1971 (8) TMI 26 - SC - Income Tax

Service of Notice - question whether the assessees had been served in accordance with the law or not is essentially a question of fact. The Income-tax Act provides for an appeal against the order under section 33B. Normally the assessee should have gone up in appeal against the order under section 33B. They should not have been allowed to invoke the extraordinary jurisdiction of the High Court

Summary

Issues: Proper service of notices under section 33B of the Indian Income-tax Act, 1922.

The Supreme Court judgment, delivered by Justice Hegde, dealt with the issue of whether the assessees were properly served before action was taken under section 33B of the Indian Income-tax Act, 1922. The case involved assessment years 1959-60, 1960-61, and 1961-62, where the Commissioner of Income-tax initiated proceedings under section 33B and issued notices to the assessees. The notices were sent by registered post and for personal service by an income-tax inspector. The notices sent by registered post were served after the Commissioner passed his orders, rendering them irrelevant. The income-tax inspector's reports indicated unsuccessful attempts at personal service, leading to affixation of the notice under his orders. The Commissioner proceeded ex parte based on these reports.

The assessees contended that they had closed their business before the notices were issued and, therefore, the service attempts were at a wrong place. The relevant legal provisions, including section 63(1) of the Act and Rule 17 of Order V of the Civil Procedure Code, were examined. The report of the serving officer did not mention the persons who identified the place of business, nor did it confirm his personal knowledge of the assessees' business location. The High Court, after detailed examination and witness testimonies, concluded that the service was improper, denying the assessees a fair opportunity to present their case under section 33B.

The Supreme Court expressed disapproval of the High Court's procedure, emphasizing that the question of proper service was a factual matter that should have been addressed through the appeal process provided under the Income-tax Act. The Court highlighted the availability of alternative remedies through appeal and criticized the assessees for directly approaching the High Court under article 226 of the Constitution. Despite acknowledging the High Court's jurisdiction to entertain the writ petitions, the Supreme Court dismissed the appeals, emphasizing the importance of following the prescribed legal procedures and remedies.