Commissioner of Income-tax, Punjab v. Daulat Ram Khanna

Sikri, J. This appeal by special leave is directed again~t the judgment of the High Court of Punjab, Chandigarh, in Income Tax Reference No. 23 of 1962, made to it by the Income-Tax C.I.T. V. DAULAT RAM (Sikri, J,) 299 Tribunal under s. 66 ( 1) of the Indian Income Tax Act, 1922. The following question was referred to the High Court :- "Whether on the facts and the circumstances of the case the notice under section 34 of the Income-Tax Act was properly served on the assessee within the prescribed period." The relevant facts, in brief, are that the respondent, Shri Daulat Ram Khanna, hereinafter referred to as the assessee, is a Hindu Undivided family, and the dispute relates to the year of assessment 1945-46. Proceedings under s. 34 of the Income-Tax Act were started by the Income Tax Officer, 'B' Ward, Amritsar, against the assessee by issue of a notice on March 29, 1954. The Process Server went to the assessee's shop for service of the notice on the assessee on March 30, 1954, but he could not serve it on the assessee because the karta of the assessee was not present. The Process Server reported to the Income-Tax Officer on the same day that the assessee had refused to accept the service of the notice. On receipt of the said report, the Income Tax Officer, on the same day, i.e., March 30, 1954, sent the notice per registered post and also ordered substituted service of the notice by di_recting the Pro­ cess Server to affix the same at the address of the assessee. The notice was affixed on March 31, 1954. We need not give the facts regarding the service of the notice by registered post because it was received by the assessee on April 5, 1954. In view of the fact that the notice was affixed according to the directions of the Income-Tax Officer, he, after recording the statement of the Process Server, held that the service of the notice by affixture was proper. The a>sessee appealed. The Appellate Assistant Commis­ sioner, inter a/ia, held that as a copy of the notice was not pasted on the outer wall of the office room of the Income-Tax Office, the substituted service was invalid. Further, on appeal, the Appellate Tribunal held that the notice was properly served under Order V. r. 20(1) of the Code of Civil Procedure, and as the Income-Tax Officer was not a Court it "".as not incumbent on him to affix a copy of the notice on th~ notice board of the Income-Tax Office. The Tribunal, therefore, held that the notice was properly served and set aside the order of the Appellate Assistant Commissioner. The High Court, following its earlier decision in Jhabar Mal Clwkhani v. Commi.uioner of Income-Tax(') held that the substi­ tuted service was invalid and answered the question in the negative. It also refu;ed to allow the counsel for the Revenue to raise the --- - --~-·- --- -· (I) 49 I. T. R. 391. :JOO SUPREME COURT REPORTS [1967] 3 s.c.R. point that the notice under s. 34 had been served in time even if the service be taken to have been effected after March 31, 1954. He had relied before the High Court on the Indian Income-tax (Amendment) Act, 1959, and the decision of this Court in S. C. Prasher v. Vasantson Dwarkadas.(1) The learned counsel for the Revenue, Mr. B. Sen, urges, first, that in view of Commissioner of Income Tax v. Straw Products Ltd. (') the High Court erred in not allowing the second point to b.e raised, and secondly, he contends, that the earlier case of the High Court in Jhabar Mal Chokhani v. Commissioner of lllcome Tax(') was wrongly decided. As we agree with the latter con· tention. it is not necessary to deal with the first point raised by him. Under s. 63 of the Income-Tax Act a notice may be served us if it were the summons issued by the court under the Code of Civil Procedure. The answer to the question depends on the true interpretation of 0. V. r. 20( I) of the Civil Procedure Code which reads as follows :- " (I ) Where the Court is satisfied that there is reason to believe that th.e defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, the Court shall order the summons to be served by affixing a copy thereof in some conspicuous place in the court-house, and also upon some conspicuous part of the house (if any) in which the defendant is known to have lust resided or carried on business or personally worked for gain, or in such other manner as the Court thinks~!~-. --·----·- . .. ------ Mr. Sen divides the above sub-rule into two parts. According to him, the first part deals with a copy of the summons being affixed in the court-house and another copy being uflixed in some conspi· cuous part of the residential house or business premises. He suys thnt it is not obligatory on the Court to ndopt this method. but the Court can. in view of the circumstances. order the service of the notice in ~my other manner as it thinks fit. Mr. Sen further says thnt it would be noticed that the word "also" has not been repeated in the Just ten words of the sub-rule. underlined above. He says that in a particular case it is in tht: discretion of the Court to order service of the notice by registered post or by affixing n copy thereof and then satisfying itself that. the copy has been affixed in a proper manner. (I) [196<) IS. C.R. ~9: 401.T.R. I. (1) [1965] 1 S. C.R. si1. (~) 49 LT.R. 391. c.1.T. v. DAULAT RAM (Sikri, J,) 30 I In our view, there is great deal of force in what Mr. Sen urges. It seems to us that the last ten words in sub-rule ( 1) of r. 20, do confer a discretion on the Coun to adopt any other manner of service. The sub-rule prescribes one manner which the Court may follow and this manner consists of two acts; ( 1) affixing a copy of the summons in the court-house, and (2) affixing it in some conspicuous part of the residential house or the business pre­ mises of the defendant. If the High Court were right we would expect that the word "also" would be repeated and inserted between the word "or" and "in" in the last ten words. The · alternative manner which the Court decides to adopt for serving must of course be such as gives notice to the person to be served. The High Court in Jhabar Mal Chokhani v. Commissioner of l11come Tax(') had relied on Deccan Co-operative Bank Ltd. v. Parsram Tolaram(') but that case considered 0. 21, r. 46, sub·r. (2), and in our view, t.he High Court wrongly regarded that provi· sion being in pari materia with 0. V. r. 20(1 ), because, in r. 46(2) the last ten words in 0. V. r. 20(1) which we have under­ lined do not figure. The decision of the Patna High Court in Narendra Prasad Sinha v. Maharani Janki Kuer(') is also distin- guishable as it also deals with 0. 21, r. 46(2). It seems to us that the object of the Legislature in giving a discretion to the Court is to enable the Court to see that unneces­ sary steps are not taken anci the service is effected in the most E expeditious and best manner. For example, if the person to be serv~d had, to the knowledge of the Court, temporarily gone outside India, the Court might have sent, even before the insertion of r. 20A, the summons by registered post to his address abroad without affixing a copy thereof in the court-house. In Narendra Klshore Das v. B~nam~li Sahu Dibakar Sa/tu Firm(') the Division Bench F of the Or1ssa High Court held that "the last mode of service namely · 'or in such other manner as the Court thinks fit' no doubt gives the Court the jurisdiction to have the servic~ of su~ons through registered post." . I~ our opinion, the case of Jhabar Mal Chokhanl v. Com­ m1s.1wnc1· of Income Tax(') was wrongly decided, In the result we G accept the appeal, ~ct as~de the judgment of the High Court and answer the que~uon m the affirmative and against the assessee. In the circumstances of the case there will be no order as to costs. V.P.S. ff (1)491.T.R.391. (2) A. I. R. 1942, Sind, 96. (3) A. l. R. 1947. Pat. 385. (4)A.1. R. 1951. Oriw1, )12. A ppea/ allowed.