1955 (8) TMI 41 - HC - Income Tax

Summary

Issues Involved:
1. Proper service of notice under Section 34 of the Indian Income-tax Act.
2. Sufficiency of service under Section 63 of the Indian Income-tax Act.
3. Rebuttal of presumption under Section 27 of the General Clauses Act.
4. Consideration of actual knowledge of notice by the assessee.

Analysis:

1. Proper Service of Notice under Section 34 of the Indian Income-tax Act
The case revolves around the service of a notice under Section 34 of the Indian Income-tax Act, which was sent to the assessee by registered post. The notice was received by the assessee's brother, Chaganlal, who was not authorized to accept it. The Tribunal held that service on Chaganlal, who was not an agent of the assessee, could not be considered valid service under the law. The Tribunal relied on the Rangoon High Court decision in Commissioner of Income-tax, Burma v. Dey Brothers [1935] 3 ITR 213, which stated that service must be as prescribed in Section 63(1) of the Income-tax Act.

2. Sufficiency of Service under Section 63 of the Indian Income-tax Act
The Tribunal's decision was questioned because it failed to consider the first part of Section 63, which allows for service by post. The Tribunal incorrectly assumed that service by registered post must follow the Code of Civil Procedure, which actually allows for service by registered post only after personal service attempts have failed. The Tribunal's reliance on the Rangoon High Court decision was misplaced as that case involved service by a process-server, not by registered post.

3. Rebuttal of Presumption under Section 27 of the General Clauses Act
Section 27 of the General Clauses Act presumes that service is effected when a document is properly addressed, pre-paid, and posted by registered post, unless the contrary is proved. The Tribunal did not consider this presumption and whether it had been rebutted. The Judicial Committee in Harihar Banerjee v. Ramsashi Roy LR 45 IA 222 established that service is presumed even if the acknowledgment is signed by someone other than the addressee, unless it is proved that the letter never reached the addressee.

4. Consideration of Actual Knowledge of Notice by the Assessee
The Tribunal failed to investigate whether the assessee had actual knowledge of the notice. The assessee claimed that the notice had not been brought to his knowledge by his brother. If the Tribunal had found that the assessee did not know about the notice, it could have been a sufficient cause for not filing the return. However, the Tribunal did not address this issue, focusing instead on the technicality of who received the notice.

Conclusion:
The Tribunal's decision was found to be incorrect because it did not consider the presumption under Section 27 of the General Clauses Act and failed to investigate whether this presumption had been rebutted. The Tribunal should have examined whether the assessee had actual knowledge of the notice and whether the service was sufficient under the law. The High Court concluded that the Tribunal was not justified in holding that the service of the notice was not sufficient merely based on the fact that it was received by the assessee's brother without considering the presumption under Section 27 of the General Clauses Act. The answer to the question referred was "No, in the absence of any consideration of the presumption under section 27 of the General Clauses Act and any finding that the said presumption had been rebutted."

Lahiri, J. concurred with the judgment.