1958 (12) TMI 38 - HC - Income Tax

Summary

Issues Involved:
1. Validity of service of notice under Section 34 of the Indian Income-tax Act.
2. Preliminary objection regarding the appealability of the order.
3. Determination of whether the decision constitutes a "judgment" under Clause 15 of the Letters Patent.
4. Compliance with procedural requirements for service of notice under the Code of Civil Procedure.

Detailed Analysis:

1. Validity of Service of Notice under Section 34 of the Indian Income-tax Act:

The appellant challenged the proceedings initiated under Section 34 of the Indian Income-tax Act on the grounds of improper service of notice. The Income-tax Officer issued a notice before the expiration of eight years from the assessment year, as required. However, the appellant contended that there was no proper service of this notice. The court examined whether the service was conducted in accordance with the law, specifically under Section 63 of the Income-tax Act, which allows for service either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908.

The serving officer attempted service by affixing the notice on the outer door of the appellant's residence after finding the appellant absent and his son refusing to accept the notice. The court held that mere absence of the appellant at the time of service does not fulfill the requirement that the appellant "cannot be found" under Order V, Rule 17 of the Code of Civil Procedure. The serving officer must make reasonable attempts to locate the appellant before resorting to affixation. Consequently, the service by affixation was deemed invalid.

2. Preliminary Objection Regarding the Appealability of the Order:

The respondents raised a preliminary objection, arguing that no appeal lies against the order made by the court below. They relied on the decision in Justices of the Peace for Calcutta v. Oriental Gas Co. Ltd., which held that an order allowing proceedings to continue does not constitute a "judgment" under Clause 15 of the Letters Patent unless it determines the proceedings themselves.

3. Determination of Whether the Decision Constitutes a "Judgment" under Clause 15 of the Letters Patent:

The court considered whether the decision of Sinha, J., which held that the service was valid, constitutes a "judgment" under Clause 15 of the Letters Patent. The court referred to the classic authority in Justices of the Peace for Calcutta v. Oriental Gas Co. Ltd., which defines "judgment" as a decision affecting the merits of the question by determining some right or liability. The court concluded that the decision of Sinha, J., determined the right of the Income-tax Officer to proceed with the assessment based on the alleged service of notice. Therefore, it was a judgment within the meaning of Clause 15, and an appeal lies against it.

4. Compliance with Procedural Requirements for Service of Notice under the Code of Civil Procedure:

The court examined whether the service of notice complied with the procedural requirements under Order V, Rules 15 and 17 of the Code of Civil Procedure. Rule 15 allows service on an adult male member of the family if the defendant cannot be found, while Rule 17 permits affixation if the defendant cannot be found after due diligence. The court found that the serving officer did not make reasonable attempts to locate the appellant before affixing the notice. The court emphasized that the strict requirements of the rules must be followed, and any relaxation of these requirements must come from the Legislature, not the courts.

Conclusion:

The court concluded that there was no valid service of the notice under Section 34 of the Income-tax Act. Consequently, the notice issued under Section 22(4) based on the assumption of valid service was without jurisdiction. The appellant was granted relief by the issuance of a writ in the nature of mandamus, commanding the respondents to forbear from giving effect to the notice under Section 22(4) and from proceeding with the assessment based on the invalid service of notice under Section 34. The appeal was allowed, and the appellant was awarded the costs of the appeal.