Vildirect: IncomeTax-caselaws-1990-VIL-532-KER-DT

1990-VIL-532-KER-DT

Equivalent Citation: [1992] 193 ITR 213

KERALA HIGH COURT

Date: 18.09.1990

KR. VENKITAPERUMAL RAJA

COMMISSIONER OF AGRICULTURAL INCOME-TAX AND ANOTHER

BENCH

Judge(s) : K. S. PARIPOORNAN., K. P. BALANARAYANA MARAR

JUDGMENT

The judgment of the court was delivered by

K. S. PARIPOORNAN J.-The petitioner in Original Petition No. 1881 of 1986 is the appellant in this writ appeal. The original petition was filed to quash exhibits P-3 and P-6 orders passed by respondents Nos. 2 and 1, respectively. The appellant is an assessee under the Agricultural Incometax Act. For the assessment year 1984-85, he was assessed under section 18(4) of the Agricultural Income-tax Act (best judgment assessment, on default), by the second respondent, by order dated December 31, 1984. The revision filed therefrom was dismissed by the first respondent by exhibit P-6 order dated January 5, 1986. Exhibit P-3 assessment order, as affirmed in exhibit P-6 order, was assailed in the original petition.

A learned single judge of this court dismissed the original petition, by judgment dated January 22, 1990. The petitioner in the original petition has come up in writ appeal.

We heard counsel for the appellant, Mr. Jose Joseph, as also counsel for the respondent/Revenue, Special Government Pleader (Taxes), Mr. N. N. Divakaran Pillai. The main ground of attack against the order of assessment, exhibit P-3, was that there was no valid and proper service of notice on the appellant before the best judgment assessment was effected under section 18(4) of the Act. The assessment order proceeds on the basis that the assessee did not file the return in spite of notice served on him on August 17, 1984, and the pre-assessment notice, proposing to complete the assessment based on previous records of assessment and data gathered on inspection of the holdings, was sent by registered post to the last known address of the assessee, but it was returned with the postal endorsement "not found" and so there was valid service of notice as contemplated by section 64(1)(c) of the Kerala Agricultural Income-tax Act enabling the assessing authority to proceed under section 18(4) of the Act. Counsel for the assessee/appellant contended that the registered notice sent by registered post was not served on the assessee. The endorsement itself shows that the appellant could not be found and, in such circumstances, without further attempt of service as contemplated by law, the assessing authority acted illegally and without jurisdiction in completing the assessment under section 18(4) of the Act. The averments in this regard are contained in paragraphs 5 and 6 of the original petition and paragraphs 2 and 6 of the memorandum of writ appeal. In the counter-affidavit filed on behalf of the respondent dated January 15, 1990, it is stated that the assessment was completed under section 18(4) of the Act because the petitioner did not comply with the requisition under section 18(2) of the Kerala Agricultural Income-tax Act. Regarding the service of pre-assessment notice, in paragraphs 7 and 9 of the counter-affidavit, it is stated that the notice was sent as per section 64 of the Kerala Agricultural Income-tax Act by registered post to the petitioner at his last known place of residence and that is sufficient for the purpose of complying with the procedure. So, the short question that arises for consideration is whether there has been sufficient service of notice before the assessment was effected under section 18(4) of the Act ?

It is common ground that the pre-assessment notice, proposing to complete the assessment based on previous records and data gathered on inspection of the holdings was sent to the petitioner by registered post. The assessing authority himself has stated in exhibit P-3 order that the said registered cover was returned with the postal endorsement "not found". This was treated as valid service of notice as contemplated by section 64(1)(c) of the Kerala Agricultural Income-tax Act. The question is, whether the said plea by the assessing authority is valid in law ? The learned single judge held in paragraph 2 of the judgment that proper notice was served by the assessing authority. How far this is justified in law arises for consideration. Section 64(1) of the Kerala Agricultural Incometax Act provides as follows :

"64. Manner of service of notice(1) Any notice required to be served on, or given to, any person under this Act or the rules made thereunder shall be deemed to be duly served or given (a) if the notice is addressed to that person and is given or tendered to him ; or

(b) where that person cannot be found, if it is affixed on some conspicuous part of his last known place of residence or business or is tendered to some adult member of his family ; or

Before an order or proceeding is rendered against a person, it is elementary that he should be served with a notice. It is in conformity with the said principle that the Act has provided that the notice addressed to a person should be given or tendered to him (section 64(1)(a) of the Act). Only if he could not be found, the substituted service under section 64(1)(b) of the Act can, ordinarily, be resorted to. As an alternative to the service of the notice personally, the notice can be sent to him by registered post (section 64 (1) (c) of the Act).

As stated by the Privy Council in Harihar Banerji v. Ramshashi Roy, AIR 1918 PC 102, L. R. 45 IA 222, if a letter properly directed containing notice is proved to have been put into the post office, it is presumed that the letter reached its destination according to the regular course of business and was received by the person to whom it was addressed and the presumption would apply with greater force to registered letters. This is presumption in law. It also flows from section 16, Illustration (b) and section 114, Illustration (f) of the Indian Evidence Act. Section 26 of the Interpretation and General Clauses Act, 1125 (Malayalam Era) is also relevant in this context. The said section reads as follows :

"26. Meaning of service by post.-Where any Act authorises or requires any document to be served by post, whether the expression 'service' or either of the expression 'give' or 'send' or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post or anchal a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post or anchal."

