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TMI Blog1965 (2) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Officer. It transpired before the Appellate Assistant Commissioner that the Income-tax Officer had taken permission of the Commissioner of Income- tax before issuing notice under section 34 in compliance with the mandatory provisions of one of the sub-sections of the same section. It further transpired that the office copy of the same notice was not signed by the Income-tax Officer. In these circumstances the Appellate Assistant Commissioner negatived the contention of the assessee. This matter, however, did not rest there. The assessee took the matter to the Tribunal. The Tribunal, again, affirmed the order of the Appellate Assistant Commissioner on this point. Thereafter, an application under section 66(1) was made, and this question was referred to us. The relevant provisions of the Income-tax Act are as follows: "34. (1) If-- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income and total world income during the previous year: Provided that the Income-tax Officer may in his discretion extend the date for the delivery of the return. 63. (1) A notice or requisition under this Act may be served on the person therein named either by post or, as if it were a summons issued by a court, under the Code of Civil Procedure, 1908 (V of 1908). (2) Any such notice or requisition may, in the case of a firm or a Hindu undivided family, be addressed to any member of the firm or to the manager, or any adult male member of the family and, in the case of any other association of persons, be addressed to the principal officer thereof." The relevant provisions of the Civil Procedure Code are as follows: "Order 5, r. 3.--Every such summons shall be signed by the judge or such officer as he appoints, and shall be sealed with the seal of the court. Order 5, r. 10: Mode of service.--Service of the summons shall be made by delivering or tendering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act is an illustration of this class. The legislature may again do it by prescribing a form. Hence, it is necessary to consider firstly whether section 34 requires a notice in writing. It was at one stage conceded on behalf of the revenue that a notice under section 34 must be in writing. It is however difficult to say in view of the subsequent arguments whether the revenue had stuck to the same concession. Be that as it may, it is clear that the words "has reason to believe" in section 34(1) suggest the requirement of a written notice, though, by itself, it is not decisive. The words "serve on the assessee" in section 34 indicates the necessity of a written notice. The paragraph after clause (b) in section 34 incorporates by reference the requirements of a notice under section 22, clause (2). Section 22 provides, inter alia, "may serve a notice" and "not being less than thirty days as may be specified in the notice." This again lends support to the view that a notice under section 22 must be in writing. Therefore, in my view, section 34(1) makes it incumbent upon the Income-tax Officer to give a notice in writing. The legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter of routine, for it seeks, inter alia, to disturb the assessment already made and finalised. Hence, it imposes upon the Income-tax Officer to apply his mind to the matter before seeking to unsettle the matter to the detriment of the assessee. The Income-tax Officer must satisfy that he has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, that income, profits or gains chargeable to income-tax have escaped assessment for that year or have been under-assessed or assessed at too low a rate or has been made the subject of excessive relief under the Act or excessive loss or depreciation allowance has been computed. The foundation of the jurisdiction of the Income-tax Officer to disturb the earlier assessment is not circumscribed only to the grounds related above. The Income-tax Officer in the alternative must satisfy that, in consequence of information in his possession, he has reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the notice: Income-tax Officer Address Date of publication of the notice. The Income-tax Officers are appointed under section 5 of the Income- tax Act. Section 2, clause (7), defines "Income-tax Officer", which means "a person appointed to be an Income-tax Officer under section 5." The words "Income-tax Officer" in the form is vague and does not indicate the person. It becomes definite and points out the person when the Income- tax Officer puts his signature. Hence, the words "Income-tax Officer" in the notice under section 22(1) requires the signature of the Income-tax Officer. Section 22(2) provides that the Income-tax Officer "may serve a notice." The word "serve" in section 22(2) brings in the necessary element of a signature by the Income-tax Officer on the notice. Hence, the signature becomes a part of the notice. A notice under section 22(2) which initiates the assessment proceeding requires a signature. A notice under section 34, inter alia, unsettles the assessment already made, a matter having more far-reaching effect on the assessee than section 22(2). It stands to reason that section 34 should equally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment or reassessment. In my view having regard to the words of clause (5) of section 5, it is a matter as between the Central Board and the delinquent officer. The Central Board may or may not take steps for the omission of the Income-tax Officer. The assessee cannot take advantage of its breach by the Income-tax Officer. Therefore, the form in the Income-tax Manual does not make it obligatory upon the Income-tax Officer to place his signature in the notice so that its breach may be taken advantage of by the assessee. Hence, even though the form in the Income-tax Manual is not helpful to an assessee, the reasons mentioned before make the signature of the Income-tax Officer on the notice under section 34 an essential and/or integral and/or inseparable vital part or requirement of such a notice and, consequently, the notice under section 34 must be signed by the Income- tax Officer and it must bear the signature of the Income-tax Officer when it is served as if it were a summons. In my opinion, if this conclusion is correct, as it is, it necessarily follows that the notice sent by post must likewise be signed and bear the signature of the Income-tax Officer. It is now necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service of a valid notice under section 34 is a mandatory requisite of assessment or reassessment under section 34 of the Income-tax Act going to the root of the jurisdiction. Hence, it is now necessary to determine whether the notice in the instant case without the signature of the Income-tax Officer is an invalid notice affecting jurisdiction or is a mere imperfect notice tantamounting to an irregularity. There