KESHAB NARAYAN BANERJEE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This appeal under Clause 15 of the Letters Patent is directed against the judgment dated June 14, 1993, passed by the learned single judge of this court whereby the writ application filed by the appellant, Keshab Narayan Banerjee, was disposed of by directing respondent No. 1 to reconsider the question of service of the notices under Sections 148 and 139(2) of the Income-tax Act, 1961, and the assessment orders passed under Section 147 of the Income-tax Act on the question whether service of such notices under Sections 148 and 139(2) under registered cover was effected or not, limited to the question of proof of the contents of the covers sent by registered post to the appellant. The brief facts leading to the filing of the appeal may be summarised thus :

(2.) For the assessment years 1983-84, 1984-85, 1985-86, 1986-87 and 1987-88, respondent No. 2, Assistant Commissioner of Income-tax, Central Circle-I, Calcutta, passed orders under Section 147 of the Income-tax Act on March 8, 1990. By invoking his power of reassessment under the said Section 147 of the Income-tax Act, he assessed the total income of the appellant at Rs. 12 lakhs on estimate and also initiated penalty proceedings under Sections 271(1)(b), 271(1)(c) and 273(2)(a) of the Act. It was mentioned in this assessment order that a notice under Section 148 of the Act was served on the assessee by affixation. Since, however, no return in compliance with the said notice served by affixation was filed, a notice under Section 142(1) of the Act was sent to the assessee by registered post which came back unserved. Subsequently, the notice was served by affixation again. Since the assessee did not comply with the notice served upon him by affixation, the proceedings under Section 147 were completed in the absence of the assessee and, as observed above, the income was computed at Rs. 12 lakhs on estimate. It appears that respondent No. 1, Commissioner of Income-tax, Central Circle-II, Calcutta, invoked his jurisdiction under Section 263 of the Income-tax Act and issued notices on February 21, 1992, upon the appellant to show cause as to why action under Section 263 of the Act be not initiated in respect of the aforesaid assessment years since it appeared to respondent No. 1 that the assessment orders passed by respondent No. 2 on March 8, 1990, for the aforesaid assessment years were erroneous and prejudicial to the interests of the Revenue for the reason that although interest under Section 139(8) of the Act was leviable in all the above noted assessment years, the Assessing Officer did not levy the same. The appellant was accordingly given an opportunity of hearing on March 4, 1992. It is at this stage of issuance of the aforesaid notice itself that the appellant approached this court by filing a writ application under Article 226 of the Constitution of India. During the pendency of the writ application, a final order in terms of Section 263 of the Act was also passed by respondent No. 1, but this order was also quashed and set aside by the learned single judge, in the light of the observations and the reasoning given in support of her judgment allowing the writ application, as shall be noticed later. The primary and the main ground, rather the only ground which was urged before the learned single judge by the appellant in support of his contention about the invalidity of the proceedings and the orders impugned in the writ application was that the order under Section 147 of the Act passed on March 8, 1990, was bad in law since it was not preceded by the service upon the appellant of any proper or appropriate notice and because the appellant was denied the opportunity of such a notice and thus a right of hearing, the order under Section 147 of the Act was invalid and illegal. It was accordingly urged and contended that respondent No. 1 had thus no jurisdiction to invoke Section 263 of the Act to revise the order earlier passed under Section 147 of the Act for levying interest on the amount of income-tax assessed because the order under Section 147 of the Act itself was bad. The learned single judge, therefore, while agreeing with the points raised by the appellant partly, did agree with the contention mainly with regard to the observations of the mandatory requirement of service of notice upon the appellant resulting in the passing of the order under Section 147 of the Act and held that if the order under Section 147 of the Act was not preceded by the service of a proper notice upon the appellant, such order was bad and accordingly proceedings under Section 263 of the Act emanating and originating from such an order were also bad.

(3.) Three modes of service, additionally or alternatively to one another were taken notice of by the learned single judge about the notice preceding the passing of the order under Section 147. The first mode was the attempt through personal service. The notice was stated to have been tendered to the appellant on October 1, 1987. This mode of service was not accepted by the learned single judge since the notice was not actually served upon the appellants but was deemed to have been served only because of the alleged refusal on the part of the appellant to accept the notice. The learned single judge was of the view that since particulars of the person who allegedly refused to accept the service or the date and place of receiving the notice, etc., etc., were not indicated in the endorsement regarding the refusal, service by this mode was not properly effected. The second mode of service (not mentioned in this order in the judgment under appeal) was by affixation at the residence of the appellant. This mode of service also was not accepted by the learned single judge. Relying upon Section 282 of the Income-tax Act, which prescribed two alternative modes of service, one by registered post and the other as if by way of summons under the Code of Civil Procedure, and read in the context of Order 5, Rule 17, of the Code of Civil Procedure, the learned single judge held that the service by affixation, as claimed by the respondents was also not proper since it was not in conformity with the requirement of Order 5, Rule 17 of the Civil Procedure Code. The learned single judge held that one of the main reasons for resorting to affixation was either the refusal on the part of the appellant or that there was no likelihood of him being found at his residence within a reasonable time and that there was no other person duly authorised and empowered to accept the service on his behalf. Observations were also made about the number of times the serving officer were required to go to the residence of the appellant to effect service and the extent of enquiries he was supposed to make with regard to the whereabouts of the appellant and his assertion that there was no likelihood of the appellant being found at his place within reasonable time.