1964-VIL-25-CAL-DT

Equivalent Citation: [1966] 61 ITR 600

CALCUTTA HIGH COURT

MATTER NO. 158 OF 1963

Dated: 19.03.1964

RAMPIYARI KHEMKA

Vs

COMMISSIONER OF INCOME-TAX

S. Roy for the Petitioner

E.R. Meyer for the Respondent

Bench

D. N. SINHA, J

JUDGMENT

This application relates to the income-tax assessment of the petitioner, Rampiyari Khemka, widow of late Mahadeo Prosad Khemka, residing at 48, Nandlal Mitra Lane, Howrah. The facts are briefly as follows: According to the petitioner, in or about February, 1961, she filed a return of her income for the assessment year 1960-61 in the office of the Income-tax Officer, Howrah, pursuant to a notice under section 22(1) of the Income-tax Act (hereinafter referred to as the "said Act"). It is stated that the Income-tax Officer called for returns of the earlier years and the petitioner filed a return for the assessment years 1953-54 to 1959-60. According to the Commissioner of Income-tax, as stated by him in the impugned order under section 33B of the said Act, dated 7th February, 1963, the assessee filed a voluntary return of income for the assessment years 1953-54 to 1960-61, all dated February 14, 1961, excepting the last one which was dated February 13, 1961. Cognisance of the returns was taken by the Income-tax Officer, Shri H. Biswas, and notices under section 23(2) of the said Act were issued and served on Shri J.L. Kherria, an income-tax practitioner, who was an authorised representative of the assessee. On the 18th February, 1961, assessment orders were passed for the years 1953 to 1961. On 28th January, 1963, the Commissioner of Income-tax, West Bengal, issued a notice upon the petitioner under section 33B of the said Act. This notice has been referred to in the pleadings but no copy has been annexed. I have, therefore, called for the original notice to be produced and I have directed that a copy be kept on the record marked as exhibit 1.

It is necessary to set out the contents of the notice, which is in the following terms :

"On calling for and examining the records of your case for the assessment years 1953-54, 1954-55, 1955-56, 1956-57, 1957-58, 1958-59, 1959-60 and 1960-61 and other connected records, I consider that the orders of assessment passed by the Income-tax Officer, "D" Ward, Howrah, on February 18, 1961, are erroneous in so far as they are prejudicial to the interests of the revenue for the following reasons amongst others-...

2. Enquiries made have revealed that no business was carried on by you as alleged in the returns. Also the Income-tax Officer was not justified in accepting the initial capital, the income from business, the acquisition and sale of jewellery, etc., without any enquiry or evidence whatsoever.

3. I, therefore, propose to pass such orders thereon as the circum stances of the cases justify after giving you an opportunity of being heard under the powers vested in me under section 33B of the Income-tax Act, 1922. The cases will be heard at 11 a.m. on February 7, 1963, at my above office when you are requested to produce the necessary evidence in support of your contentions. Objections in writing accompanied by the necessary evidence, if any, received on or before the appointment for personal hearing will also be duly considered.

4. Please note that no adjournment of the hearing will be granted."

The notice was sent by registered post to the petitioner, addressed to 48, Nandlal Mitra Lane, Howrah. This registered cover was delivered at the said address and Gita Bhai Khemka, daughter of the petitioner, received the same and signed the acknowledgment receipt on or about 1st February, 1963. Meanwhile, on the 29th January, 1963, notice was also served by Inspector, K.M. Naskar, of the income-tax department who took it to premises No. 48, Nandlal Mitra Lane, Howrah, and R.S. Khemka, son of the petitioner, received the same and signed for it. On 2nd February, 1963, the said R.S. Khemka sent back the two unopened covers containing the notices mentioned above to the Commissioner of Income-tax with a covering letter, a copy whereof is annexed to the petition and is included in exhibit A at page 3. He stated that on the 29th January, 1963, an inspector from the income-tax office came to serve him with a notice-"for Sm. Rampiyari Khemka". He does not mention that she was his mother. He further stated as follows :

