TMI Blog1980 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment of income-tax for the assessment year 1949-50, it came to the notice of the ITO that a large part of the sale proceeds were realised by the assessee by sending railway receipts consigned to self through V.P.P. to different parts of the territory, which at that time were comprised in British India. The ITO, having reason to believe, on the basis of the facts which came to his notice that the income of the assessee which accrued, arose or was received in the then taxable territories had escaped assessment in respect of the assessment years 1940-41 to 1948-49, gave notices to the assessee under s. 34(1)(a) of the Indian I.T. Act, 1922 (hereinafter referred to as " the old Act "), with the prior approval of the CBR. The notices for assessment in respect of the escaped income were issued on March 6, 1962. On March 28, 1962, the process-server, Bhorilal, submitted his report which, on translation, reads as under: " I went to the house of Swaroop Lal Kanhaiya Lal Tiwari and Jhumarlal Swaroop Lal Govind Narain Tiwari with notices under section 34 for the assessment years 1940-41 to 1948-49, to the house of Swaroop Lal Kanhaiyalal (sic) and found Praduman Kumar Tiwari and Bab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted April 16, 1968. While filing the appeals against the ex parte assessment orders, the assessee also filed applications under s. 27 of the old Act, but those applications were also rejected and the appeals filed by the assessee against the orders passed by the ITO on the applications under s. 27 of the old Act were also likewise dismissed. The assessee filed further appeals before the Tribunal and these appeals, both relating to the Hindaun Karauli section and Bharatpur section, were disposed of by the Tribunal by its order dated April 10, 1968. The Tribunal in these orders held that the notices under s. 34(1)(a) of the old Act were not served upon the assessee as provided in O. 5 of the CPC and that, in the absence of proper service of notices, the ex parte assessment orders were null and void. In the appeals arising out of applications under s. 27 of the old Act, the Tribunal held that since there was no valid service of notices upon the assessee under s. 34(1)(a) read with s. 22(2) of the old Act, the assessee had sufficient cause for not submitting the returns in compliance with such notices and the Tribunal, accordingly, cancelled the assessments relating to the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they are substantially the same as have been referred to in the earlier two references. In Reference No. 31 of 1970, three questions have been referred, one at the instance of the assessee and two at the instance of the revenue, which are as under: " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessment made under section 23(3)/34(1)(a) of the Indian Income-tax Act, 1922, is valid and in accordance with law, though notices under sections 22, 23 and 34 were not served on all the partners or their legal representatives, when the assessee-firm stood dissolved on June 9, 1957 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that there was no valid service of notice under section 34(1)(a) of the Indian Income-tax Act, 1922, on the assessee and the proceedings taken by the Income-tax Officer were illegal and void, thus cancelling the assessment ? 3. Whether the finding of the Tribunal that on the facts and circumstances of the case, the service of notice under section 34(1)(a) of the Act by affixture was bad in law, is legally correct ? " It may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply accordingly." If proceedings under s. 34 of the old Act had not commenced by the giving of notice, then sub-cl. (ii) of cl. (d) of s. 297(2) would have been attracted. But in the present case, as we have already mentioned above, notices under s. 34 read with s. 22 of the old Act were issued on March 26, 1962, before the commencement of the new Act. The proceedings in pursuance of such notices were continued and disposed of in accordance with the provisions of the old Act and as if the new Act had not been passed. Therefore, the procedure for service of such notices would be governed by the provisions of s. 63 of the old Act and not by the provisions of ss. 282 and 283 of the new Act. Section 63 of the old Act, read with s. 26(1) of the old Act, provided that a notice under that Act could be served on the person named therein, either by post or as if the notice or summons issued by a court, under the Code of Civil Procedure, 1908. Sub-s. (2) of s. 63 further provided that any such notice, in the case of firm, may be addressed to any member of the firm or to the manager thereof. Section 26 of the old Act is applicable to the case of a dissolved firm, which has not discontinu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot find the defendant and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service could be effected is available, the serving officer is authorised to affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain. Then, r. 20 of O. 5 of the CPC further authorises the court, if it is satisfied that there was reason to believe that the defendant was keeping out of the way for any purpose of avoiding service or if for any other reason the summons could not