Rani Luxmi Devi vs The Income Tax Officer

Sinha, C.J.—This is an appeal against an order of A.C. Sen, J., dated March 31, 1966. The facts are briefly as follows: The Appellant Rani Luxmi Devi is a citizen of Nepal. She has, however, had a long connection with India and is an Assessee under the income tax Officer, ''G'' Ward, District II(2), Calcutta, being the Respondent No. 1 in this appeal. According to the Appellant, she was until recently the owner of No. 11 Theatre Road, Calcutta, and was residing there. According to her, on January 30, 1964, she sold the said premises No. 11 Theatre Road to Messrs. Ruby Insurance Co., Calcutta, and left for Allahabad. From there she went to Indore. She states that she resides at Indore and at Darjeeling where her husband has a dwelling house. On March 28, 1962, the Appellant was served with 13 notices u/s 34 of the Indian income tax Act, 1922 (hereinafter referred to as the said Act) in respect of the assessment for 1940-41 to 1951-52, stating that her income for the relevant years had escaped assessment and was going to be reassessed, and she was called upon to file a return. On April 5, 1963, the predecessor of the present Respondent No. 1 directed the Appellant to file a return u/s 34(1)(a), but she failed to do so. On March 30, 1964, the Respondent No. 1 passed an ex parte order of assessment for the assessment year 194344 u/s 23(4) read with Section 34 of the said Act. Thereafter, a demand notice was issued u/s 29 of the said Act for Rs. 2,22,174-47 nP. and this demand is stated to have been served on the Appellant on March 30, 1964, by affixation. It is unnecessary to multiply the facts, because we have before us the return of the peon, Purna Kamal Chakraborty, who served the said notice and it runs as follows:

I, Purna Kamal Chakraborty, son of late Kali Kamal Chakraborty, attached to Dist. II(2), do hereby solemnly declare that on March 30, 1964, I was given by the income tax Officer, ''G'' Ward, Dist. II(2), Calcutta, a notice u/s 29 (D.N. challan & copy of A.O. & Assessment from) of the I.T. Act, 1922, for the assessment year 194344- for service, on Sm. Rani Luxmi Devi, w/o Commanding Genl. Sir Bahadur Shumsher Jung Bahadur Rana of 11 Theatre Road, Calcutta. That I went to the place, 11 Theatre Road, Calcutta, on March 30, 1964, at 4 p.m. As the said person was not available in the above place I affixed the notice on the outer gate of her house in the presence of Sri Gouri Sankar Ghosh, Inspector of income tax, Dist. II(2), Calcutta.

There is also a declaration made by Gouri Sankar Ghosh, Inspector of income tax, Dist. II(2), Calcutta, on the same date, namely March 30, 1964, in the following terms:

I hereby declare that notice u/s 29 (demand notice, challan and copy of the assessment order and assessment form) of I.T. Act, 1922, for the assessment year 1943-44 in the name of Sm. Rani Luxmi Devi, w/o Commanding General Sir Bahadur Shumsher Jung Bahadur Rana, has been affixed on the outer gate of 11 Theatre Road, Calcutta, by Sri Purna Kamal Chakraborty, notice sever, Dt. II(2), Calcutta, in my presence.

In the application in the Court below, it was the service of the demand notice which was challenged. We are not concerned with the assessment order but only with regard to the service of notice u/s 29. It is not disputed before us that notice u/s 29 must be served before the amount of the income tax becomes recoverable. It is not also disputed before us that the service of the notice must be made in accordance with Section 63 of the said Act, which provides that notice of requisition under the said Act must be served on the person therein named either by post or through Court as if it were a summons under the Code of Civil Procedure, 1908 (V of 1908). Thus the notice in question had to be served as a summons under the Code of Civil Procedure. It is not also disputed that the service must be under Order 5, Rule 17 of the CPC as amended by this High Court. The amendment came into effect on July 25, 1928. The amended Rule 17 runs as follows:

...where the Defendant is absent from his residence at the time when service is sought to be effected on him thereat or there is no likelihood of his being found thereat within a reasonable time and there is no agent empowered to accept service of the summons on his behalf, not any other person upon whom service can be made the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the Defendant ordinarily resides or carries on business or personally works for gain and shall then return the original to the Court from which it was issued with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed.

