- (1.) This is an appeal from the judgment and order of Ray, J. discharging the rule nisi obtained by the Appellant in an application under Article 226 of the Constitution. Before the trial Judge the Appellant sought to have the order of the Additional Member, Board of Revenue, dated May 30, 1961 and the order of the Commissioner, Presidency Division, dated September 7, 1960, quashed under the following circumstances:
(2.) The Appellant is a partner of a firm known as Messrs. Tilla Mohammad Fazal Karim, having 8 as share therein. For the assessment year 1949-50, the Appellant was assessed to income-tax on his 8 as share of profit from the said registered firm of Tilla Mohammad Fazal Karim as per the allocation mentioned in the order of assessment dated March 31, 1954. By the said order his income was assessed at Rs. 36,152. After the assessment order was made, a sum of Rs. 1,500 was deposited by the Appellant towards payment of income-tax of the firm for the said assessment year 1949-50. By an order dated March 29, 1955, the Certificate Officer, 24-Parganas signed a certificate stating that a sum of Rs. 8,818-3 is due from the Appellant as certificate debtor. The said certificate had been forwarded by the Income-tax Officer, District 11(1), Calcutta along with a requisition Under Section 46(2) of the Income-tax Act to the Collector, Alipore. In the certificate proceedings an objection under the Public Demands Recovery Act was made by the Appellant to the effect that the said certificate was not enforceable against him inasmuch as no notice of demand under Section 29 of the Income-tax Act, 1922, was served upon the Appellant. The Certificate Officer and the Additional District Magistrate, Alipore, on an appeal by the department, held that the said certificate was invalid as there was no proof that the demand notice was served. The Union of India moved the Commissioner, Presidency Division, by way of revision and the said learned Commissioner by an order dated September 7, 1960, restored the said certificate. Thereafter, on a revision application by the Appellant, the Additional Member, Board of Revenue, by his order dated May 30, 1961, confirmed the order of the learned Commissioner, Presidency Division.
(3.) Mr. T.K. Bose, Learned Counsel for the Appellant, has contended before us that the said certificate proceedings resulting in the order of the learned Additional Member, Board of Revenue, dated May 30, 1961, should be quashed on the following grounds: (a) No notice of demand under Section 29 of the Income-tax Act was in fact served upon the Appellant and as such, the Appellant cannot be deemed to be in default within the meaning of Section 45 and therefore, the certificate proceedings initiated under Section 46(2) of the Act is invalid and inoperative. (b) In any event, the notice of demand under Section 29 has not been served in accordance with the statutory provision under Section 63(1) of the Act. It cannot be denied that there is great force in the contention of Mr. Bose. The liability to pay income-tax arises when the amount specified in the notice of demand under Section 29 has not been paid. It is only on the failure to pay the amount mentioned in the notice of demand that the Assessee shall be deemed to be in default in which contingency Section 46(2) of the Act is attracted. The certificate proceedings have been commenced at the instance of the Income-tax Officer under Section 46(2). If there is no notice of demand and no consequential liability to pay tax, the Income-tax Officer has no jurisdiction to issue and forward a certificate and cannot set in motion the certificate proceedings which has resulted in the impugned order. Although we do not question the validity of this argument, it seems to us that such proposition of law has no application to the facts and circumstances of the instant case Mr. Bose has argued on the basis that no notice of demand under Section 29 has been served on the Appellant or has ever reached the Assessee. There is no dispute that the relevant assessment order was made on March 31, 1954. It is also admitted by the Appellant in para. 6 of the petition that the assessment order, was served on him. On examination of the original records, it appears that the demand notice, challan and the assessment order were directed to be issued simultaneously to the Assessee on the same day, namely, March 31, 1954, when the assessment was completed. It is quite true that the administrative order to the effect that the demand notice be issued to the Assessee by itself does not prove that the notice has been served on the Appellant. But taking into consideration the following surrounding circumstances it seems to us that the conclusions arrived at by the Commissioner, Presidency Division and the Additional Member, Board of Revenue, to the effect that notice of demand was served on the Appellant was correct. The order of assessment dated March 31, 1954, has been admittedly served on the Assessee. It appears from para. 7 of the affidavit of Amiya Kumar Sanyal that the demand for the assessment year 1949-50 was determined at Rs. 10318-3 and was payable by April 15, 1954. In spite of reminders on September 20, 1954 and January 24, 1955, by the department for payment of the arrears, the Assessee continued to be in arrears and no payment was made. On February 8, 1955, the Appellant prayed for payments by instalments and an order was passed on February 14, 1955, granting two instalments, the first instalment of Rs. 5,000 was to be paid by April 28, 1954 and the balance being Rs. 5318-3 by April 20, 1955. Again, on June 4, 1955, at the instance of the authorised pleader of the Appellant, an order granting the Appellant seven instalments was passed and the necessary challans for the same were served on the said pleader on the July 11, 1955. Thereafter, on August 8, 1955, another order was made informing the Appellant that on the failure to pay the first instalment of Rs. 1,500 by August 19, 1955, the entire demand would be considered to be due on that date and penalty under Section 46(1) of the Indian Income-tax Act would be imposed without any further reference. It was only under those circumstances that the Appellant made payment of Rs. 1,500 on August 15, 1955. Again, on September 30, 1955, another reminder was made to him for further payment of the instalment and necessary challans were also issued on the basis of the above order. Further indulgence was granted to him on the November 18, 1955 and on March 27, 1956, to pay the arrears of tax. Under these extreme circumstances the recovery certificate was forwarded by the Income-tax Officer to the Collector of 24-Parganas. It is true that the department has not been able to prove acknowledgment receipt, postal or otherwise, to show that the demand notice was served on the Appellant. Even then it is difficult to believe that although the demand notice, the challan and the assessment order were directed to be issued simultaneously to the Appellant on the same date and the assessment order was admittedly received by the Appellant, the notice of demand did not reach him. Apart from the fact that the assessment order along with the demand notice and challan were ordinarily served simultaneously on the Assessee, it seems to us that the very fact that the Appellant by his conduct has accepted the order of assessment without any objection and has, in fact, asked for instalments on several occasions, prove that the notice of demand was also served upon him. Another extra-ordinary feature of the case is that although order of assessment was served on him on or about April, 1955 he or his pleader has not complained either in the petitions or elsewhere that notice under Section 29 has not at all been served. The objection of Mr. Bose that the department has failed to prove the service of demand notice is more of form than of substance. The Appellant's own conduct belies his contention that notice of demand has not been served on him. For these reasons, in our opinion, the surrounding circumstances and the circumstantial evidence in this case clearly establish that alike the order of assessment, the notice of demand has also been actually served on the Appellant.;