TMI Blog1989 (2) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... guarantee bond dated April 25, 1969, under section 230(1), could not be held as an assessee within the meaning of section 2(7) of the Income-tax Act, 1961, thus being entitled to the right of appeal under section 246 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the notice under section 148 was not properly served and the proceedings under section 147 of the Income-tax Act, 1961, were valid ? " This question has been reframed by us and will read as under : "Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the notice under section 148 was not properly served and the proceedings under section 147 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and he consequently made an assessment under section 144 including the value of salary paid in Canadian dollars in the said income. Hindusthan Steel Ltd. approached the Commissioner of Income-tax for waiving interest and penalty on the voluntary disclosure of this additional income. But it is not clear as to what happened in that matter. Against the order of the Income-tax Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) who held that the Income-tax Officer erred in trying to serve the notice not on the real assessee, Mr. Nemethy, but on Hindusthan Steel Ltd. Since Hindusthan Steel Ltd. had not been authorised to receive the statutory notice on behalf of Mr. Nemethy, he held the entire assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was tried to be made under section 148, the service of a notice in accordance with law is a condition precedent for such proceedings. We agree with the Commissioner of Income-tax (Appeals) that there was no valid service of notice under section 148 and he was, therefore, justified in annulling the assessment made on the basis of such service." The first question relates to the maintainability of the appeal. At the time when the assessment was made pursuant to the notice under section 148 of the Income-tax Act, Mr. L. Nemethy had already left India. Hindusthan Steel Ltd., by virtue of the guarantee bond executed on April 25, 1969, was under an obligation to pay income-tax which might become payable by Mr. Nemethy. In fact, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person ; (b) every person who is deemed to be an assessee under any provision of this Act; (c) every person who is deemed to be an assessee in default under any provision of this Act." In this case, ultimately, the amount of tax will be paid by Hindusthan Steel Ltd. Hindusthan Steel Ltd. is also the person against whom a proceeding has been taken for assessment of the income of Mr. Nemethy. Although the liability to pay the assessed tax is of the assessee and Hindusthan Steel Ltd. has no liability under the Income-tax Act, the facts of the case are as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. It has been noted by the Tribunal that Mr. Nemethy, at the time of his departure from India, obtained an income-tax clearance certificate and gave his Canadian address to the Department. The second important fact that is to be borne in mind is that the return of income of Mr. Nemethy was not filed by him nor was it signed by him. It was signed by one of the officers of Hindusthan Steel Ltd. and filed purportedly on behalf of Mr. Nemethy. Mr. Bagchi, appearing on behalf of the Department , has sought to argue that there has been a waiver of an irregularity. It has been argued that the service of notice upon the assessee can be waived. Such service is not upon the assessee and the assessee is entitled to waive this condition. This poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not appeared at any stage. He had left India. It is Hindusthan Steel Ltd. which accepted the service of the notice and filed returns under the signature of an officer of Hindusthan Steel Ltd. From these facts, it cannot be inferred that the service of the notice was waived by Mr. Nemethy. The basic principle of waiver is conscious relinquishment of a known right. Even assuming that the non-service of notice was a mere irregularity, it has been nowhere stated that Mr. Nemethy has waived the irregularity with full knowledge of all facts and that as such the waiver was a conscious act. Mr. Nemethy had nothing to do with the case. It does not appear that he participated in the proceedings at any stage. He has not filed nor authorised filing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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