"The husband of the lady died on 19th January, 1963, and the lady is in state of mourning. In conformity with rites, the lady went out of Calcutta for two months and hence, I pleaded my inability to accept the said cover as neither I am authorised to accept any documents on her behalf nor in a position to communicate with the lady. Despite my pleadings your inspector insisted for serving the said cover on me. As your inspector was very much adamant on serving the said cover despite my pleadings, I had to accept the said cover and I signed the acknowledgment for myself and under protest. While accepting the said cover, I disclaimed any responsibility and pointed out to your inspector that, if possible, I will send the said cover to the lady but up to this day, I could not transmit the said cover."

Here again, R.S. Khemka was writing about his mother, the petitioner, as "the lady" without stating that she was his mother. He further stated that the registered cover was delivered to his minor sister by the postal peon "by misrepresentation and distortion of facts". It is not stated what misrepresentation and distortion of facts had been made. On the 5th February, 1963, a further communication was addressed by the petitioner's solicitor, Messrs. G.P. Lath and Co., a copy whereof is included in annexure "A" to the petition, at page 4. It was stated therein that on the 29th January, 1963, a closed cover was left with R.S. Khemka who neither resided with the petitioner nor was her authorised agent to accept service. It was further stated that on the 1st February, 1963, a registered cover addressed to the petitioner was delivered to the petitioner's minor daughter. These two covers had been returned to the Commissioner. It was stated that the petitioner was out of Calcutta on the two dates when service was sought to be effected, and she was not aware of the contents of the returned covers. The letter concluded as follows:

"In the circumstances aforesaid, we are hereby instructed to write to you to serve the contents of the said covers on us as her representative immediately to enable us to convey the said contents to our client for necessary instructions."

On the 7th February, 1963, the Commissioner passed an order under section 33B of the said Act, without giving to the petitioner any further opportunity of being heard. It now appears that the Commissioner, on the date when he made the order, was not apprised of the communication made by the solicitor. The reason for this has been explained in an affidavit affirmed by Krishna Rao Bhandra Narasinham on the 6th August, 1963. In paragraph 2 of the said affidavit, it is stated that the letter of the solicitor dated 5th February, 1963, did not give reference to the particular income-tax assessment in connection with which the letter was being written. It was accordingly received by the receiving section on the 5th February, 1963, and was placed at the disposal of the assessment section. On the 16th February, 1963, the clerical staff of the assessment section brought the said letter to the notice of the Income-tax Officer-in-charge of the assessment section who put up the said letter before the Commissioner, asking his permission to direct the I.A.C., Range XIV, to obtain a report from the Income-tax Officer and take necessary action in the matter. It was also suggested that the I.A.C. might dispose of the matter himself. The matter was actually placed before the Commissioner on 18th February, 1963. It is stated that in the meanwhile an order had already been made by the Commissioner on the 7th February, 1963, and no authority having been filed with the income-tax authorities authorising G.P. Lath & Co. to act on behalf of the assessee, his representation could not be considered. This rule was issued on the 25th April, 1963, calling upon the respondents to show cause why a writ in the nature of mandamus should not be issued asking them to forbear from giving effect to the order dated 7th February, 1963, made by the Commissioner and as to why a writ in the nature of certiorari should not be issued quashing the proceedings initiated by the notice dated 28th January, 1963, and for other reliefs. Section 33B of the said Act empowers the Commissioner to call for and examine the record of any proceeding under the said Act and if he considers that any order passed therein by the Income-tax Officer is erroneous, in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including a direction for a fresh assessment after cancelling the existing assessment. It is, however, provided that no order shall be made after the expiry of two years from the date of the order sought to be revised. The order of assessment had been made on the 18th February, 1961. It would be, therefore, barred by the 17th February, 1963. In other words, if the order dated 7th February, 1963, is set aside, no further order can now be passed under section 33B of the said Act. It is, therefore, necessary to consider the matter with extreme care.