The learned Judge in the Court below has held that, it being admitted that on the relevant date the Appellant was not in Calcutta, the provisions of Section 17 were necessarily satisfied and the service has been declared to be good. In our opinion the learned Judge was in error. It has now been decided authoritatively that, in order to justify service by affixation, it is not enough for the serving peon to go to the residence of the person upon whom service is to be made and if he cannot find that person to serve by affixation. Under the Calcutta amendment, where the person to be served is absent from his residence at the time when service is sought to be effected and where there is no agent empowered to accept service on his behalf, nor where the service can be made on any other person according to law, the serving peon must be satisfied that not only was a person absent from his residence but there was no likelihood of his being found therein within a reasonable time. This cannot be done without enquiring in the vicinity. It precludes affixation simply after being satisfied that the person was absent. I cannot understand the reasoning of the learned Judge in the Court below when he says that as the Appellant''s case is that she had sold the premises and gone away, the provisions of Rule 17 are necessarily satisfied. Rule 17 enjoins that the service must be at the ''residence'' of the person sought to be served. If it is conceded that the lady had, on the date of service at No. 11 Theatre Road, sold it and gone away, then it had ceased to be her residence, and no service upon her at that address under Rule 17 was permissible at all. The service by affixation under Rule 17 can only be justified on the footing that No. 11 Theatre Road was still her residence. If it was her residence then the procedure laid down by the amended Rule 17 must be followed. If the peon made enquiries he might have discovered that the Rani was no longer residing at the said premises. The fact that Ruby General Insurance Co. sent her the copy of the notice that was affixed does not in any way affect the matter. A service is only competent if it is served in accordance with law. Mere knowledge of service is not enough. The amended rule has been exhaustively considered by me in Tripura Modern Bank Ltd. Vs. Bansen and Co., . The learned Judge has relied on a Division Bench judgment of this Court: Commissioner of income tax, West Bengal v. Kiron Devi (1965) 70 C.W.N. 414. The facts in that case are entirely different. They are as follows: Kiron Devi was the Assessee upon whom notice was issued by the Commissioner of income tax, West Bengal, u/s 33B of the income tax Act, 1922. According to the income tax records the Assessee''s residence was at Basirhat in the district of 24-Parganas and she used to be assessed to income tax by the income tax Officer, ''B'' Ward, dist. 24-Parganas. It was admitted by the Commissioner of income tax that he knew that she was at the relevant time not residing in Basirhat but at 20 Mullick Street, Calcutta. Notices were sent to her by registered post both to Basirhat as well as 20 Mallick Street, Calcutta. The notice so sent to Basirhat came back undelivered, but the notice sent to Mallick Street address was redirected and was sent to Bidasa, Churu, Rajasthan, and was there served on the Respondent on May 8, 1963. Steps were also taken to serve the notice personally by the department''s representatives. Two attempts were made to find the Respondent and serve the notice personally at each of the two different addresses. The Respondent was found to be absent from both the addresses, and the departmental representatives were informed that she was staying at Rajasthan. They were satisfied that there was no possibility of her returning within a reasonable time. In these circumstances the notice was served by affixing and it was held to be good service. The case was however decided on the footing that a notice u/s 33B has not to be served with the strictness that is required for the service of a notice under the income tax Act u/s 63(1), such as might be the case where a notice u/s 34 has to be served. It was held that all that Section 33B required was that the Assessee should be given an opportunity of being heard and so long as rules of natural justice were not violated the order could not be assailed on the ground of non-service of notice. It was held that on the circumstances of the case there was no violation of the rules of natural justice. It was, therefore, not necessary for the learned Judge to decide the point as to whether there was a proper service under Rule 17, Order 5 of the CPC as amended. The facts in the present case are entirely different. It is not disputed that in the present case notice will have to be served as a summons. When the notice was sought to be served at 11 Theatre Road, Calcutta, the Assessee had already sold the property and had left Calcutta. No enquiry was made. Without making some enquiries it is impossible for the serving officer to come to the conclusion that the Assessee was not likely to return within a reasonable time. A notice has to be served at the residence, and 11 Theatre Road, Calcutta, had ceased to be the residence of the Assessee. Secondly, on the facts and circumstances of the instant case, it would be illogical to say that because the lady was away from Calcutta it must be presumed that there was no likelihood of her returning within a reasonable time and, therefore, the service was good. Certainly, upon the facts of this case, it appears that the Assessee was not likely to return at all because she has ceased to reside at 11 Theatre Road, Calcutta. But if the serving officer made proper enquiries he would have come to know that the lady had left 11 Theatre Road, Calcutta, for good and it was no longer her residence and, therefore, the notice could not be served by affixation at all at that address. All that the serving peon says is that as the Assessee

was not available in the above place I affixed notice on the outer gate of her house....

In my opinion, this does not comply with the provisions of law relating to the service of summons under Order 5, Rule 17 of the CPC read with Section 63(1) of the income tax Act, 1922. The appeal, accordingly, must be allowed and the judgment of the" Court below set aside. The Rules is made absolute to this extent that the Respondents are restrained from enforcing the assessment order without serving a proper notice u/s 29 of the said Act upon the Appellant in accordance with law. We make it absolutely clear that this appeal or the application has nothing to do with the assessment order itself. Further, it may be recorded that the learned Advocate for the Appellant has furnished to the learned Counsel for the Respondent the present address of the Appellant. After taking into consideration all the facts and circumstances of the case we make no order as to costs.

The stay order is vacated and the security given of the Ezra Mansion is discharged and it is made clear that the Respondents will be at liberty to enforce the attachment notice u/s 226 of the income tax Act that has already been given and to realise the money thereunder.

Arun K. Mukherjea, J.

I agree.