Dwarka Prasad, J. - (1.) THESE four references arise out of proceedings for reassessment under Section 34(1)(a) of the Indian I.T. Act, 1922 (hereinafter called "the old Act"), in respect of M/s. Jhumartal Swaroop Lal (referred to hereinafter as "the assessee") and as common questions have been referred to this court for decision in these references, it would be proper to dispose of them by a common order.
(2.) THE assessee is a partnership firm, which enjoyed monopoly rights of stone quarrying in the erstwhile States of Karauli and Bharatpur and in the Hindaun area of the former State of Jaipur. THE assessee was a nonresident, with its head office at Jaipur and carried on the business in the Indian States as also in the taxable territory. THE assessee did not file any return nor had paid any income-tax in respect of the assessment years 1940-41 to 1948-49. During the course of the proceedings for the assessment of income-tax for the assessment year 1949-50, it came to the notice of the ITO that a large part of the sale proceeds were realised by the assessee by sending railway receipts consigned to self through V.P.P. to different parts of the territory, which at that time were comprised in British India. THE ITO, having reason to believe, on the basis of the facts which came to his notice that the income of the assessee which accrued, arose or was received in the then taxable territories had escaped assessment in respect of the assessment years 1940-41 to 1948-49, gave notices to the assessee tinder Section 34(1)(a) of the Indian I.T. Act, 1922 (hereinafter referred to as "the old Act"), with the prior approval of the CBR. THE notices for assessment in respect of the escaped income were issued on March 6, 1962. On March 28, 1962, the process-server, Bhorilal, submitted his report which, on translation, reads as under : "I went to the house of Swaroop Lal Kanhaiya Lal Tiwari and Jhumarlal Swaroop Lal Govind Narain Tiwari with notices, under Section 34 for the assessment years 1940-41 to 1948-49, to the house of Swaroop Lal Kanhaiynlal (sic) and found Praduman Kumar Tiwari and Babu Badha Mohan, but they refused to accept the notice. I have been to the house four times, but whenever I went, the party sent a message through the servant, although the party was in the house." On receipt of this report, the ITO passed the following order on the margin of the report, of the process-server dated March 28, 1962, itself : "J. N. Please contact parties if they refuse to accept notice, you may proceed to effect service by affixation and report. (Sd.)     March 28, 1962." Then it appears that the process-server went to the house of the assessee along with inspector, J. N. Sharma, and the notices were affixed on the premises of the partner of the assessee in the presence of two independent witnesses on the same day. The affidavit of J. N. Sharma, inspector of the income-tax department, which is on record is as under : "I. J. N. Sharma, inspector, solemnly affirm and state that under order of the Income-tax Officer, 'A' Ward, Jaipur, notices under Section 34 for the assessment years 1940-41 to 1948-49, addressed to the abovementioned assessee have been affixed by the process-server, Shri Bhori Lal, in my presence on the last known aforesaid address of the assessee, as it could not be served upon him personally. Signatures of the two independent witnesses of the locality, Shri Bhanwar Lal and Shri Deen Dayal, in whose presence the notices mentioned above have been affixed, have been taken on the acknowledgment slips. Dated 28-3-1962 (Sd.) J. N. Sharma Inspector."    