1952 (3) TMI 40 - HC - Income Tax

Summary

Issues:
1. Validity of service of notice for appeal hearing.
2. Legality of Rule 24 of the Income-tax Appellate Tribunal Rules, 1946.

Detailed Analysis:

Issue 1: Validity of service of notice for appeal hearing
The case involved a reference under Section 66(1) of the Income-tax Act regarding the dismissal of an appeal by the Appellate Tribunal for default. The Tribunal had sent notices for the appeal hearing, but they were returned unserved. The question raised was whether the refusal of service by the postal authorities was sufficient to presume the notice was served. The Court referred to relevant legal provisions, including Order 5, Schedule I of the Civil Procedure Code, Section 63 of the Income-tax Act, and Section 27 of the General Clauses Act. It was held that there is a presumption of proper service, and it is the duty of the assessee to rebut this presumption if they claim the notice was not served. The Court answered this question in the affirmative based on previous case law.

Issue 2: Legality of Rule 24 of the Income-tax Appellate Tribunal Rules, 1946
The second question raised was whether Rule 24 of the Income-tax Appellate Tribunal Rules, 1946, was ultra vires and in conflict with Section 33(4) of the Income-tax Act. Rule 24 allowed the Tribunal to dismiss an appeal for default if the appellant did not appear for the hearing. The argument against the rule was that it conflicted with Section 33(4), which mandates the Tribunal to pass orders after hearing both parties. The Court rejected this argument, stating that the rule did not prevent the Tribunal from passing orders but allowed for dismissal in case of non-appearance. It was noted that the rule implied non-appearance despite service of notice. Additionally, the Court held that there is inherent jurisdiction for the Tribunal to set aside an order of dismissal for default if there was no actual service of notice or sufficient cause for non-appearance. The Court found Rule 24 to be valid and not ultra vires. The Department was awarded costs amounting to Rs. 300.

In conclusion, the High Court upheld the validity of the service of notice and the legality of Rule 24 of the Income-tax Appellate Tribunal Rules, 1946, dismissing the appeal and awarding costs to the Department.