MALCHAND SURANA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference under Section 66(2) of the Income-tax Act, 1922 (hereinafter referred to as "the Act") raises a short but an interesting question for the decision of the court. The facts as given in the statement of the case are as follows : The assessee, Malchand Surana, was served with a notice under Section 34 of the Act for reassessment of his income for the assessment year 1945-46 in February, 1949. As no return was filed in response to the said notice a best judgment assessment was made under Section 23(4) on the 19th April, 1949, on a total income of Rs. 41,500. The assessee made an application under Section 27 of the Act asking the Income-tax Officer to cancel the assessment and to make a fresh assessment as the aforesaid notice under Section 34 was not served on him and he had no reasonable opportunity to comply therewith. His case was that the registered letter containing the notice was actually delivered to his brother who had no authority to receive such notice and who failed to hand over the notice to him in time. The Income-tax Officer rejected the assessee's application under Section 27. Two appeals were taken to the Appellate Assistant Commissioner, one against the order of assessement and the other against the order under Section 27, and both these appeals were dismissed by the Appellate Assistant Commissioner. Two further appeals were taken to the Income-tax Appellate Tribunal by the assessee, the appeal from the assessment order being I.T.A. No. 7546 of 1950-51, while the appeal from the order under Section 27 was I.T.A. No. 7547 of 1950-51. The Tribunal disposed of both the appeals by a single order dated the 9th April, 1952. It held that though service by registered post was a mode of service allowed under Section 63 of the Act, it was open to the assessee to allege and prove that the notice had not been served on him. In the present case as there was no dispute that the notice had been served on the brother of the assessee who had no authority to accept such service, the service of the notice had not been properly effected. The Tribunal thereafter passed the following order :

(2.) At the instance of the Commissioner the following question was referred to this court under Section 66(2), namely, "Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that service of the notice under Section 34 of the Indian Income-tax Act by registered post, which had been received by Chaganlal, a brother of the assessee at the place of business of the assessee, was not sufficient service within the meaning of Section 63 of the Indian Income-tax Act ?" This court gave the following answer to the said question : "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."

(3.) In conformity with the answer given by this court the Tribunal reconsidered its decision in I.T.A. No. 7547 of 1950-51 under Section 66(5) of the Act and as no evidence was tendered by the assessee for rebuttal of the presumption arising under Section 27 of the General Clauses Act in spite of notice being given to him, the Tribunal directed that its former order in the appeal would stand vacated and the assessee's application under Section 27 would be rejected.