The ITO considered the service so effected as sufficient and as the assessee failed to appear and file returns in pursuance of the said notices, the ITO proceeded to pass ex parte orders of assessment on November 14, 1962, in respect of the assessment years 1940-41 to 1948-49 under Section 34(1)(a) read with Section 23(4) of the old Act. The assessee filed appeals, which were dismissed by the AAC. Thereafter, the assessee filed further appeals before the Income-tax Appellate Tribunal, Delhi Bench A (hereinafter referred to as "the Tribunal"). The appeals relating to Karauli-Hindaun section in respect of assessment years 1940-41 to 1948-49 were decided by the Tribunal by a consolidated order dated April 10, 1968, while the appeals relating to the Bharatpur section, in respect of the assessment years 1944-45 to 1948-49 were disposed of by the Tribunal by a common order dated April 16, 1968. While filing the appeals against the ex parte assessment orders, the assessee also filed applications under Section 27 of the old Act, but those applications were also rejected and the appeals filed by the assessee against the orders passed by the ITO on the applications under Section 27 of the old Act were also likewise dismissed. The assessee filed further appeals before the Tribunal and these appeals, both relating to the Hindaun-Karauli section and Bharatpur section, were disposed of by the Tribunal by its order dated April 10, 1968., The Tribunal in these orders held that the notices under Section 34(1)(a) of the old Act were not served upon the assessee as provided in Order 5 of the CPC and that, in the absence of proper service of notices, the ex parte assessment orders were null and void. In the appeals arising out of applications under Section 27 of the old Act, the Tribunal held that since there was no valid service of notices upon the assessee under Section 34(1)(a) read with Section 22(2) of the old Act, the assessee had sufficient cause for not submitting the returns in compliance with such notices and the Tribunal, accordingly, cancelled the assessments relating to the assessment years 1940-41 to 1948-49, in the case of Hindaun-Karauli section and 1944-45 to 1948-49, in the case of Bharatpur section and directed the ITO to make fresh assessments in accordance with law. Reference No. 13 of 1970 arises out of the order of the Tribunal in respect of ex parte assessments made relating to the assessment years 1940-41 to 1948-49 regarding Karauli-Hindaun section, while Reference No. 12 of 1970 arises out of the decision on applications under Section 27 of the old Act for reopening the ex parte assessments referred to above. The Reference No. 25 of 1970 similarly arises out of the order of the Tribunal relating to ex parte assessments for the years 1944-45 to 1948-49, regarding the Bharatpur section and Reference No. 31 of 1970 arises out of the order passed on application under Section 27 of the old Act in respect of such ex parte assessment orders. The following questions have been referred by the Tribunal in Reference No. 13 of 1970 : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that there was no valid service of notice Under Section 34(1)(a) of the Indian Income-tax Act, 1922, on the assessee and that the proceedings taken by the Income-tax Officer were illegal and void thus cancelling the assessment made Under Section 23(4) of the Indian Incometax Act, 1922? 2. Whether the Tribunal was not justified in considering that the assessment made under the provisions of Section 34(1)(a) of the Indian Income-tax Act, 1922, are ab initio null and void because the statutory notices issued under Section 34(1)(a) of the Act for initiating assessment proceedings, which is a condition precedent to the validity of the proceedings, is invalid ?" Identical questions have been referred to this court in Reference No. 25 of 1970. In Reference No. 12 of 1970, the two questions, which have been referred, are as under : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that there was n'o valid service of notice under Section 34(1)(a) of the Indian Income-tax Act, 1922, on the assessee and that the proceedings taken by the Income-tax Officer were illegal and void thus cancelling the assessments made under Section 23(4) of the Indian Income-tax Act, 1922 ? 2. Whether the Tribunal was not justified in considering that the assessments made under the provisions of Section 34(1)(a) of the Indian Income-tax Act, 1922, are ab initio null and void because the statutory notices issued under Section 34(1)(a) of the Act for initiating assessment proceedings, which is a condition precedent to the validity of the proceedings, is invalid ?"
