TMI Blog1968 (8) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause under section 33B of the Indian Income-tax Act, 1922, and section 263 of the Income-tax Act, 1961, for the assessment years 1960-61 and 1961-62 were not validly served on the assessee ? (2) If the answer to question No. 1 is in the affirmative, then whether the Tribunal was right in holding that the proceedings under section 33B of the Indian Income-tax Act, 1922, and section 263 of the Income-tax Ac, 1961, were invalid and illegal? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in refusing to direct the Commissioner to pass fresh orders under section 33B of the Indian Income-tax Act, 1922, and section 263 of the Income-tax Act, 1961, after giving the assessee a farther opportunity of being heard ? " The facts material for coming to a decision on the above questions may be briefly stated. The assessee, Smt. Sabitri Devi Agarwalla, filed voluntary returns of income for the assessment years 1949-50 to 1958-59 before the Income-tax Officer, " A " Ward, Special Survey Circle IV, Calcutta, on September 30, 1958, and the assessment for those years was completed by the Income-tax Officer, on the same date. The returns for the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice under section 33B, and hence, the entire proceeding was invalid and illegal. The Tribunal also refused to accede to the prayer of the department for a direction to the Commissioner to take up the matter after issuing proper notices from the stage when the illegality has been found to occur. In order to determine the question of law involved in this case, we may read section 33B of the old Act. Section 33B(1) and (2) of the old Act and section 263(1) and (2) of the new Act are in pari materia except that in sub-section (2)(a) of the new Act. Section 147 has taken the place of section 34. We may, therefore, read section 33B(1) and (2) as also sub-section (3) : " 33B. (1) The Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of section 33B, enabling the assessee an opportunity of being heard. The learned counsel relies on a decision of the Calcutta High Court in the case of Commissioner of Income-tax v. Smt. Kiran Devi Singhee, to support the aforesaid submission. He particularly relies on the following observation in the said judgment : " To hold that in a proceeding under section 33B a notice in writing must be served, as provided in section 63(1) of the Act, would be reading into section 33B something which is not there at all. The stringent requirement of the service of a notice under section 24 of the Act cannot be applied to a proceeding under section 33B of the Act. " It is true that section 34 of the Act contains in terms a reference to a notice which is not to be found in that manner in section 33B and the notice which is mentioned in section 34 is notice under section 22(2) of the Act. It is specifically mentioned in that section that after issue of the notice the provisions of the Act, so far as may be, shall apply as if the notice were a notice issued under sub-section (2) of section 22. Apart from this, there is no reference in section 34 to a special opportunity of being hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the Commissioner's oral information to them at his office, giving orally the grounds which have impelled him to take action for revision of the proceedings under this section, as sufficient will defeat the very object of giving an opportunity of being heard as provided under section 33B. In order that, an assessee may have an opportunity of being heard, he must know what are the grounds on which the proceedings are taken against him and this. object will not be fulfilled unless the notice to him is in writing. It is difficult to conceive that the Commissioners of Assam, Nagaland, Tripura and Manipur, at Shillong, will send for the assessees spread out in these farflung areas under his jurisdiction to his Shillong office and convey his orders to them orally there together with the grounds. One may ask, how will he get the assessees in his Shillong office without a notice to them ? It is not to be supposed that he will send one of his employees to meet the assessee in person to verbally intimate to him that he is required at the Shillong office for taking note of the contemplated order under section 33B. Official business is not usually performed in that way. Therefore, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department was unable to serve the notices on the assessee personally or on any of her agents and it is also not proved that the assessee has her residence in the addresses given. When a notice is sent by registered post, section 27 of the General Clauses Act will come to the aid of the department, when it is shown that it has been properly addressed, prepaid and posted by registered post. This section does not contemplate a case of the registered letter returning to the sender, which is the present case. If registered notices were refused when tendered that would have been also proper service under the law. That is again not so in the instant case. The department having taken the position that the assessee could not be served personally and could not be found in the addresses given in the returns, and the further fact not being proved that the assessee at any time had resided in these addresses, mere affixing of the notices in the addresses, given, in absence of the proof showing that it was her ordinary place of residence or office, a service by hanging(?) cannot be considered as a valid or sufficient service in law. Mr. Bhattacharjee has drawn our attention to Order 5, rule 17, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tituted service.- (1) Where the court is satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, the court shall order the summons to be served by affixing a copy thereof in some conspicuous place in the, court house, and also upon some conspicuous part of the house (if any) in which the defendant is known to have last resided or carried on business or personally worked for gain, or in such other manner as the court thinks fit. (2) Effect of substituted service.-Service substituted by order of the court shall be as effectual as if it had been made on the defendant personally. (3) Where service substituted, time for appearance to be fixed.