Sabyasachi Mukharji J. - On the 4th of September, 1958 the petitioner, Vishan Swarup was assessed under section 23 (3) of Indian Income Tax Act, 1922 on a total income of Rs. 18,602/- for the assessment year 1955-56. By notices under section 148 of the Income Tax Act, 1961 allegedly served on the petitioner on the 22nd of March, 1972 as well as on the 28th of March 1972 the said assessment under Article 226 of the Constitution challenges the said reopening.
2. The first question, is, whether the petitioner was served with notices under section 148 of the Income Tax Act, 1961. The service of notice under section 148 is mandatory and is a condition precedent for the initiation of the re-assessment proceeding. The said service in view of the provisions of section 282 of the Income Tax Act, 1961 must be made as if it was a summons issued by a Court under the Code of Civil Procedure. Under Order 5, Rule 17 of the Code in order to be a valid service by affixation on the ground that the person to be served was not available, it must be shown that reasonable and diligent efforts had been made to find the person at the place where he was likely to be available. My attention was drawn to the Calcutta Amendment of Order 5, Rule 17 of the Code which provides that attempt must be made to serve the person concerned at his residence. In this connection reference may also be made to Order 5, Rule 20 which provides for substituted service where the Court is satisfied that there is reason to believe that the defendant was keeping out or away for the purpose of avoiding service or summons cannot be served in the ordinary way, then it can be directed that the summons may be served by affixing a copy of the notice upon a conspicious part of the house in which the person concerned last resided or carried on business and also by affixing a copy at the Court house. The first point urged in support of this application was that the petitioner resided at 7A, Elgin Road, Calcutta, and that the revenue knew that fact and even then no attempt had been made to serve the petitioner at the said premises. In this connection reference was made to the verification of the petition where the petitioner has described himself as residing at 7A, Elgin Road, as well as to the deposition of the petitioner on the 25th of January 1971 before the Income Tax Officer wherein he had stated that he resided at 7 A, Elgin Road, Calcutta, and that was his permanent address. It appears, however, that in the returns filed by the petitioner for the assessment years 1972-73 and 1973-74 on the 31st of July, 1972 and the 31st of August 1973 respectively the petitioner had shown his business address at 29 A, Sir Hariram Goenka Street, Calcutta, and also as his address for residence. It further appears that in the estimate for advance tax filed on the 17th of March, 1972 the petitioner indicated his address as No. 29 A. Sri Hariram Goenka Street, Calcutta. It appears that on a previous occasion by a letter dated the 10th of November, 1972 the petitioner had informed the Income Tax Department that he had changed his place of business from 12 A, Netaji Subhas Road, Calcutta, to 5, Clive Row, 9th Floor, Calcutta but in the return filed during the intervening period on the 31st July, 1972 he showed his address at 29 A, Hariram Goenka Street. A letter was received by the Income Tax Department on the 16th of March which was dated nil where in the petitioner sought to inform the Income Tax Department that he was conducting his business from 12 A, Netaji Subhas Road, Second Floor. He did not however give any room number of the particular floor of 12 A, Netaji Subhas Road. In the aforesaid view of the matter in my opinion for the purpose of service of the notice it must presumed that the petitioner was residing at his business address and that was the address given to the Income Tax Department. As a matter of fact apart from verification there is no definite statement in the petition that the petitioner was residing at 7 A, Elgin Road, Calcutta. The question, therefore, is whether at his business place which was given as his residential address the notice had been served in accordance with law, that is to say whether either in accordance with the provision of Order 5, Rule 17 or Order 5, Rule 20 of the Code of Civil Procedure. The principles and the manner in which this question has to be determined are well settled. Reference may be made to the observations of the Court in Jabarmull Dudhwalla vs. Bhagataran Serowgir, 51 C.W.N. 189; Tripura Modern Bank Ltd. vs. Bansen & Co., A.I.R. 1952 Cal. 781, Commissioner of Income Tax, Punjab, Jammu and Kashmir and Himachal Pradesh vs. Daulat Ram Khanna, 65 I.T.R. 603; Rameswar Sirkar vs. Income Tax Officer, 'A' word, Special Survey Circle I & other, 88 I.T.R. 374; Lilooah Steel and Wire Co. Ltd. vs. I.T.O., B, Ward, District II(I) Calcutta, 86 I.T.R. 611; C.I.T., W.B. & Ors. vs. Kiron Debi Singhee, 70 C.W.N. 414 and Gopiram Agarwalla vs. First Additional I.T.O. & Ors., 37 I.T.R. 493.
