MANCHANDA, J. - (1.)THIS a case stated under section 66(1) of the Income-tax Act, 1922 (hereinafter referred to as the Act). The questions referred are :
(1) Whether, on the facts and in the circumstances of the case, the receipt of notice by Ram Dayal, the munim of the assessee-Hindu undivided family, constituted a proper and valid service on the assessee ?

(2) Whether, on the facts and in the circumstances of the case, action under section 34(1) (a) was legal and valid ?

(2.)THE material facts are these : THE relevant assessment year is 1945-46, the previous year being the Diwali year ending 16th October, 1944. On the first day of the succeeding accounting year, i.e., on the 17th of October, 1944, relevant for the assessment year 1946-47, there were three credits in the names of three members of the Hindu undivided family totalling Rs. 65,000. THEse credits were : (1) Rs. 50,000 in the name of Surajmal Surajram, (2) Rs. 10,000 in the name of Krishnadas, and (3) Rs. 5,000 in the name of Dharam Das. THE assessee is a Hindu undivided family which carries on business in the trade name of M/s. Mithoo Lal Tek Chand at Orai, District Jalaun. THE credit entries came to light in the course of the assessment proceedings for the assessment year 1946-47. THE Income-tax Officer called for an explanation. It was explained that the sum of Rs. 65,000 had come from previous withdrawals made during 1936-1940, and which were removed from Orai and kept tucked away in Jaisalmer, Rajasthan, the original home of the assessee. THE explanation was disbelieved. THE sum of Rs. 65,000 was, therefore, added in the assessment for 1946-47, as income of the assessee from an undisclosed source. When the matter was taken up to the High Court, upon reference, the High Court considered that the entry being on the first day of the year of account, relevant for the assessment year 1946-47, it was not possible to conceive of its being the income of that assessment year (the case is reported as Mithoo Lal Tek Chand v. Commissioner of Income-tax, and it held that it could not be the income of the assessment year 1946-47.
Thereupon, on the 25th March, 1953, a notice under section 34/22(2) of the Act was issued in the trade name of the assessee and addressed to its principal place of business at Orai. On the 14th of November, 1953, notice under section 23(2) was issued. On the 28th of November, 1953, the assessee filed a return, not under protest, showing the income as had been originally shown for the assessment year 1945-46. No objection as to the mode of service was taken at any time before the Income-tax Officer. He, having considered the explanation of the assessee which was the same as had been given earlier, added by an assessment order dated 22nd March, 1954, the said sum of Rs. 65,000 as income from an undisclosed source for the assessment year 1945-46. In the appeal to the Appellate Assistant Commissioner, for the first time, the assessee took an objection to the notice under section 34/22(2) as not having been addressed to the manager or any adult male member of the family as required by section 63, sub-clause (2), of the Act - the notice having been served on the munim of the assessee by name Ram Dayal. The Appellate Assistant Commissioner after enquiries held that the impropriety and irregularity, if any, in the service of the notice must deemed to have been waived because the assessee had filed the return without any protest. As regards the service on the munim, Ram Dayal, he was of the view that it has been stage managed by the karta so as to leave a loophole for raising an objection later on. This conclusion was reached because of the admitted fact that all the members of the assessee-family were present when the postman had brought the notice and there was no good and sufficient reason why the postman should pick upon the munim, leaving out the members of the family, to have the acknowledgment due receipt signed by him. He was also satisfied that section 34(1) (a) was applicable as the assessee has failed to fully and truly disclose in the return filed or during the assessment proceedings for the relevant assessment year 1945-46 the existence of any such amount as capital or otherwise in its possession.

On further appeal, the Appellate Tribunal upheld the finding of the Appellate Assistant Commissioner and found as a fact that Amar Chand had deliberately, for an ulterior purpose, got the munim to sign the acknowledgment due receipt and further that the said munim, Ram Dayal, was an authorised agent to receive notices from the income-tax department. It also agreed with the view of the Appellate Assistant Commissioner that no full and true disclosure had been made in the accounting section 1944-45, relevant for the assessment year 1945-46, of the fact that some money was lying at Jaisalmer representing earlier withdrawals during the assessment years 1936 to 1940, and which had been brought into the books of account on the 17th of October, 1944, which fell within the financial year ending on 31st March, 1945, relevant for the assessment year 1945-46. Hence, this reference at the instance of the assessee.

(3.)THE first question need not detain us as it is concluded by findings of fact given by the Tribunal that there was in fact service upon the manager and the adult members of the family, though the acknowledgment due receipt was signed by the munim, Ram Dayal, and in any event that Ram Dayal was an authorised agent to receive notices on behalf of the assessee. In this view the matter question No. 1 has to be answered in the affirmative and against the assessee.
As regards question No. 2, the answer will depend on whether the assessee fully and truly disclosed all the primary facts necessary for its assessment for the relevant assessment year 1945-46. The material portion of section 34(1) (a) reads :

..... the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, to have been under-assessed....