TMI Blog1973 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... stion now before us are as under : The assessee is a partnership-firm with four partners, namely : (1) Shrimati Bhupinder Kaur, wife of Shri Surrinder Singh Johar, (2) one married daughter of S. Surrinder Singh Johar, (3) Amarjit Singh, and (4) Prabjit Singh, the two sons of S. Surrinder Singh Johar. For the assessment year 1959-60, the Income-tax Officer, Ward " C ", Jammu, issued a notice to the assessee, dated June 10, 1959, under section 22(2) of the old Act. This notice has been found by the Tribunal to have been served on one D. B. Thappa, an employee of the assessee. A similar notice, dated May 3, 1960, for the assessment year 1960-61 was issued by the Income-tax Officer, Ward " C ", Jammu. This notice the Appellate Assistant Commissioner, found to have been served on S. Surrinder Singh Johar, the husband of partner No. 1 and the father of partners Nos. 2 to 4, who was the general manager of the assessee during the relevant period. This notice also was issued under section 22(2) of the old Act calling upon the assessee to file a return of its income. The Tribunal found that after the service of the notice under section 22(2) for the assessment year 1959-60 on Shri D. B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed income from Rs. 1,01,000 to Rs. 76,024. A corresponding reduction was accordingly made in the amount of penalty as the penalty imposed was determined at 50% of the tax payable. The amount of penalty on such reduction came to Rs. 16,944 as stated earlier. The assessee felt contented with the order of the Appellate Assistant Commissioner refusing to reopen the assessment proceedings and did not choose to file an appeal before the Tribunal. The ex parte order of assessment passed by the Income-tax Officer on November 20,1962, thus became absolute. Two appeals, however, were filed before the Tribunal against the orders of the Income-tax Officer imposing penalty being Income-tax Appeals Nos. 9538 and 9541 of 1965-66 for the assessment years 1959-60 and 1960-61, respectively. Appeal No. 9541 pertaining to the assessment year 1960-61 was not pressed before the Tribunal and was, therefore, dismissed. Appeal No. 9538 pertaining to assessment year 1959-60 only was pressed. Before the Tribunal it was argued on behalf of the assessee that (1) even if the service of the notice under section 22(2) be taken as good for purpose of an assessment, the same service cannot be taken as valid serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the old Act on the assessee was not proved. He submitted that the service of the notice under section 22(2) of the old Act was a condition precedent for imposition of penalty under section 271(1)(a) of the Act. He further submitted that D. B. Thappa on whom the service of the notice is found to have been made was not duly authorised on behalf of the assessee to accept service of the notice. The mere fact, according to him, that S. Surrinder Singh Johar, who was the general manager of the firm, applied for time for filing of the return on behalf of the assessee did not constitute a valid and a legal service of the notice under section 22(2) of the Income-tax Act. The next contention of Mr. Randhawa was that the Indian Income-tax Act, 1922, was repealed by the Act of 1961. The assessment in the present case was made on November 20, 1962, a date long after the date of enforcement of the new Act. The proceedings taken under the old Act, according to him, did not survive after the repeal of the old Act. Fresh notice, therefore, was necessary to be served on the assessee before initiation of the penalty proceedings under section 271 read with section 274. We take up the last conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the firm has to be presumed. So far as the notices under section 22(4) are concerned, we think it is not necessary to consider whether or not the same were duly served on the assessee for it is not a notice under section 22(4) which is necessary to be served on the assessee for purposes of penalty but one under section 22(2) of the Act. The reply to the question referred to us, therefore, will depend on the question whether the service on D. B. Thappa was a legally valid service for purposes of initiating the imposition of penalty proceedings. We have considered the question and we are of the opinion that the notice in the present case under section 22(2) of the Act cannot be said to have been duly served upon the assessee, when, admittedly, there is no finding by the Tribunal that D. B. Thappa, the employee of the assessee, was authorised to accept such service on behalf of the assessee. It is true that J. S. Johar, the general manager of the assessee, applied for extension of time for filing the return but this conduct may at best be suggestive of the fact that the general manager had known about the issuance of such a notice to the assessee. Acquisition of knowledge in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.J. who delivered the judgment for the Full Bench, observed as under : " Now, it is common ground that when the two summonses under consideration were delivered at 32, Mogul Street, the manager, S. M. Dutta, was not present, and that they were delivered to and taken by J.C. Muzumdar, one of the assistants working at the shop. There was evidence that each and every one of the clerks and assistants in the shop used to accept communications addressed to the firm. The question is whether in such circumstances there was evidence to justify the conclusion that S. M. Dutta was served with the summonses in question. In my opinion there was not. It is not pretended that S. M. Dutta was present, or had any personal knowledge of the delivery of either of the notices to J. C. Mazumdar, or that J. C. Mazumdar, or any of the clerks or assistants in the firm were persons authorised to accept service of notices within Order V, rule 9 and/or rule 13. The problem, therefore, has resolved itself to this fine point ; whether where a notice under the Income-tax Act is delivered otherwise than by post to any clerk or servant on the premises where the assessee carries on business, and according to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiating reassessment proceedings were issued in the names of the assessees who were minors and not in the names of their guardians and were served on a clerk of the assessees' father who was neither an agent of the assessees nor authorised to accept notices on their behalf. The court while dealing with the question of validity of service under section 63 of the old Act observed as under : " There is no doubt that a notice prescribed under section 148 of the Act for initiating reassessment proceedings is not a mere procedural requirement ; the service of the prescribed notice on the assessee is a condition precedent to the validity of any reassessment made under section 147. If no notice is issued or if the notice issued is shown to be invalid, then the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. " These observations were made by the court relying on the Supreme Court judgment in Y. Narayana Chetty v. Income-tax Officer, Nellore [1959] 35 ITR 388 (SC), where their Lordships of the Supreme Court observed as under : " The notice prescribed by section 34 of the Income-tax Act for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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