be served in the ordinary way, then the court shall order the summons to be served by affixing 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 ". The facts narrated above go to show that the process-server made repeated attempts to serve the notices on the partner of the firm, at the place of business of the firm at least four ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... best one of them was present on the premises. In such circumstances, it is obvious that it was not possible for the process-server to effect service upon the partners of the firm personally and it is also equally clear that they were avoiding the service of notice upon them. It was for this reason that the ITO directed that service be effected by affixation after making one more attempt to serve the notices personally. We are, therefore, of the view that the satisfaction of the ITO about the fact that the partners of the firm were keeping out of the way for the purpose of avoiding the service of notices and further that it was not possible to serve the notices upon them in the ordinary manner, is apparent from the record and merely the circumstance that the assessing authority did not express his satisfaction by writing the words that he was satisfied that the partners of the firm were keeping out of the way for the purpose of avoiding service of the notices and that the notice could not be served upon them in the ordinary manner, could not be construed as absence of satisfaction on the part of the assessing authority. The Tribunal also observed that there were no clear-cut inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted between the word 'or' and 'in' in the last ten words. The alternative manner which the court decides to adopt for serving must of course be such as gives notice to the person to be served." The legislature in its wisdom has given wide discretion to the court under O. 5, r. 20, CPC, to decide the manner in which substituted service is to be effected, in order to ensure that unnecessary steps and time is not wasted and service is effected in the most expeditious and reasonable manner and at the same time information may be properly conveyed to the person desired to be served regarding the proceedings in which his presence is required to be secured. If a person has gone abroad to the knowledge of the court, then no useful purpose would be served by affixing the notices at the residence of such person or by publishing the same in a local newspaper. In that case, the best method would be to send the summons by registered post at the address outside (India) of the person concerned, even without affixing a copy thereof in the court-house. Thus, the words " or in such other manner " occurring in r. 20 of O. 5, CPC, gives the court jurisdiction to get the service effected in the best ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement with the aforesaid principle. However, in the present case, the facts, which have been found by the Tribunal and which have been narrated by us above, clearly go to show that there were repeated and reasonable efforts made by the serving officer to effect personal service, but on account of the non-co-operative attitude adopted by the partners of the assessee, service of notices under s. 34(1)(a) of the old Act could not be effected personally upon the partners of the assessee-firm and even after the failure of genuine efforts made in getting service effected upon the partners, the assessing authority took further precaution in directing the inspector of the department to go along with the process-server and to make one more attempt for getting the service effected personally. But at the same time he ordered that on failure of the last mentioned attempt to effect service personally, the method of substituted service, by affixation of the notices on the business premises of the assessee-firm should be resorted to. When the assessing authority gave a clear mandate that the notice should be affixed only if one more attempt which was to be made to serve the notices personally fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee had no reasonable opportunity to comply with or was prevented by sufficient cause from complying with the notice. In the instant case, no other ground has been advanced on behalf of the assessee to show that it was prevented by sufficient cause from making the return or had no opportunity to comply with the notice issued under s. 34(1)(a) read with s. 22 of the old Act, except that the notice Was not properly served. As we have held above, the notice under s. 34(1)(a) read with s. 22 of the old Act was validly served upon the assessee-firm and as such there was no reasonable ground for cancelling the assessment by the Tribunal. We therefore, decide the question referred on behalf of the revenue in the negative and are of the opinion that the Tribunal was not right in law in holding that there was no valid service of notice under s. 34(1)(a) of the Indian I.T. Act, 1922, on the assessee-firm. We are further of the view that the Tribunal was also not right in holding that the proceedings taken by the ITO were illegal and void. The finding of the Tribunal that the service of notice issued under s. 34(1)(a) of the aforesaid Act of 1922 by affixture was bad in law cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