The first point taken by Mr. Roy appearing on behalf of the petitioner is that the notice had not been served on the petitioner in accordance with law. Under section 63 of the said Act, a notice may be served on the person therein named, either by post, or as if it was a summons issued by a court under the Code of Civil Procedure, 1908. There were two attempts to serve the notice upon the petitioner. The one was by registered post and this was accepted, but it is stated that it was received by the petitioner's minor daughter. The second attempt was personal service and it was received by R.S. Khemka, the petitioner's adult son. The case made out on behalf of the petitioner is that on the relevant dates she was not in Calcutta having gone out of it in connection with rites and ceremonies connected with the death of her husband who had died recently on the 29th January, 1963. It is stated that the registered letter was received by a minor daughter of the petitioner and that the second service was made on R.S. Khemka who did not reside with the petitioner. Under the Code of Civil Procedure, service on an adult male member of the family of the person who was intended to be served, residing with her, would be a good service. The question, therefore, is as to whether R.S. Khemka was residing with the petitioner on the material date. It appears from the facts stated above that in the letter of R.S. Khemka dated 2nd February, 1963, he has stated that his mother, whom he has described as "the lady", had gone out of Calcutta for two months and that is why the notice could not be accepted. He has stated that he had accepted the notice under protest and had told the inspector that he was going to send the cover to the "lady", but could not transmit the cover, without giving any reason as to why he could not carry out that simple operation. In the petition affirmed by the petitioner herself, not a single word has been said to the effect that at the relevant time she was away from Calcutta. It is significant that although in his letter of the 2nd February, 1963, R.S. Khemka writes that his mother had gone away from Calcutta for two months, and that he could not get into communication with her, yet only 7 days afterwards, G.P. Lath & Co. wrote a letter "under instructions" of the petitioner. In the letter written by R.S. Khemka, his address given is "48, Nandlal Mitra Lane, Salkia, Howrah". He has not filed an affidavit to say that he did not reside with his mother on the relevant date. It is in paragraph 9 of the petition that the petitioner states that R.S. Khemka "neither resides with your petitioner nor is an authorised agent of your petitioner". This statement has been affirmed by the petitioner as "based upon information received from R.S. Khemka and believed to be true" which is an absurd situation. Although this allegation has been denied in the affidavit-in-opposition, still no affidavit is forthcoming from R.S. Khemka to the effect that on the relevant date he was not residing with his mother at 48, Nandlal Mitra Lane, Howrah. Upon considering all the facts, I am of the opinion, that on the relevant date R.S. Khemka, an adult male member of the family of the petitioner, was residing with her at 48, Nandlal Mitra Lane, Howrah, and further, that there is no sufficient reason to think that the petitioner was away from Calcutta on the relevant date. I, therefore, hold that the notice was duly served.

