CL 13 of the Letters Patent as independent proceedings. The application for transfer of a suit is and should be considered an ancillary proceeding just as an application for adjournment or some other direction by the Court as to how to go on with the suit is/ The decision in Asrumati's case : [1953]4SCR1159 is, therefore, no authority for the proposition that as the proceedings before the Income-tax Officer remained alive after the decision of the application under Article 226 of the Constitution, the decision in the proceedings before the High Court should not be considered a judgment.

8. It appears to me clear, as I have already indicated, that the proceeding under Article 226 of the Constitution is an independent proceeding in which the question of the right of the Income-tax Officer to proceed with the assessment on the basis of the notice that had been issued, and is alleged to have been served, has been raised and determined. The decision of Sinha, J. is, therefore, a judgment and so an appeal lies.

9. Coming to the merits of the question of the validity of service, reference has to be made to Section 63 of the Income-tax Act which provides that 'notice or requisition under this 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, 1908'. In the present case service was attempted in accordance with the procedure laid down for the service of summons under the Code of Civil Procedure. Order V, Rules 15 and 17, leaving out of account the 'local amendments for Calcutta, are in these words:

Rule 15. 'Where in any suit the defendant cannot be found and has no agent empowered to accept service of the summons on his behalf, service may be made on any adult male member of the family of the defendant who is residing with him.

Explanation. A servant is not a member of the family within the meaning of this rule.'

Rule 17. 'Where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgment, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant, and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, and shall then return the original to the Court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed.'

From the affidavit of the serving officer it is clear that when he went with the notice to the address of the present appellant, he found the appellant had gone out. Then he offered the notice to a person who was pointed out to him as the appellant's son and on the kilter's refusal to accept the service, he affixed the notice. The first requisite that has to be established before such service can be held to be valid service in accordance with law is that the defendant could not be found. The mere fact that the serving officer went to the address and found him absent from that address is not sufficient to establish the requirement that the defendant could not be found. It was pointed out in Sakharam v. Padmakar, ILR 30 Bom 623, if a serving officer goes to a defendant's house, but does not find him there, and the defendant's adult son, who is in the house, refuses to accept service on behalf of the father, these facts by themselves do not justify the officer in resorting to the mode of service by affixation, and that he must, before effecting such service, inquire of the son as to where the defendant is and otherwise exercise due and reasonable diligence in finding the defendant. In Subramania v. Subra-mania ILR 21 Mad 419, it was again observed that mere temporary absence of the defendant does not justify the serving officer in affixing a copy of the summons on the door of the defendant's house. The law as clearly settled, therefore, is that the mere fact that the serving officer does not find the defendant--or the party to be served with the notice--at the address is not tantamount to saying that the defendant cannot be found, Before it can be said that the defendant cannot be found, it must be shown not only that the serving officer went to the place at a reasonable time when he would be expected to be present, but also that if he was not found, proper and reasonable attempts were made to find him either at that address or elsewhere. If after such reasonable attempts the position still is that the defendant is not found, then and then only it can be said that the defendant cannot be found. The irreststible conclusion from the affidavit in this case, therefore, is that the requisite that the defendant cannot be found has not been established and, consequently, the service by affixation is not a good service.

10. Mr. Meyer tried to persuade us that the strict requirement of the rule should not be insisted upon in the case of service of notice under the Income-tax Act where the provisions of the Code of Civil Procedure are only attracted through the medium of Section 63. He has contended that serious consequences would follow the omission of service by a certain date in income-tax cases which are not likely to occur in ordinary cases coming before the Civil Courts. In my opinion, the fact that serious consequences may follow the omission to serve in accordance with the procedure laid down by law can never justify the Court in relaxing the requirements of law. If such relaxation is necessary, the Legislature of the country is the proper authority to do so. It will be dangerous if in their attempt to relieve any party of the effects of his omission to follow the procedure required by law, because of the serious consequences that would otherwise follow, the Courts of Law should take upon themselves to permit a different procedure.

11. It does not appear that Sinha, J., took into consideration the effects of the words 'cannot be found' in coming to his conclusion that there had been proper service in accordance with law.

12. My conclusion, therefore, is that there has not been valid service in accordance with law of the notice under Section 34 of the Income-tax Act, and consequently the issue of the notice under Section 22 of the Act on the assumption that there has been service of notice under Section 34 is without jurisdiction.

13. It appears to me, however, that the appellant is not entitled to all the reliefs which he asked for in his application and in respect of which the rule nisi was issued. I think it will be proper, however, to give him relief by the issue of a writ in the nature of mandamus commanding the respondents to forbear from giving effect to the notice that was issued under Section 22(4) dated the 3rd Tune, 1957, and also commanding them to forbear from proceeding in the matter of assessment of the appellant on the assumption that there has been valid service of the notice under Section 34. Whether or not a fresh service of the notice that was already issued under Section 34 will give the Income-tax Officer jurisdiction to proceed with the assessment is a question on which we express no opinion.

14. I would accordingly allow the appeal, set aside the order made by the learned Judge and order that a writ in the nature of mandamus be issued with the directions as indicated above.

15. The appellant will get the costs of the appeal.

R.S. Bachawat, J.

16. I agree.


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