3. Therefore it appears that the service of the notice is mandatory and the said service must be in accordance with the procedure enjoined by the Code of Civil Procedure either under Order 5, Rule 17 or under Order 5, Rule 20. The service can therefore be only after reasonable and diligent attempts had been made to find the person concerned. What is reasonable and diligent, however, depends upon the facts and circumstances of each case and whether a particular case the revenue has been able to establish that there has been proper service or not in an application under Art. 226 of the Constitution also depends upon the facts and circumstances of each case. It appears that prior to the reopening of the assessment, the petitioner was written to on the 23rd of February, 1972 asking the petitioner to explain why his assessment should not be reopened. That letter was also not received by the petitioner but had to be affixed at 29 A, Sir Hariram Goenka Street, Calcutta. In response to that letter the petitioner gave a reply which was considered reopening. Thereafter, it appears the petitioner wrote a letter which was received on or about the 16th of March, 1972 intimating that he has changed his place of business from 29 A, Sir Hariram Goenka Street to 12 A, Netaji Subhas Road, Second Floor, without indicating any room number. Prior to the receipt of that letter a notice was sent to be served and the return of the process server reads as follows :
'That on 21-3-1972 I received notice under section 148 dated 21-3-1972 for 1955-56 issued by the Income Tax Officer 'A' Ward, Dist. I (I), Calcutta, for service on Sri Vishan Swarup Agarwalla, 29A, Sir Hariram Goenka Street, Calcutta (name and address of the assessee.) I attempted to contact the assessee for personal service on 21-3-1972 between the hours 4 P.M. to 5 P.M. and having failed in these attempts I have served the notice by affixation on 22-3-1972 between the hours 1.30 P.M. in the presence of Sri Gopal Chandra Dey.'
Thereafter as mentioned hereinbefore the letter which was received the Income Tax Department on the 16th of March, 1972 was brought to the notice of the Income Tax Officer concerned and he directed his office to serve another notice at the Netaji Subhas Road address. The said notice was served on the 28th of March, 1972 and the return of the process server indicates as follows :-
'That on 28-3-1972 I received notice under section 148 dated 28-3-72 for the assessment year 1955-56 issued by the Income Tax Officer, A Ward Distt. I (I), Calcutta, for service on Sri Vishan Swarup Agarwalla of 12 A, Netaji Subhas Road, 2nd floor, (Name and Address of the Assessee) Calcutta, I attempted to contact the assessee for personal service on 28-3-1972 between the hours 16.00 to 16.30 and again on 29-3-72 between the hours 12.30 to 13.00 and having failed in these attempts I have served the notice by affixation on 29-3-72 between the hours 12.30 to 13.00 in the presence of Sri Tapan Kumar Mandal, Inspector, Distt. I (I), Calcutta.'
It appears that prior to the service on the 22nd of March, the Inspector had obtained directions from the Income Tax Officer concerned which reads as follows :-
'Attempted but the A was not present in his Guddi and other person did not receive the notice. Hence, returned.
Please attempt again on 22-3-72.
Again attempted on 22-3-72 between the hours 10.30 A.M. to 11 A.M. but the A was not present in his Guddi. Hence returned.
Please try again and serve it by affixation if necessary.
Served by affixation.
In the background of these facts, in my opinion, it must be held that the petitioner was served with the notice in the instant case. The return of the process server states that attempts were made to serve the assessee personally and having failed in these attempts, the notice was affixed. In view of the course and events narrated before, in my opinion, it should be presumed that reasonable and diligent attempt had been made to serve the notice on the assessee personally and that the revenue was proceeding cautiously and carefully giving opportunity to the assessee of showing cause before reopening. The process server in this attempt to serve the notice having failed to serve, he must have made reasonable and diligent attempts as enjoined by the provisions of Order 5, Rule 17. The procedural requirements of Order 5, Rule 20 of the Code and this were also followed in the instant case. In the aforesaid background, in my opinion, for the purpose of this application the petitioner cannot be allowed to contend that the notice had not been served upon the petitioner before the re-opening. The first ground of challenge, therefore, fails.