The next point taken is one of some difficulty. Section 33B enjoins that the assessee must have "an opportunity of being heard". The Commissioner has also been given power of making or causing to be made such enquiry as he deems necessary. Mr. Roy appearing on behalf of the petitioner states that the order made by the Commissioner dated 7th February, 1963, shows on the face of it that there has been a gross violation of the rules of natural justice. His first argument that the petitioner had not been served with the notice at all has not been negatived. Mr. Roy, however, states that where, even after the service of notice, the assessee does not appear and the matter has to be decided ex parte, the law enjoins that certain precautions must be taken. The leading case on the subject is a decision of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax [1954] 2 ITR 775; [1955] 1 SCR 941. It has been held there that income-tax authorities cannot decide a case on guess-work or suspicion. They can derive information from other sources, but although they need not disclose the source, if they wish to rely on information received from outside sources which operates adversely to the assessee, the information upon which it is proposed to be relied must be disclosed to the assessee and he must be given an opportunity of dealing with the same. In that case, the Supreme Court was of the opinion that the Appellate Tribunal had violated the fundamental rules of natural justice in reaching its conclusion. Firstly, it did not disclose to the assessee what information was supplied to it by the departmental representative. Next, it did not give any opportunity to the assessee to rebut the materials furnished to the Tribunal by the said representative. The result was that the assessee had not got a "fair hearing". It has been held that even where the assessee was in default and consequently under section 144 the Income-tax Officer was entitled to make a best judgment assessment, he must, if he takes into account materials from other sources, disclose the information received, to the assessee, so that he might have an opportunity to explain the same (see Swami Brothers v. Commissioner of Income-tax [1958] 34 ITR 123 ). Before I deal further with the law on the subject, it is necessary to look at the impugned order itself. I have set out above the notice that was sought to be served on the petitioner dated 28th January, 1963. In that notice, reasons have been given for holding that the existing assessment was erroneous and prejudicial to the interests of the revenue. It was stated that upon enquiry it was revealed that no business was carried on by the assessee as alleged in the return and also that the Income-tax Officer was not justified in accepting the initial capital, income from business, the acquisition and sale of jewelleries, etc., without any enquiry or evidence whatsoever. It appears that the petitioner in filing her return, whether voluntarily or otherwise, had made a statement before the Income-tax Officer, a copy whereof is exhibit A to the petition. She mentioned there that she was married in 1911 and her parents and father-in-law were wealthy persons and at the time of her marriage she received substantial amount of presents and dowry in ornaments and jewelleries. She said that this amounted to ₹ 15,000. Thereafter, she made some speculation in silver and hessian for which she has no accounts and she invested an "initial capital" of ₹ 17,000 towards the business in silver and hessian. In October, 1960, she made a loan to Messrs. National Trades & Industries Corporation of ₹ 10,000. During the years 1956-57 she loaned to R.S. Khemka, her son, a sum of ₹ 12,000. She also claimed a sum of ₹ 17,501 as her share of capital in a business known as the Hindusthan Agency. In February, 1961 she gave a loan of ₹ 25,000 to the Nav Bharat Trading & Engineering Co. In his said order dated 7th February, 1963, the Commissioner of Income-tax, first of all dealt with the filing of return or returns by the petitioner and the order of assessment made thereon. The facts revealed in his order are startling. Firstly, he says that the petitioner filed voluntarily the return of income for the years 1953-54 to 1960-61, all the returns being dated February 14, 1961, except one which was dated February 13, 1961. He finds that barring the return for 1960-61 there is no date of receipt stamped on the other returns. The dates of the notices under section 23(2) were interpolated in the records. For example, the return for 1960-61 was received on February 18, 1961, but the notice under section 23(2) is found to have been issued on February 10, 1961. He finds that the "dates of issue of notice and assessment orders are all predated by a month as is clearly evidenced from the interpolation in the order sheets". It was found that the Income-tax Officer made the assessment in "post-haste" without making any enquiry or investigation. It is quite plain that the allegations are very serious indeed. It amounted to this that the petitioner was in collusion and conspiracy with the Income-tax Officer concerned and there were interpolations in the record and that the matter was decided without evidence fraudulently. I have been informed that this particular Income-tax Officer had made about 300 similar assessments in respect of which orders had to be made under section 33B, and proceedings were taken against this officer and he has been ultimately removed from service. In the order, it is next mentioned that this Income-tax Officer who made the assessment had no jurisdiction because he was only allotted the files starting from the words "S" to "Z". As the assessee's name is Rampiyari Khemka, this particular officer had no jurisdiction to deal with the file. Under section 5(5) of the said Act, if there are two or more Income-tax Officers operating in the same jurisdiction, the Commissioner may distribute and allocate the work between them. If, however, an Income-tax Officer has got territorial jurisdiction, the mere fact that he deals with a file not allotted to him would be a mere irregularity. Mr. Meyer has not contended that it is necessarily fatal. As regards jurisdiction, it appears from the order that certain enquiries were made. It is stated as follows :

"On enquiry it has been ascertained that the Income-tax Officer, D-Ward, Howrah, had no jurisdiction over the assessee and hence all the assessments made by him are ab initio null and void. It has also been learnt from local enquiries that the assessee was residing with her husband, Shri Mahadeo Prosad Khemka, and her son, Shri R.S. Khemka, at the address noted in the returns, i.e., 48, Nandlal Mitra Lane, Salkia, Howrah. However no business was carried on from that place."

