PETITIONER: COMMISSIONER OF INCOME-TAX, PUNJAB Vs. RESPONDENT: DAULAT RAM KHANNA DATE OF JUDGMENT: 29/03/1967 BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. SHAH, J.C. RAMASWAMI, V. CITATION: 1967 AIR 1552 1967 SCR (3) 298 ACT: Income Tax Act (11 of 1922) s. 63-Notice under s. 34- direction by Income-tax Officer to affix at address of assessee-No affixture on the notice board of the Income-tax Office-Sufficiency of substituted service. HEADNOTE: Code of Civil Procedure (Act 5 of 1908), O. V. r. 20(1)- Scope of. Under s. 63 of the Income-tax Act a notice under the Act may be served as if it were a summons under the Civil Procedure Code. Order V, r. 20(1) of the Code prescribes two alternative methods of service when the summons- could not be served in the ordinary way, namely, (1) by affixing one copy of the summons in the court-house and another in a conspicuous part of the residential house or business premises of the party to be served; and (2) "in such other manner as the Court thinks fit". These words confer a discretion on the court to adopt any other manner of service and include a direction to affix a copy in such manner as to give notice to the person to be served, but without affixing a copy thereof in the court-house. [301A-B] Therefore, where proceedings under s. 34 of the Income-tax Act, 1922, were started against the assessee, a Hindu Undivided family, by issuing a notice, but the notice could not be served on its karta, and the Income-tax Officer ordered substituted service by directing the process server to affix the notice only at the address of the assessee and satisfied himself that the notice was affixed in a proper manner, it must be held that the notice was properly served on the assessee. [299C-E; 301F] Jhabar Mal Chokhani v. Commissioner of Income-tax 49 I.T.R. 391, overruled. Narendra Kishore Das v. Banamali Sahu Dibakar Sahu Firm, A.I.R. 1951 Orissa 312, approved. Deccan Cooperative Bank Ltd. v. Parsram Tolaram, A.I.R. 1942 Sind 96 and Narendra Prasad Sinha v. Maharani Janki Kuer, A.I.R. 1947 Pat. 385, referred to. JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 580 of 1966.
Appeal by special leave from the judgment and order dated
September 3, 1964 of the Punjab High Court in Income-tax
Reference No. 23 of 1962.
B.Sen, T. A. Ramachandran and S. P. Nayyar for R. N.
Sachthey, for the appellant.
S. K. Aiyar and B. P. Maheshwari, for the respondent.
The Judgment of the Court was delivered by
Sikri, J. This appeal by special leave is directed against
the judgment of the High Court of Punjab, Chandigarh, in
Income Tax Reference No. 23 of 1962, made to it by the
Income-Tax
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 directing the Process 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 assessee appealed. The Appellate Assistant Commis-
sioner, inter alia, 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 was not incumbent on him to affix a copy of
the notice on the 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
Chokhani v. Commissioner of Income-Tax(1) held that the
substituted service was invalid and answered the question in
the negative. It also refused to allow the counsel for the
Revenue to raise the
(1) 49 1. T. R. 391.
3 00
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. ( 2) the High Court erred in not allowing the
second point to be raised, and secondly, he contends, that
the earlier case of the High Court in Jhabar Mal Chokhani v.
Commissioner of Income Tax(3) was wrongly decided. As we
agree with the latter contention, 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 as
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 O. V. r. 20 (1 ) of the Civil
Procedure Code which -reads as follows :-
” ( 1 ) Where the Court is satisfied that
there is reason to believe that the 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 last
resided or carried on business or personally
worked for main, or in such other manner as
the Courtthink’s fit.”
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 affixed in some conspicuous part of the residential
house or business premises. He says that it is not
obligatory on the Court to adopt this method, but the Court
can, in view of the circumstances, order the service of the
notice in any other manner as it thinks fit. Mr. Sen
further says that it would be noticed that the word “also”
has not been repeated in the last ten words of the sub-rule,
underlined above. He says that in a particular case it is
in the discretion of the Court to order service of the
notice by registered post or by affixing a copy thereof and
then satisfying itself that the copy has been affixed in a
proper manner.
(1) [1964] S. C. R. 29:49 I.T.R. 1. (2) [1965]2
S. C. R. 881.
(3) 49 I.T.R. 391.
30 1
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 Court 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 premises 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
Income Tax(1) had relied on Deccan Co-operative Batik Ltd.
v. Parsram Tolaram(2) but that case considered O. 21, r. 46,
sub-r. (2), and in our view, the High Court wrongly regarded
that provision being in pari materia with O. V. r. 20(1),
because, in r. 46 (2) the last ten words in O. V. r. 20(1)
which we have underlined do not figure. The decision of the
Patna High Court in Narendra Prasad Sinha v. Maharani Janki
Kuer (3 ) is also distinguishable as it also deals with O.
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
unnecessary steps are not taken and the service is effected
in the most expeditious and best manner. For example, if
the person to be served 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 Kishore Das v.
Banamali Sahu Dibakar Sahu Firm (4 ) the Division Bench of
the Orissa 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 service
of summons through registered post.”
In our opinion, the case of Jhabar Mal Chokhani v. Com-
missioner of Income Tax(1) was wrongly decided. In the
result we accept the appeal, set aside the judgment of the
High Court and answer the question in the affirmative and
against the assessee. In the circumstances of the case
there will be no order as to costs.
Appeal allowed.
V.P.S.
(1) 49 1. T. R. 391.
(2) A. 1. R. 1942, Sind, 96.
(3) A. 1. R. 1947. Pat. 385.
(4) A. 1. R. 1951. Orissa, 312.
302