(3.) WE may observe that they are substantially the same as have been referred to in the earlier two references. In Reference No. 31 of 1970, three questions have been referred, one at the instance of the assessee and two at the instance of the revenue, which are as under : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessment made under Section 23(3)/34(1)(a) of the Indian Income-tax Act, 1922, is valid and in accordance with law, though notices under Sections 22, 23 and 34 were not served on all the partners or their legal representatives, when the assessee-firm stood dissolved on June 9, 1957 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that there was no valid service of notice under Section 34(1)(a) of the Indian Income-tax Act, 1922, on the assessee and the proceedings taken by the Income-tax Officer were illegal and void, thus cancelling the assessment ? 3. Whether the finding of the Tribunal that on the facts and circumstances of the case, the service of notice under Section 34(1)(a) of the Act by affixture was bad in law, is legally correct ?" It may be observed that the question which has been referred at the instance of the assessee in Reference No. 31 of 1970 does not appear to us to arise out of the order of the Tribunal, as the question of dissolution of the firm or the necessity of service of notices on all the partners of the dissolved firm does not appear to have been raised or decided by the Tribunal. Thus the principal question which is required to be determined in all these reference cases is as to whether the finding of the Tribunal that there was no valid service of notices under Section 34(1)(a) of the Act on the assessee or that the service by affixation is bad in law is legally correct or not and were the proceedings for assessment taken by the ItO illegal and void, as held by the Tribunal. Before proceeding to decide the question about the validity of service, it would be proper to dispose of a preliminary submission made by the learned counsel for the assessee. It was argued by him that the provisions of Sections 282 and 283 of the new Act should be complied with, while learned counsel for the revenue argued that the proceedings in these cases were governed by the provisions of the old Act. Section 297 of the new Act provides for the repeal of the old Act. Clause (d) thereof has saved the provisions of the old Act so far as such proceedings are concerned in respect of which notices under Section 34 of the old Act had been issued before the commencement of the new Act. Clause (d) of Sub-section (2) of Section 297 of the new Act runs as under : "(2) Notwithstanding the repeal of the Indian Income-tax Act, 1922 (XI of 1922) (hereinafter referred to as the repealed Act),--..... (d) where in respect of any assessment year after the year ending on the 31st day of March, 1940- (i) a notice under Section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed ; (ii) any income chargeable to tax had escaped assessment within the meaning of that expression in Section 147 and no proceedings under Section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under Section 148 may, subject to the provisions contained in Section 149 or Section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly." If proceedings under Section 34 of the old Act had not commenced by the giving of notice, then Sub-clause (ii) of Clause (d) of Section 297(2) would have been attracted. But in the present case, as we have already mentioned above, notices under Section 34 read with Section 22 of the old Act were issued on March 26, 1962, before the commencement of the new Act. The proceedings in pursuance of such notices were continued and disposed of in accordance with the provisions of the old Act and as if the new Act bad not been passed. Therefore, the procedure for service of such notices would be governed by the provisions of Section 63 of the old Act and not by the provisions of Sections 282 and 283 of the new Act. Section 63 of the old Act, read with Section 26(1) of the old Act, provided that a notice under that Act could be served on the person named therein, either by post or as if the notice or summons issued by a court, under the Code of Civil Procedure, 1908. Sub-section (2) of Section 63 further provided that any such notice, in the case of a firm, may be addressed to any member of the firm or to the manager thereof. Section 26 of the old Act is applicable to the case of a dissolved firm, which has not discontinued its business. Section 26, which deals with the change in the constitution of a firm, runs as under : "26. (1) Where, at the time of making an assessment under Section 23, it is found that a change has occurred in the constitution of a firm or that a firm has been newly constituted, the assessment shall be made on the firm as constituted at the time of making the assessment : Provided that the income, profits and gains of the previous year, shall for the purpose of inclusion in the total incomes of the partners, be apportioned between the partners who in such previous year were entitled to receive the same : Provided further that when the tax assessed upon a partner cannot be recovered from him it shall be recovered from the firm as constituted at the time of making the assessment. (2) Where a person carrying on any business, profession or vocation has been succeeded in such capacity by another person, such person and such other person shall, subject to the provisions of Sub-section (4) of Section 25, each be assessed in respect of his actual share, if any, of the income, profits and gains of the previous year : Provided that, when the person succeeded in the business, profession or vocation cannot be found, the assessment of the profits of the year in which the succession took place up to the date of succession, and for the year preceding that year shall be made on the person succeeding him in like manner and to the same amount as it would have been made on the person succeeded or when the tax in respect of the assessment made for either of such years assessed on the person succeeded cannot be recovered from him, it shall be payable by and recoverable from the person succeeding, and such person shall be entitled to recover from the person succeeded the amount of any tax so paid." ;