It is not stated as to what enquiries were made and what was the exact information received. Mr. Meyer has shown me two reports of inspectors who made the enquiry. He failed however to show that there was any enquiry made which resulted in the information about the petitioner's residing with her husband or her son at 48, Nandlal Mitra Lane, Howrah, or that no business was carried on from that place. It appears from the said reports that it was found that Messrs. National Trades & Industries Corporation carried on business at P-21/22, Radha Bazar Street, and the partners were the petitioner's husband and her eldest son, Shri G.S. Khemka. It was further found that the Hindusthan Agency was carried on at the same place, but details could not be gathered except that it was said that the firm had been sponsored by G.S. Khemka. Mr, Meyer says that since the inspector had gone to all these places and ascertained the addresses and names of the partners and since in the report no mention was made that the petitioner was carrying on business at 48, Nandlal Mitra Lane, it was to be inferred that the assessee was residing with her husband and her son at the Howrah address and was not carrying on any business there. In my opinion, this argument cannot be accepted. It has been specifically stated that upon local enquiry it was found that the assessee was in fact residing with her husband and her son, R.S. Khemka, at the Howrah address, but no business was carried on from that place. The fact is that there is no report whatever on record to that effect.

The position, therefore, is as follows ; A notice was sent to the petitioner on the 28th January, 1963, in which it was stated that it was proposed to set aside the assessment made on the 18th February, 1961, as enquiries had been made and certain facts had been revealed. So far as those facts are concerned, there is no difficulty. But when he came to make the order under section 33B dated 7th February, 1963, the Commissioner proceeded on grounds not at all disclosed to the petitioner and on the result of enquiries and information some of which had never been made and the result of the information was, in any event, never disclosed to the petitioner. The most serious ground on which the order proceeded was the fact that the service of notice and the making of the assessment order were all fraudulent. Although the word "fraud" had not been specifically used, the facts disclosed show that the charge is one of collusion and fraud. It is held that notices under the said Act were not properly issued or served. The orders were not properly made, but interpolations were made in the record to show that it was properly done. No such thing could have been done without a concert between the Income-tax Officer and the assessee. Of these very serious charges, however, no inkling was at all given to the petitioner in the notice that was served upon her. Let us assume that she received the notice and did not appear at the hearing. At best, the order could have been made after conforming to the rules of natural justice. Just because the petitioner did not appear at the hearing, it did not mean that allegations of fraudulent conduct or the interpolation of records, etc., could be gone into and decided without any notice whatsoever to her that she was being charged with the same or that the order of assessment was being set aside on such grounds. So far as local enquiries are concerned, undoubtedly the Commissioner is given the power under section 33B itself to make necessary enquiries, but if he is going to rely on any such information prejudicial to the assessee, that information must be disclosed to her although not necessarily the source. Apart from the enquiries mentioned in the notice, the Commissioner has relied on other enquiries not mentioned therein. In fact the record does not show that some of the enquiries had at all been made. The Commissioner went upon the record and I do not see how it can be argued that there were enquiries not appearing in the record. In coming to the conclusion that the assessment made was erroneous and prejudicial to the revenue, the Commissioner has considered a number of grounds. Some of the grounds he was entitled to go into ex parte, as the petitioner, in spite of notice of such grounds, failed to appear and contest the same. He, however, did not confine himself to those grounds, but his order, which is a speaking order, discloses that he considered the case from various points of view not disclosed to the petitioner, took into consideration materials quite unknown to her, and relied on enquiries and information prejudicial to the assessee, the gist of which had not been disclosed to her. As regards enquiries, I think the position is quite clear. The Commissioner could make any enquiry that he finds necessary, because section 33B itself gives him that right. But if he proposes to use against the assessee the result of any such enquiry, he must communicate to her the substance of such information, so as to put the assessee in possession of full particulars of the case she was expected to meet. He should have given her an opportunity to meet the same. This principle is now established by a judgment of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax [1954] 26 ITR 775 ; [1955] 1 SCR 941. See also Vasantlal & Co. v. Commissioner of Income-tax [1962] 45 ITR 206 (SC) and Commissioner of Income-tax v. Khemchand Ramdas [1940] 8 ITR 159 . In Gunda Subbayya v. Commissioner of Income-tax [1939] 7 ITR 21 , at page 28, Leach C.J. said as follows :