4. The second ground of attack against reopening was that the Income Tax Officer had no material to reopen the assessment. I am unable to accept this contention. The grounds for reopening have been indicated in the affidavit-in-opposition in the annexure E which reads as follows :
'Income-tax Officer, X Ward, Bombay reported that his assessee Sri R. R. Lakhiani, 480, Dhankar Building, Kalba Devi Road, Bombay encashed T.Ts. of total amount of Rs. 12.57 Lakhs between 14-9-54 and 19-11-54 through the Hindustan Mercantile Bank Ltd., Fort Bench, Bombay. These T.Ts. were encashed by him signing as 'Hukamdas Govindram' and 'K. Mangumal'. Sri Lakhiani was not prepared to disclose the source of these T.Ts. Sri J. S. Bindre, Bank Manager summoned by I.T.O., X Ward, Bombay, deposed that Sri Lakhiani was introduced to him by Shri Vishan Swarup Agrawalla, 29A, Sir Hariram Goenka Street, Calcutta. Sir Vishan Swarup Agarwalla requested the Bank Manager that he would be sending some money from Calcutta and Sri Lakhiani may be allowed to receive this money signing 'Hukumdas Govindram' and 'K. Mangumal'.
5. On the basis of this information, a show cause letter was issued to Shri Vishan Swarup Agarwalla vide copy of enclosed letter No. I (I)/V-51 A dt. 23-2-1972. A copy of reply of Sri Agarwalla dated nil (received in this office on 6-3-1972) is enclosed. Sri Agarwalla has denied the whole transaction. But in view of the deposition of Sri J. S. Bindre, the Bank Manager it is clear that he sent the above. T.Ts. from Calcutta to Bombay out of his income from some undisclosed sources.
6. In the above circumstances, I have reason to believe that because of the failure of the assessee to disclosed fully and truly all material facts necessary for his assessment, his income assessable to tax for the assessment year 1955-56 has escaped assessment. I therefore propose to reopen his income-tax assessment for 1955-56 assessment year for which the approval of the Board is solicited.'
Therefore, it appears that information was received on evidence of the Bank Manager that the petitioner had caused transmission of money to the extent of Rs. 12,00,000/- from Calcutta in some fictions name. If upon this information the Income Tax Officer forms the belief that these was not full disclosure in case of the assessee who had disclosed only an income of Rs. 18,000/- and odd it cannot be said that the Income Tax Officer was acting without any basis and without any material. The second ground of challenge to the notice must also, therefore, fail.
7. It was, lastly, contended that the Income Tax Officer was acting at the dictate of others. In aid to that submission reliance was placed on paragraph 5 of the petition where it was alleged that the Income Tax Authorities at Bombay had approached the Income Tax Officer concerned at Calcutta for initiating the proceeding but it appears that on or about the 31st of January, 1972 the Income Tax Officer was alleged to have come to the conclusion that there was no material for initiation of the proceeding but thereafter he changed his opinion. Counsel for the petitioner urged that the letter that the Income Tax Officer had written to the Bombay Income Tax Authorities should have been produced. The revenue, however, did not produce the same. Counsel for the petitioner contended that adverse presumption should be drawn on this account. Even if an adverse presumption is made and it is accepted that the Income Tax Officer had written at one time to the Income Tax Authorities at Bombay that he was of opinion that there was no ground for initiation of the re-assessment proceeding that does not, in my opinion, prevent the Income Tax Officer from coming to the belief on proper material that the assessment required to be reopened. So long as it is not established that the Income Tax Officer had surrendered his judgment or abandoned his discretion, it cannot be said that the Income Tax Officer acted at the behest of others. On the materials in the petition I am unable to accept the proposition that the Income Tax Officer was acting at the behest of others. In the aforesaid view of the matter, the challenge to the notice on this ground must also fail.
8. In the premises this application fails and is dismissed. The Rule nisi is discharged. Interim order, if any, is vacated. There will be no order as to costs.
9. The prayer for stay of operation of this order is refused.