1960 (4) TMI 71 - HC - Income Tax

Summary

Issues:
1. Validity of service of notice on the manager
2. Implied authority of the manager to receive notice and communications
3. Sufficiency of cause for failure to comply with notice

Analysis:

The judgment delivered by the Bombay High Court pertains to an application made by the assessee under section 27 of the Income-tax Act for canceling an ex parte assessment and requesting a fresh assessment order under section 23. The assessee, a firm of four partners engaged in manufacturing and selling bidis, had submitted a return of its total income for the assessment year 1952-53. Despite multiple adjournments, an ex parte assessment order was made by the Income-tax Officer on 31st January, 1957, assessing the total income at Rs. 1,64,000. The assessee subsequently applied under section 27, leading to the present reference.

The primary issue addressed in the judgment was the validity of the service of notice on the manager of the assessee firm. The Appellate Assistant Commissioner and the Tribunal found that the manager had received various notices and letters on behalf of the firm throughout the assessment proceedings without objection. The Tribunal concluded that the manager had implied authority to accept service of notices on behalf of the firm, considering the conduct of the assessee and the manager. The High Court upheld this finding, emphasizing that the notice under section 23(4) was admitted by the assessee, indicating a waiver of any procedural irregularity in service.

Regarding the sufficiency of cause for failure to comply with the notice, the assessee contended that the manager, who was allegedly ill, had not informed them of the appointment date. However, the Tribunal found that the manager was not ill on the relevant date and had received the communication from the Income-tax Officer. Consequently, the High Court affirmed the Tribunal's decision that there was no sufficient cause for the assessee's failure to comply with the notice.

In conclusion, the High Court answered both questions referred by the Tribunal in the affirmative, affirming the validity of the service of notice on the manager and the lack of sufficient cause for non-compliance with the notice. The assessee was directed to pay the costs of the Commissioner, bringing finality to the matter.