TIWARI K C AND SONS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE questions, which have been referred to us on this reference, arise on an application which was made by the assessee under S. 27 of the IT Act for cancelling the ex parte assessment and for making a fresh assessment order under S. 23. His application was rejected by the ITO and the decision of the ITO has been confirmed by the AAC and also by the Tribunal. The assessee is a firm of four partners with equal shares manufacturing and selling bidis at Nasik. For the asst. year 1952 - 53 for which the corresponding accounting year was Samvat year 2007, the assessee submitted a return of its total income on 19th Feb., 1953. Thereafter notices under S. 22(4) and 23(2) for the production of the assessee's books of accounts and explaining the return were issued to the firm by the ITO and as many as sixteen adjournments were given for the purpose at the request of the assessee extending over a period of about four years. Finally, an ex parte assessment order was made under S. 23(4) on 31st Jan., 1957, assessing the total income at Rs. 1,64,000. The ITO also started penalty proceedings against the assessee. It was thereafter on 15th March, 1957, that an application under ection 27 was made by the assessee out of which the present reference arises. In this application the assessee alleged that the ITO's letter dt. 24th Jan.,1957, fixing the appointment for 30th Jan., 1957, was served on the assessee's gumasta, Sri Parasare, on 29th Jan.,1957, and the said gumasta being then sick could not intimate the date to the assessee. It was, therefore, contended that the assessee had sufficient reason not to be present on 30th Jan., 1957, before the ITO. It was also contended that the gumasta was not authorised to receive any notice or summons on behalf of the assessee and, therefore, the service was bad in law. It was found by the AAC that on 29th Jan., 1957, Sri Parasare was attending the assessee's shop and, therefore, was not ill as alleged by the assessee. As to the second contention raised by the assessee, it was held that Parasare, the manager of the assessee's firm, had received the notice and letters on behalf of the firm throughout the proceedings relating to the asst. year 1952 -53 and the service on the manager of such letters and notices was accepted by the assessee. The manager had also accepted the demand notice and the challan, the assessment order and the notice under s. 28(3) for levy of penalty and many other processes without any objection from the assessee firm. The notice under S. 23(2) along with the ITO's letter dt. 4th Jan., 1957, fixing the appointment for 18th Jan., 1957, and directing the assessee to produce all evidence and informing the assessee that no further adjournment would be given were also served on the manager, Sri Parasare, and the assessee had admitted service of this notice nd he letter. In view of these facts, the Tribunal came to the conclusion that Sri Parasare was acting as a duly accredited agent in his dealings with the ITO throughout, and, therefore, had the implied authority to accept service of notice on behalf of the firm. It was also pointed out by the Tribunal that since the assessee had admitted the receipt of the letter and the notice of the ITO dt. 4th Jan., 1957, by which the appointment was fixed for 18th Jan., 1957, it was incumbent on him to be present before the ITO on that date or in any event enquire whether the prayer for adjournment had been granted or not by the ITO. The assessee, however, remained absent on 18th Jan., 1957, as usual, and apparently made no effort to know whether or not the adjournment prayed for was allowed. This was in keeping with the contumacious conduct the assessee had betrayed throughout the course of the proceedings. The Tribunal, therefore, took the view that the assessee was not entitled to any indulgence.

(2.) AT the instance f the assessee two questions have been referred by the Tribunal to this Court. They are as follows :

(3.) MR . Palkhivala's argument, therefore, is that in this case the service was neither by post nor in the manner provided for the service of summons under the CPC and, therefore, was not a proper and legal service. The manner for service of summons under the CPC is by service either on the person himself or on his duly authorised agent to whom the authority to receive such summons has been given in writing. Admittedly, in the present case there is no such authority in writing and, therefore, Mr. Palkhivala argues that the service in the present case on Parasare was not service as contemplated by law.