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income-tax Officer, 'i' Ward and Ors. Vs. B.N. Bhattacharya (03.12.1976 - CALHC) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberAppeal from Original Order No. 745 of 1969
Judge
Reported in81CWN351,[1978]112ITR423(Cal)
ActsIncome Tax Act, 1922 - Section 34(1); ;Code of Civil Procedure (CPC) , 1908 - Orders 5 and 41, Rules 17, 19, 27(1)
Appellantincome-tax Officer, 'i' Ward and Ors.
RespondentB.N. Bhattacharya
Appellant AdvocateBalai Chandra Pal and ;Nanda Lal Pal, Advs.
Respondent AdvocateNoni Coomar Chakraborty, ;Sanjoy Bhattacharya and ;Mihir Chakraborty, Advs.
Cases Referred and Jhabarmull Dudhwalla v. Bhagatram Serowgie
Excerpt:
- .....that notice for the period 1940-41 to 1950-51 had not been served.5. before us, the record of the process server and the income-tax officer were produced. at this stage, it may be mentioned that the learned advocate for the respondent objected to such production of record and such record being relied upon at the appellate stage. we, therefore, directed the appellant to file an affidavit annexing the copies of the records. the income-tax officer has done so. on behalf of the respondent again it was contended that such additional evidence could not be relied upon or should not be allowed to be relied upon in view of the provisions of order 41, rule 27, of the code of civil procedure. reliance was also placed on the decision of this court in debi charan lal v. sheik mehdi hussain [1916] 20.....
Judgment:

Sabyasachi Mukharji, J.

1. The subject-matters of challenge in the writ application out of which this appeal arises were the notices under Section 34(1)(a) of the Indian Income-tax Act, 1922, for the assessment years 1940-41 to 1950-51, 1952-53 and 1953-54.

2. It is the case of the revenue that the petitioner-respondent was assessed to income-tax for the assessment year 1939-40 on the basis of the return filed by him. For the assessment years 1941-42 to 1943-44, the respondent did not file any return and the assessments for the said years were made at nil under Section 23(4) of the Indian Income-tax Act, 1922. For the assessment year 1944-45 and subsequent years up to 1948-49, no action had been taken for the respondent's assessment under the Act. For the assessment year 1949-50, the respondent's assessment file was closed on the basis of the report submitted by an inspector of income-tax regarding the financial position of the respondent and, thereafter, no further action was taken for the assessment of the respondent up to the assessment year 1953-54. But it appeared to the revenue that the income of the respondent had escaped assessment due to the failure and/or omission on the part of the respondent to disclose fully or truly all relevant and material facts. It appeared to the income-tax department that the respondent had bank accounts in his own name in the National & Grind-lays Bank and French Bank. He had also bank accounts in the names of Eastern Commercial Corporation, Bengal Industrial Corporation, West Bengal Industrial Corporation and many other names. From these accounts it appeared that the respondent had been handling huge amounts of cash every day. In one such bank account, he had deposited a sum of Rs. 3,87,959 on a single day, namely, the 25th January, 1948. On several other dates he had deposited substantial amounts, as mentioned in paragraph 18 of the affidavit-in-opposition filed on behalf of the revenue. It further appeared that the respondent during the relevant periods had withdrawn substantial amounts from the bank accounts and he had regularly made large monthly payments to night clubs like Golden Slipper, Firpos, etc. On enquiry it was ascertained that there were three cars registered in his name including a Cadillac which he was stated to have purchased in 1952 for the sum of Rs. 50,000. From the payments made by the respondent to travel agents for the purchase of travellers cheques, it was also apparent that he had been touring abroad from time to time. From these facts the revenue formed the belief that the income of the respondent had escaped assessment and, accordingly, the notices were issued.

