Care required in handling notices, reminders letters etc.

[CA DEV KUMAR KOTHARI]

Section 143(2) of the Income-tax Act, 1961.

Section 27 of the General Clauses Act, 1897.

The Shahbad Cooperative Sugar Mills Limited Versus Deputy Commissioner of Income Tax 2013 (9) TMI 734 - PUNJAB & HARYANA HIGH COURT

Asstt. CIT v. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA

Care of notices, reminders, letters etc. in any legal matter:

In any legal matter handling and attending of notices, reminders etc. is very important. When any notice is received, the information on the envelope must be carefully read, it must be opened with care and its contents must be carefully reviewed. Generally on the envelope summary of contents is given, so the contents must be examined with such summary. In case the contents do not tally with summary, the sender must be informed immediately.

In case any summary is not given on the envelope, the sender must be immediately informed about what has been received.

When two or more notices are received in one cover:

Suppose in an envelope only one notice or other document is received, whereas the noting or summary on the envelope indicates two notices or other documents, then the sender must be immediately informed about one item received and other item missing and not received. If such information is not given immediately, there can be presumption that both items have been delivered through the same envelope or cover.

Service of document:

A document or notice sent by Registered letter is presumed to be delivered if it is not received back. In case a registered letter is refused, or not claimed after intimation, then also it is presumed to be delivered. Section 27 of the GENERAL CLAUSES ACT, 1897   [10 OF 1897] is relevant in this regard. The said section reads as follows with highlights and some commentary thereon is give below:

27. Meaning of service by post.- 

Where any ¹(Central Act) or Regulation made after the commencement of this Act authorizes of requires any document to be served by post, where the expression "serve" or either of the expressions "give" or "send" or any other expression in used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing pre-paying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

 COMMENTS  

(i) A notice when required under the statutory rules to be sent by ‘registered post acknowledgement due' is instead sent by ‘registered post' only, the protection of presumption regarding serving of notice under ‘registered post' under this section of the Act is neither tenable nor based upon sound exposition of law; United Commercial Bank v. Bhim Sain Makhija, 1993 (9) TMI 336 - DELHI HIGH COURT. 

(ii) Where a notice is sent by the landlord by registered post and the same is returned by the tenant with an endorsement of refusal, it will be presumed that the notice has been served; Jagdish Singh v. Natthu Singh, 1991 (11) TMI 246 - SUPREME COURT. 

Care required in sending notices, documents etc:

Care should be taken to ensure that the notice or document is sent for servicing in a prescribed manner, if any. For example if a letter is to be sent by ‘registered post acknowledgement due' then mere registered letter will not be proper.

It is worth to note that dishonest people will generally try to find technical defects to deny their liability and obligations. The litigations generally take place due to dishonesty of some of parties in the matter. In case of honest and fair dealing we do not find litigation.

Therefore, while sending as well as while receiving notices or legal documents one must check legal compliance as to manner of sending , servicing and also the same at the time of receiving.

Case of The Shahbad Cooperative Sugar Mills Limited under I.T.Act:

In this case the Assessing Officer sent two notices u/s 143(2) for two years (at first occasion) , in one cover and under one dispatch entry. It is not clear whether the envelope indicated contents or not.

The assessee acted upon one notice for one of year which was within time. However, in respect of the other notice assessee challenged that it was not received (at first occasion). The reminder notice sent for the second time was challenged on ground of time barred.

When the assessee received the first notice, he did not inform the AO that he received only one notice in the cover.

Thus in this case issue involved was of a situation where (a) AO dispatched notices under section 143(2) for two assessment year together in same envelope through post. (b) the assessee accepted to have received one notice (c) assessee denied receipt of other notice in a Writ Petition (d) the assessee had not mentioned about one notice acted upon by him.

On reading of the judgment we also find that there was also lack of promptness on behalf of assessee in replying to notices and letters issued by the AO. This went against assessee because the assessee could not rebut the presumption of service of notice.

The Court held that , presumption of service to assessee was to be accepted

The Court held that there is nothing to show that the assessee did not receive two notices at the first occasion of dispatch in one cover. When the assessee received and acted upon notice for one year, there is no substance in averment that the assessee did not receive notice for second year which was sent under one dispatch entry and in one cover.

Therefore, the challenge of second notice on ground of being time barred failed in Writ Petition, because court found that first notice was sent and presumed to be delivered at the time of first occasion when two notices were sent and the assessee acted upon one notice and had not at all communicated about service of only one notice.

In this case, if the assessee had, on receipt of first notice informed the AO that he received only one notice, then position could be different. Not taking any action to inform the AO about what has been received at the first occasion closed the doors of the assessee to contend that he did not receive notice for second year in the first cover.

Learning from the case:

As mentioned earlier in this article, there must be promptness to acknowledge receipt of notice or other documents and in case there appears any defect in delivery (like envelop being torn or damaged and having no content or not all contents) the same must be reported immediately. In the case before the High Court, it is quite possible that there was defect in packing of envelope and only one notice was placed in it, however, because the assessee has not informed the AO about what he received, he could not plead after long gap of time that he did not receive notice of one of years. It is also not clear as to whether the cover / envelope had noting about contents or not, In case the noting shows two notices, then in view of no objection by assessee he had no case. In case the envelope did not indicate summary of contents of envelope, then the assessee must have pointed out that in absence of such a summary/ packing list, the presumption must be for only one notice.  

As noted by the honorable Court in this case there was only bald denial by the petitioner that notice was never received. There was no effort and any evidence was not produced to rebut the presumption, thus the Court in its considered opinion, found pleadings as insufficient, to record a finding in favour of the petitioner and Writ Petition was dismissed.

The judgment is analyzed below for analysis of facts and decision:

The Shahbad Cooperative Sugar Mills Limited Versus Deputy Commissioner of Income Tax 2013 (9) TMI 734 - PUNJAB & HARYANA HIGH COURT