The above section also provides a presumption that the service shall be deemed to be effected, in cases where a letter is sent by registered post, by properly addressing, pre-paying and posting it by registered post. The aforesaid presumption is made by reckoning the normal human conduct and course of things. It is only based on that presumption that section 64(1)(c) of the Kerala Agricultural Income-tax Act provides that, if the notice is sent by registered post to a person at his last known place of residence or business, the notice shall be deemed to be duly served on that person. It is true that section 64(1) of the Kerala Agricultural Income-tax Act does not contain a clause similar to clause 26 of the Interpretation and General Clauses Act, 1125, to the effect that the legal fiction is applicable " unless the contrary is proved". But, it should be remembered that the deeming provisions contained in section 64(1) of the Kerala Agricultural Income-tax Act or section 26 of the Interpretation and General Clauses Act, 1125, are only legal fictions. In Radhakrishna Punchithaya v. H. Sanjeeva Rao, AIR 1963 Ker 348 ; [1963] KLT 656, Joseph J., delivering the judgment of the Bench, dealt with the scope and relevancy of the legal fiction as follows (at p. 349 of AIR 1963 Ker):

"It has been said that equity is the life of a legal fiction.

'Since equity is the life of legal fiction, where substantial justice does not require its interference, still more where it would suffer from its operation, fiction has no place.'

(Broom's Legal Maxims - 10th Edn., p. 80)

Lord Mansfield observed in Morris v. Pugh [1761] 3 Burr. 1241 at p. 1243 :

'Fictions of law hold only in respect of the ends and purposes for which they were invented. When they are urged to an intent and purpose not within the reason and policy of the fiction, the other party may show the truth'."

The legal fiction in section 64(1) is created only for a definite purpose, namely, for the service of a notice on a person. The service of notice may be done, either by tendering it or serving it on the person concerned or by sending the notice by registered post, at his last known place of residence or business. The fiction should be limited to the purpose for which it is created. It should not be extended beyond the purpose for which it was created. The Supreme Court of India, in Har Charan Singh v. Shiv Rani, AIR 1981 SC 1284, had occasion to deal with the scope of the fiction enacted in section 27 of the General Clauses Act (Central Act). In paragraph 7 of the judgment, the court referred to the said fiction as a presumption raised in law, similar to the one contained in section 114, Illustration (f) of the Indian Evidence Act. So, it is fairly clear that if a notice is sent by registered post to a person, at his last known place of residence or business, under section 64(1)(c) of the Kerala Agricultural Income-tax Act, a presumption arises that, unless the contrary is proved, there is due service or proper service of notice on the said person the addressee. It is only a presumption which can be rebutted. If the registered letter is received back through the post office stating that it could not be delivered to the addressee or that the addressee was dead when the letter was taken, the presumption stands rebutted. Similarly, in cases where the notice is returned by the post office with an endorsement that the registered letter could not be delivered since the addressee could not be found or was not available, the presumption afforded by section 64(1)(c) of the Kerala Agricultural Income-tax Act regarding due service of notice will not be available. In other words, the presumption which arises by sending the notice by registered post to a person at his last known place of residence or business, even if the acknowledgement receipt is not received or nothing is heard about the delivery of the article will be offset or stand rebutted by the return of the registered letter with the endorsement of the postal authorities that the addressee could not be found or is dead or it could not otherwise be delivered. In this case, the pre-assessment notice containing proposal to complete the assessment on the basis of previous records and data gathered on inspection of the holdings was returned with the postal endorsement "not found". The presumption that will be available by sending the notice by registered post under section 64(1)(c) of the Kerala Agricultural Income-tax Act is offset or rebutted by the postal endorsement that the addressee/assessee was not found. The notice could not have been even tendered, much less delivered to the assessee, in such circumstances. The endorsement, on its own, offsets the presumption that is ordinarily available under section 64(1)(c) of the Kerala Agricultural Income-tax Act. It cannot be said that the sending of the registered notice by post to a person, at his last known place of residence or business, in the circumstances, could be treated as a valid service contemplated by section 64(1)(c) of the Act. The contrary view expressed in exhibit P-3 assessment order and upheld in exhibit P-6 order is unreasonable and unsustainable in law. Exhibits P-3 and P-6 orders disclose errors of law apparent on the face of the record. They deserve to be annulled.

With great respect to the learned single judge, we find ourselves unable to concur with his view that the service of notice was proper in the instant case. On this short ground, we hold that exhibits P-3 and P-6 orders are illegal. They are quashed.

The second respondent is at liberty to proceed ahead with the assessment for the assessment year 1984-85 by serving a fresh pre-assessment notice on the appellant in accordance with law. The writ appeal is allowed

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