3. The respondent contended in his writ application that the said notices had not been served upon the respondent. For the assessment years 1952-53 and 1954-55, the notices under Section 34(l)(a) of the Act were served by registered post on 5th April, 1961, and on 25th January, 1961, respectively. In view of the fact that such service by registered post had not been specifically denied by the respondent in his affidavit-in-reply, D. Basu J., before whom this writ application came up for hearing, accepted the position that the respondent had been served with the notices for these years. In this appeal, no grievance was made about that finding of the learned trial judge. The learned trial judge, however, was of the view that notices for the assessment years 1940-41 to 1950-51, which were alleged to have been served by affixation, had not been properly served. He, accordingly, held that notices for the aforesaid period had not been served in accordance with law and, therefore, he made the rule nisi absolute to the extent that it challenged the service of the notices for the aforesaid years.

4. Before us, in this appeal the propriety of that conclusion of the learned trial judge is under challenge. Under Section 63(1) of the Indian Income-tax Act, 1922, notices are required to be served as if these were summons issued by a court under the Code of Civil Procedure. We, have, therefore, to refer to Order 5, Rule 17, of the Code of Civil Procedure, as amended by the Calcutta High Court. The said rule after amendment enjoins that where the defendant refuses to sign the acknowledgment or where the defendant is absent from his residence at the time when service is sought to be effected on him and there is no likelihood of his being found thereat within a reasonable time and further there is no agent empowered to accept service of the summons on his behalf nor any other person on whom the 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 and shall thereafter return the original to the court by which it was issued, with a report, endorsed thereon or annexed thereto stating that the copy has been so affixed and the circumstances under which the serving officer had done so, and the name and address of the person by whom the house was identified and in whose presence the copy was affixed. Rule 19 of Order 5 enjoins that when a summons is returned under Rule 17, the court shall if the return under that rule has not been verified by the declaration of the serving officer, and may, if it has been so verified, examine the serving officer, on oath, or cause to be so examined by another court, touching the proceeding and may make such further enquiry into the matter as it thinks fit and then shall declare that the summons has been duly served or order for such service as it thinks fit. Before the learned judge, an affidavit-in-opposition was filed in which it was stated that as the respondent could not be found at the addresses given, namely, at 8/1, Dacres Lane, Calcutta, and also at 19, Mayfair Road, Calcutta, the notice was affixed on the 30th March, 1962, at 8/1, Dacres Lane. After analysing the provisions of the law and examining the affidavit-in-opposition, the learned judge found that the name of the serving officer had not been disclosed and no affidavit from him had been put in. Furthermore, no independent record was produced before the learned trial judge. In the premises, the learned judge was of the opinion that it had not been established before the court that the service had been effected in the manner prescribed by law. In the circumstances, the learned judge held that notice for the period 1940-41 to 1950-51 had not been served.

5. Before us, the record of the process server and the Income-tax Officer were produced. At this stage, it may be mentioned that the learned advocate for the respondent objected to such production of record and such record being relied upon at the appellate stage. We, therefore, directed the appellant to file an affidavit annexing the copies of the records. The Income-tax Officer has done so. On behalf of the respondent again it was contended that such additional evidence could not be relied upon or should not be allowed to be relied upon in view of the provisions of Order 41, Rule 27, of the Code of Civil Procedure. Reliance was also placed on the decision of this court in Debi Charan Lal v. Sheik Mehdi Hussain [1916] 20 CWN 1303; AIR 1916 Cal 317, Municipal Corporation of Greater Bombay v. Lala Pancham, : [1965]1SCR542 and Shanbaggakannu v. Muthu Bhattar, : AIR1971SC2468 . But as was observed by the Supreme Court in the case of K. Venkataramiah v. A. Seetharama Ready, : [1964]2SCR35 , that, under Rule 27(1) of Order 41 of the Code of Civil Procedure, the appellate court has the power to allow additional evidence not only if it requires such evidence 'to enable it to pronounce judgment', but also for 'any other substantial cause'. There might well be cases where even though the court found that it was able to pronounce judgment on the state of record as it was, and so it could not strictly say that it required additional evidence to enable it to pronounce judgment, it still considered that in the interest of justice something which remained obscure should be filled up so that it could pronounce its judgment in a more satisfactory manner. Such a case would be one for allowing additional evidence for any other substantial cause under Rule 27(1)(b) of Order 41 of the Code. In the instant case, in the affidavit-in-opposition filed before the learned trial judge, it had been stated that the notice had been served by affixation at 8/1, Dacres Lane, Calcutta.