--Where service is substituted by order of the court, the court shall fix such time for the appearance of the defendant as the case may require. " Even under rule 20A of the Code of Civil Procedure where, for any reason whatsoever, the summons is returned unserved, the court may, either in lieu of or in addition to the manner provided for service of summons in the foregoing rules direct the summons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Tribunal was right in holding that the proceedings under section 33B of the Indian Income-tax Act, 1922, and section 263 of the Income-tax Act, 1961, were invalid and illegal, it is sufficient to state that the proceedings which had commenced on the Commissioner taking action under section 33B cannot be vitiated by any irregularity or illegality of the service of notices which he was bound under the law to give in order to offer reasonable opportunity to the assessee to show either that the proceedings are void and illegal or that the earlier assessment orders are correct. The entire proceedings under section 33B cannot be wiped out because an irregularity or illegality has taken place in a subsequent step in the course of the disposal of the proceeding. As noted earlier, section 33B has two parts. The first part is confined to the action of the Commissioner ex parte at that stage when no, notice or opportunity need be given to the assessee before arriving at the decision to take action under section 53B against her. In this case, the proceedings were initiated and legally commenced on 23rd July, 1963, when the Commissioner issued the show cause notice under section 33B fixi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal distinguished that case holding that in the Bombay case, the Appellate Tribunal had set aside the order of the Commissioner and directed the Commissioner to pass fresh orders after giving the assessee sufficient opportunity of being heard and to find as a fact whether there was or was not a genuine firm in existence. According to the Tribunal, in the present case, the department was asking for such a direction to be given by the Tribunal and the Tribunal was not inclined, on the facts of the present case, to give such a direction. The Tribunal has also observed that : " The legislature in its wisdom has fixed the period of two years for passing of order under section 33B by the Commissioner of Income-tax. Therefore, if we give such a direction, in the particular facts of the case, we consider that we will be extending the time limit given by the legislature which we, therefore, do not propose to do." It appears, therefore, that the Tribunal refused to pass the orders on two grounds. They did not want to exercise their discretion in remanding the case, a power which undoubtedly the Tribunal has under section 33(4) of the old Act. There can be no obligation to exercise th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was introduced into the Act in 1948, and the legislature had before it the provisions of section 34 with the proviso which were already there. Even so, the legislature did not provide for such a contingency in section 33B itself although even this section in due course found place in the proviso to section 34 as already noticed. It is, therefore, a clear and intended omission and it is not for the courts to supply the casusomissus. It is strenuously argued by Mr. Bhattacharjee that the provision of appeal provided for against orders passed under section 33B would be meaningless and an absurd position will ensue when a remand order is passed in appeal if the Commissioner is unable to carry out the order on the ground of limitation. There may be two answers to this. Under section 33(4) the Appellate Tribunal " may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner ". The Tribunal may undoubtedly in an appropriate case based on judicial considerations pass an order of remand under section 33(4). But when the Tribunal finds that in view of claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be passed under this section beyond two years of the date of the impugned assessment. I may also refer to a passage in Craies on Statute Law, 6th edition, at page 70 : "...'a statute may not be extended to meet a case for which provision has clearly and undoubtedly not been made'...'Where the literal reading of a statute ... produces an intelligible result ... there is no ground for reading in words or changing words according to what may be the supposed intention of Parliament'. " In Crawford v. Spooner, the Judicial Committee said: " We cannot aid the legislature's defective phrasing of an Act, we cannot add and mend, and, by construction, make up deficiencies which are left there. " In Magor and St. Mellons R. D. C. v. New Port Corporation, it was held by the House of Lords that " a court has no power to fill any gaps disclosed in an Act. To do so would be to usurp the function of the legislation." As Lord Loreburn L.C. observed in the House of Lords appeal, Vickers, Son Maxim Ltd. v. Evans at page 445 : " We are not entitled to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself. " The old ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n--In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. " The Tribunal's first ground holding that this order dated 18th, July, 1962, will be barred, falls through in view of the provisions of section 263(3) of the new Act. The Tribunal has refused to direct the Commissioner to pass fresh order under section 263 of the new Act, being largely influenced by a consideration of the provisions of section 33B of the old Act and not referring to section 263 of the new Act at all. In view of the provisions of section 263(3) and also the answer to question No. (2), it cannot be said that the Tribunal was justified, on the facts and in the circumstances of the case, in refusing to direct the Commissioner to pass fresh orders under section 263 of the new Act after giving the assessee a further opportunity of being heard. My answer to the first part of this question is in the affirmative but the same is in the negative with reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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