"There is nothing in the '1922' Act itself which requires the Income-tax Officer to disclose to the assessee the materials on which he proposes to act or to refer to it in his order but natural justice demands that he should draw the assessee's attention to it before making an order. The information which the Income-tax Officer has received may not always be accurate and it is only fair when he proposes to act on materials which he has obtained from an outside source that he should give the assessee an opportunity of showing, if he can, that the Income-tax Officer has been misinformed...."

If part of an order is good and another part bad, the whole order becomes" defective, because where a finding is based on a material which is only partly irrelevant or inadmissible it was vitiated as a whole. This was held by the Supreme Court in Dhirajlal Girdharilal v. Commissioner of Income-tax [1954] 26 ITR 736 , 740 (SC). Mr. Meyer has drawn my attention to a Supreme Court decision, S.N. Namasivayam Chettiar v. Commissioner of Income-tax [1960] 38 ITR 579 [1960] 2 SCR 885. In that case, the appellant, a resident in India, carried on trade in Colombo in grains and foodstuffs for cattle. For the relevant assessment years the Income-tax Officer rejected the accounts which were produced by the appellant and made an estimate of the profits. The Appellate Tribunal revised this estimate and having taken into account all the relevant factors, computed the profits at 15 per cent. on grains imported from India and 12½ per cent. on grains purchased in Ceylon. In support of its computation it pointed out that in certain other cases which came to its notice the rates of profits had been as much as 20 per cent. The appellant contended that the Tribunal had taken into consideration the "other cases", where it was alleged that the profit went up to 20 per cent., without disclosing the same to the appellant and without giving him an opportunity to deal with the same. The case of Dhakeswari Cotton Mills Ltd. [1954] 26 ITR 775 (SC) was cited in support. Kapur J. said as follows :

"In our opinion, no such case arises in the present appeal. No information, as in Dhakeswari's case (supra), was supplied to the Tribunal by any one and taken into consideration by it, and, therefore, it was not necessary to give any such opportunity as the appellant contends for. In the present case the Tribunal has held that from the method of accounting adopted by the appellant correct profits could not be deduced because of the various reasons which have been set out above and the reference to profits made in other cases was only by way of supporting that conclusion. It was not the basis on which the conclusion was formed nor the basis on which the percentage was arrived at."

In the present case, the notice that was given merely stated that enquiries had revealed that no business had been carried on by the assessee as alleged in her return and also that the Income-tax Officer was not justified in accepting the initial capital, the income from business, the acquisition and sale of jewelleries, etc., without any enquiry or evidence whatsoever. But the basis of the order is not merely the charges contained in the notice. It has been held that there was conspiracy and collusion between the assessee and the Income-tax Officer. Every single step in the assessment has been found to smell of fraud. The returns were filed in a peculiar manner. The notices were pre-dated. There were interpolations in the order sheets, and it has been doubted as to whether notices were at all issued. The demand notices were also tampered with and there were various other defects. It is obvious that the whole basis of the order has changed, or at least has taken into account new and much more serious factors than were disclosed in the notice. There is, therefore, no analogy between the Supreme Court decision cited above and the instant case. Coming to the local enquiry, local enquiry mentioned in the order to the effect that the assessee was residing with her husband and her son, R.S. Khemka, or that no business was carried on from 48, Nandlal Mitra Lane, is not to be found in the record at all. Mr. Meyer argues that after all the assessee will not be prejudiced because the order of the Commissioner merely sets aside the assessment and a new assessment will be made in accordance with law. Mr. Roy has pointed out that this is not the point of view from which the matter should be approached. If there has been a violation of the rules of natural justice, it is immaterial whether the same results would have been reached if there was no violation of such rules or that the person concerned was not really prejudiced. In General Medical Council v. Spackman [1943] AC. 627, Lord Wright said as follows:

