1953 (7) TMI 10 - HC - Income Tax

Summary

Issues Involved:
1. Validity of service of notice of demand under Section 63 of the Income-tax Act, 1922.
2. Whether the order of the Appellate Assistant Commissioner refusing to condone the delay falls within Section 30(2) and if the appeal to the Tribunal against the refusal to condone the delay was incompetent.

Detailed Analysis:

1. Validity of Service of Notice of Demand:
The primary issue revolves around whether the service of notice of demand on Mr. Bhaumick and Mr. Bannerjee was valid under Section 63 of the Income-tax Act, 1922, read with Order V, Rule 12, of the Code of Civil Procedure, and whether this service could be considered the starting point of limitation for an appeal.

Facts:
- The assessee submitted returns for the assessment years 1944-45 and 1945-46.
- Notices of demand were sent by registered post to the address provided by the assessee.
- Notices were received by Mr. Bhaumick on October 14, 1949, and Mr. Bannerjee on November 11, 1949.
- The assessee argued that these individuals were not authorized agents to receive the notices.

Legal Provisions:
- Section 63(1) of the Income-tax Act allows notices to be served either by post or as if they were summonses issued by a court under the Code of Civil Procedure.
- Order V, Rule 12, of the Code of Civil Procedure requires personal service on the assessee unless an agent is empowered to accept service.

Court's Reasoning:
- The court clarified that Section 63(1) provides two alternative modes of service: by post or as a court summons.
- When notices are sent by registered post, as in this case, the service is governed by Section 27 of the General Clauses Act, which presumes service upon proper addressing, pre-payment, and posting.
- Under the Post Office Act, delivery to the addressee's agent or usual recipient is deemed valid.
- The court held that since the notices were sent by registered post, the presumption of valid service stands unless rebutted by positive evidence, which was not provided by the assessee.

Conclusion:
- The service of notice on Mr. Bhaumick and Mr. Bannerjee was valid.
- The starting point of limitation for the appeal was the dates on which these notices were received, i.e., October 14, 1949, and November 11, 1949, respectively.

2. Order Refusing to Condone Delay:
The second issue concerns whether the Appellate Assistant Commissioner's refusal to condone the delay falls under Section 30(2) and whether the appeal to the Tribunal against this refusal was competent.

Facts:
- The assessee filed an appeal on July 5, 1950, claiming that the limitation period should start from the date he personally received the notices.
- The Appellate Assistant Commissioner rejected the appeal on the ground of limitation, stating that no application for copies of the orders was made, and thus the appeal was out of time.

Legal Provisions:
- Section 30(2) of the Income-tax Act provides for a 30-day limitation period for appeals from the receipt of the notice of demand, with the possibility of condonation for sufficient cause.
- Section 31 deals with the hearing and disposal of appeals.

Court's Reasoning:
- The court noted that the assessee did not apply for condonation of delay but argued he was within the limitation period.
- The court referred to precedents, including Dewan Chand v. Commissioner of Income-tax and K.K. Porbunderwalla v. Commissioner of Income-tax, distinguishing between orders made under Section 30(2) and Section 31.
- It held that the nature of the order (refusal to condone delay) and the stage at which it was made determine its appealability.
- The court concluded that when the Appellate Assistant Commissioner hears and decides on limitation issues, the order falls under Section 31 and is thus appealable.

Conclusion:
- The refusal to condone the delay was an order under Section 31, making the appeal to the Tribunal competent.
- The court answered both parts of the second question in the negative, affirming the appeal's competency.

Final Judgment:
- The service of notice on Mr. Bhaumick and Mr. Bannerjee was valid, and the limitation period started from the dates they received the notices.
- The order refusing to condone the delay was appealable, and the appeal to the Tribunal was competent.

Reference Answered:
- The court answered the reference accordingly, with no order as to costs.