Shah, J. - (1.) Thayaballi Mulla Jeevaji - hereinafter called "the respondent" - was a trader in "Malabar produce", cloth, pepper and other commodities. For the assessment year 1945-46, the respondent submitted a return disclosing a net business loss of Rs. 7,960. The Income-tax Officer, Kozhikode, District Malabar, completed the assessment on March 29, 1946, and computed the total income of the respondent at Rs. 8,009 and brought it to tax. On December 4, 1953, the Income-tax Officer received information that in the name of the respondent there stood credited large sums of money in account with the Central Bank of India Ltd. at Bombay. The Income-tax Officer being of the opinion that the deposits made by the respondent represented profits of the business which had escaped assessment issued on March 18, 1954, a notice under section 34(1)(a) of the Income Tax Act, 1922, to the assessee. The notice was, it is claimed, tendered to the son of the respondent and was accepted by him. The process server was informed that the respondent was in Bombay and that "it would take a week for him to return". Being of the view that service of the notice on the respondents son was irregular, the Income-tax Officer cancelled that notice and issued a fresh notice on March 24, 1954. This notice was affixed on March 25, 1954, to a conspicuous part of the business premises of the respondent by the process server in the presence of two persons and an endorsement was made on the notice that "At the above address on enquiry the owner (the assessee) was said to be in Bombay or in Ceylon, and, as directed by the Income-tax Officer, the notice was pasted at the premises of the company of the owner and that witnesses had also signed on the notice." On March 25, 1954, the process server swore an affidavit in support of the truth of the endorsement, in the presence of the Income-tax Officer.
(2.) After some correspondence the respondent on November 12, 1954, submitted a fresh return again disclosing a net loss of Rs. 7,960 in his business transactions. The Income-tax Officer completed the proceeding for reassessment under section 23(3) and section 34 of the Income Tax Act, 1922, and brought to tax an additional amount of Rs. 61,036. In appeal before the Appellate Assistant Commissioner the contention of the respondent that the proceedings for reassessment was "illegal and invalid" because the notice under section 34(1)(a) was not served on him was rejected and the order of the Income-tax Officer was confirmed. But the Income-tax Appellate Tribunal set aside the order of reassessment holding that there was no proper service of the notice under section 34.
(3.) At the instance of the Commissioner, the Tribunal referred the following question to the High Court of Kerala : "Whether, on the facts and in the circumstances of the case, the reassessment for 1945-46 made on March 9, 1955, was valid - ;