6. It had been further stated that the process server was unable to serve the notices personally at 8/1, Dacres Lane, as well as at 19, Mayfair Road. But as the report of the process server was not produced before the learned trial judge and as there was no further affidavit clarifying the circumstances under which the notices were affixed, the learned judge was unable to find out whether the notices had been affixed in accordance with the requirements of law. The learned judge did not as such disbelieve the statement in the affidavit-in-opposition that the notices had been served by affixation. But the learned judge was unable to find the circumstances under which the notices were affixed and, therefore, could not hold that those were affixed in accordance with law. Such circumstances have been sought to be clarified by placing reliance on the report of the process server and the entries in the order sheets of the Income-tax Officer and we required the production of such records in order to find out under what circumstances the process server came to affix the notices, alleged to have been affixed at 8/1, Dacres Lane. All the records were produced and therefrom it appears the circumstances in which the process server had come to affix the notices. In the declaration of the process server it has been stated that after he was ordered by the Income-tax Officer to serve the notices, he went to serve the said notices on 28th March, 1962, at 12'30 p.m. and again on 29th March, 1962, at 3.50 p.m. but could not find the respondent and enquired of the persons who were there whether they would accept service. But they declined to do so and they refused to inform as to when and where the respondent would be available. Thereupon, the process server stated that he informed the concerned Income-tax Officer and the concerned Income-tax Officer had directed him to try again at 19, Mayfair Road, and there also he met with the same fate and thereupon pursuant to the direction of the Income-tax Officer the process server stated that he had affixed the said notices at 8/1, Dacres Lane, on 30th March, 1962. The said declaration is witnessed by the Inspector of the income-tax department. The order sheet of the Income-tax Officer indicated that on 30th March, 1962, he had been informed that the notices could not be served at 19, Mayfair Road, and thereafter he directed service by affixation at 8/1, Dacres Lane. The entries in the order sheet on the 31st March, 1962, indicated that the Income-tax Officer had examined the Inspector and the process server and he was satisfied that the notices were validly served. On behalf of the respondent it was contended that the said report of the process server was defective. It is true that the report has not been stated in very clear language, but if the report is read in its entirety along with the entries in the order sheet, it would be apparent that the process server first went to 19, Mayfair Road, and thereafter went to 8/1, Dacres Lane. On behalf of the respondent it was further submitted that in order to be a valid service by affixation, it must be shown that the process server had gone to serve the notice at reasonable time. Going to a businessman's house when he was not supposed to be available was not making proper effort. It was further contended that proper and substantial efforts must be made to find the persons to be served. Reliance in this connection was placed on the observations of this court in the case of Kassim Ebrahim Saleji v. Johurmull Khemka [1916] 20 CWN 173; AIR 1916 Cal 181 (2) and Jhabarmull Dudhwalla v. Bhagatram Serowgie [1947] 51 CWN 189. Whether in a particular case there were proper and substantial efforts or whether reasonable efforts had been made to serveyor find the person to be served, depends upon the facts and circumstances of that case. In the instant case, it is to be borne in mind that notices for the subsequent years and previous years had been served by registered post and these have been accepted. Here also the process server states that he went on two different dates at two different times at two different places but he could not find the respondent nor get any information about the time and place where the respondent could be found. In the background of the instant case, in our opinion, it could not be said that the notices had not been properly served. Further, in view of the fact that the Income, tax Officer, who had issued the said notices, was satisfied after examining the process server and the Inspector that the notices were served in accordance with Rule 19 of Order 5 of the Code of Civil Procedure. In that view of the matter, we are of the opinion that the respondent has failed to establish that the notices under Section 34(1)(a) of the Income-tax Act for the assessment years 1940-41 to 1950-51 had not been served in accordance with law.

7. In the premises, this appeal must be allowed and the judgment and the order of the learned trial judge are hereby set aside and the rule is discharged.

8. There will be no order as to costs.

9. As prayed for by the respondent, the operation of this order shall remain stayed till the end of the Christmas vacation.

M. M. Dutt, J.

10. I agree.


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