"A decree of Lord Cottenham L.C. was set aside because he had an interest in the company, unknown to the defendant. It was immaterial that, as Lord Campbell said in Dimes v. Proprietors of Grand Junction Canal Co. [1852] 3 H.L. Cas. 758, 'no one can suppose that Lord Cottenham could be, in the remotest degree, influenced by the interest that he had in this concern'. If the principles of natural justice are violated in respect of any decision, it is, indeed, immaterial whether the same decision would have been arrived at in the absence of the departure from the essential principles of justice. The decision must be declared to be no decision."

In Walter Annamunthodo v. Oilfields Workers' Trade Union [1961] AC. 945, 955 (PC), the appellant had been found guilty of an offence for which he was not charged. What happened was that the appellant was appearing before the General Council of the Oilfields Workers' Trade Union to answer four charges of offences committed against the rules. The appellant attended the first hearing and denied the charges. The hearing was not completed on that date but was adjourned. On the adjourned date he did not appear and the General Council proceeded under rule 11(7) of the Rules, which created a separate and distinct offence, and an order of expulsion was made. Lord Denning said as follows:

"... it was said that, if he had appeared at the adjourned hearing, he could have been given notice in writing then and there of the intention to proceed under rule 11(7) and thus expelled without any violation of natural justice. This argument appealed to Wylie J., who thought that, as he had been given an opportunity of appearing at the adjourned hearing and had not appeared, that was enough to satisfy natural justice. Their Lordships realise the force of this reasoning but they cannot agree with it. Walter Annamunthodo must be taken to have known that, at the adjourned hearing, the General Council might proceed to award the full penalty prescribed for the offences then charged against him-which was only a small fine-but he could not be expected to know that he might be dealt with for a separate and distinct offence which involved expulsion. When the General Council at the adjourned hearing desired to proceed under rule 11(7), and found that he was not present, they ought to have adjourned the hearing once again so as to give him notice of the fresh charge : and they would have had to do it in writing under rule 32(5). By failing to do so, they failed to observe the requirements of natural justice .... Mr. Lazarus did suggest that a man could not complain of a failure of natural justice unless he could show that he had been prejudiced by it. Their Lordships cannot accept this suggestion. If a domestic tribunal fails to act in accordance with natural justice, the person affected by their decision can always seek redress in the courts. It is a prejudice to any man to be denied justice.... he can always ask for the decision against him to be set aside."

In the present case, at the hearing the assessee did not appear. Assuming that she is to be deemed to have been served with notice and took the risk of an ex parte order, it must be an order based upon the notice that was issued. Since the Commissioner at the hearing found that there were serious allegations of fraud, collusion and conspiracy, interpolation of records, etc., he should not have proceeded further without bringing these matters to the notice of the assessee and giving her an opportunity of answering the serious charges. The hearing should have been adjourned for that purpose. It is of no use now to say that she was not prejudiced by the order or that had she appeared at the hearing the further charges could have been communicated to her.

Mr. Meyer has drawn my attention to the fact that if this order is now set aside, the unfortunate result would be that a revision would be barred because an order under section 33B must be made within two years from the date of the order sought to be revised. That unfortunately is the inevitable result. But I am unable to consider that as a factor that should influence my decision. As has been stated above; an order made in violation of the rules of natural justice is not a: order at all. It is apparent that the authorities waited until the matter was about to be time-barred and then acted with undue haste. The result is that it defeated its own purpose.

In the facts and circumstances of this case, I have no option but to make the rule absolute. The application must therefore succeed. The rule is made absolute and there will be a writ in the nature of certiorari quashing the order dated 7th February, 1963, made by the Commissioner of Income-tax and there will be issued a writ in the nature of mandamus directing the respondent not to give effect to it. This however will not prevent the respondents from taking any other steps against the petitioner under the Income-tax Act or any other law, which they are entitled to take, and to proceed in accordance with law. There will be no order as to costs.