are no direct cases on the point under section 34 and in fact none was cited before us. In the course of arguments however, both parties referred to us several decisions, some of which require examination, for they may throw light on the precise point before us. In the case of Commissioner of Income-tax v. Swaminathan Chettiar [1947] 15 I.T.R. 430, it was held by a Bench of the Madras High Court that the omission to state in the notice that it was directed against him as karta of the family was a mere irregularity when the assessee proceeded on the basis that the notice called upon him as karta and filed the return as such and did not agitate the point as to defective notice before the matter reached the Income-tax Tribunal. In the case of Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 34, a notice in terms of which is a condition precedent to the assumption of jurisdiction by the Income-tax Officer. It is notice with a body but without a soul. Hence, it is an invalid notice and consequently equivalent to no notice. It is now necessary to turn to the cases under the Public Demands Recovery Act which were referred to before us. Rule 2 of Schedule II of the Act dealing with mode of service provides, inter alia, that the "service of a notice...shall be made by delivering or tendering a copy thereof, signed by the Certificate Officer or such Ministerial Officer as he authorises in this behalf..." In the case of Abanindra Kumar Maity v. A.K. Biswas [1954] 58 C.W.N. 573, the Certificate Officer did not put his signature on the notice in his own hand. The notice however bore a rubber stamp signature of the Certificate Officer. It was urged before their Lordships in these circumstances that the notice was invalid and consequentially the proceedings thereunder were void. Their Lordships held that a signature by a rubber stamp does not fulfil the requirements of the Act and was consequently void. In a later case in Satish Chandra Bhowmick v. Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dranath Ghorai v. Sudhir Ch. Ghose, a case which raised the question of waiver in relation to Order 21, rule 90, of the Civil Procedure Code and section 35 of the Bengal Money Lenders Act, the general principles regarding waiver in relation to statutory provisions were discussed at some length. It was observed there that this raises the question whether such a sale is a nullity. "If a provision of statute is only directory, an act done in contravention of the provision is mainfestly not a nullity. Section 35 of the Act is couched in a mandatory form and it casts in terms a duty on the court to comply with its provisions before a sale is held. Prima facie, the provision is mandatory, at any rate we shall assume it to be so for the purpose of the appeal." Their Lordships, after referring to several decisions and relative observations, finally summarised the matter in these words: "Whether the court acts without inherent jurisdiction a party affected cannot by waiver confer jurisdiction on it, which it has not, when such jurisidiction is not wanting a directory provision can obvioulsy be waived. But a mandatory provision can only be waived if it is not conceived in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he in fact took it 11 days after the prescribed period of eight years had expired. In these circumstances it was said that the assessee's lawyer waived the assessee's right to challenge the irregularity of the notice. In other words, the question for consideration is whether the knowledge of the lawyer and his intentional relinquishment of the right on behalf of his client is sufficient to fasten it on the client himself when he is not aware of the position in law and does not in fact relinquish his right voluntarily with knowledge of the same. In my opinion, no warrant of attorney is worded in such wide terms as to enable a counsel or a lawyer to waive the rights of the client without referring the matter to him. There is no evidence that the matter was referred to the assessee or that he had knowledge of the same. Hence, in my opinion, in law again Mr. Banerjee was not competent to waive the right which his client had. In the result, the answers must be in favour of the assessee. The assessee will get the costs of this application. LAIK J.--In this reference, the assessment was originally completed on September 23, 1946, under section 23(3) of the Income-tax Act, 192 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned by the Income-tax Officer. On the other hand, it appears that the notice under section 34(1B) of the Act is prescribed by rule 49, but not so the notice under section 34. Still one must ask oneself as to whether any principle could be deduced from all these, as there is no logical consistency as to the provisions of signing and non-signing, in the Act, Rules, Instructions, Notes, Forms, etc., though the revenue authorities are presumed to act conformably to them. It has been contended that it is difficult to follow the reasoning of Chakravartti C.J. in the case of R.K. Das & Co. v. Commissioner of Income-tax [1956] 30 I.T.R. 439, particularly the place at the top of page 449. But it should be remembered that the general principles in the said case as well as in the case of Commissioner of Income-tax v. Ramsukh Motilal [1955] 27 I.T.R. 54, are approved by the Supreme Court in Narayana Chetty's case [1959] 35 I.T.R. 388; [1959] Supp. 1 S.C.R. 189 which also speaks of prescribed notice. Mr. Meyer strongly relies on Bench decision of this court, where Bachawat J. (as his Lordship then was) sitting with Chatterjee J. held, in the case of Sethani Chhoti Debi v. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son as the same does not give jurisdiction to the court and, therefore, section 42 of the said Act is not comparable to section 63 of the Income-tax Act. Accordingly, my opinion is that the notice under section 34 of the Income-tax Act, 1922, to be a proper, valid and legal notice, requires to be signed by the Income-tax Officer, non-compliance of which would make it bad and all the proceedings started thereafter would be without jurisdiction. Mr. Meyer, however, in the last resort contended that in the facts of this case, the assessee in any event, waived the notice. The expression "waiver" has a professional meaning. It is true that the notice was duly served and was said to have been received by the assessee, but it is determined on high authority, that the notice under section 34 (I mean a valid notice) is a condition precedent for the assumption of jurisdiction. A notice under section 34 is therefore, not merely a procedural requirement. In its absence, it does not become a case of procedural defect. The difference between the cases of want of jurisdiction and those of irregular exercise of jurisdiction, is to be remembered in this context. The notice under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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