1964-VIL-29-KAR-DT

Equivalent Citation: [1965] 56 ITR 250 (Mys)

MYSORE HIGH COURT

Writ Petition No 583 of 1963

Dated: 08.04.1964

C.N. NATARAJ

FIFTH INCOME-TAX OFFICER, CITY CIRCLE II, BANGALORE

K. Srinivasan, for the petitioner

S. R. Rajasekhara Murthy for G. R. Ethirajalu Naidu, for the respondent

Bench

K. S. HEGDE AND G. K. GOVINDA BHAT, JJ.

JUDGMENT

HEGDE J.-

These are connected petitions. Common questions of law arise for decision in these petitions. Therefore, they can be dealt with in one order.

All the petitioners are the children of one Nagappa. The question of their liability to be assessed for the assessment year 1958-59 arises in these petitions. Originally, Nagappa was assessed to tax, the income with which we are concerned in these petitions. That assessment was set aside by this court in I.T.R.A. No. 3 of 1962 on August 13, 1962. Thereafter, the Income-tax Officer, City Circle II, respondent in these petitions, issued notices to the petitioners under section 148 of the Income-tax Act, 1961, to be hereinafter referred to as "the Act." The petitioners in Writ Petitions Nos. 583, 584, 585 and 588 of 1963 are minors. Notices have been issued in their individual names and not in the name of their guardian. The notices issued to the petitioners were served on K. Shivanna, the clerk of Nagappa, the petitioners' father. For the assessment year in question all these petitioners had previously submitted returns under section 22 of the Indian Income-tax Act, 1922. The Income-tax Officer held them to be not assessable. On the other hand, he held Nagappa to be liable to pay tax on the income in question and assessed him for the same which assessment, as mentioned earlier, was set aside by this court.

In these petitions the petitioners have prayed for a writ of prohibition or direction prohibiting the respondent from assessing them to tax, for the assessment year 1958-59, in pursuance of the notices referred to earlier.

Sri K. Srinivasan, the learned counsel for the petitioners, formulated three points in support of the prayer made in these petitions. They are: (i) the notices served on K. Shivanna, not being in conformity with the provisions contained in section 282 of the Act, no further steps can be taken in pursuance of those notices; (ii) the notices issued in the names of the petitioners in Writ Petitions Nos. 583, 584 and 588 of 1963 (all minors) are invalid notices and, therefore, no assessment can be made on the basis of those notices; and (iii) on the facts of these cases, there is no question of reopening the assessment made on the petitioners as they had not been assessed at all. We shall now consider these points one by one.

But before examining the points formulated by Sri. K. Srinivasan, it is necessary to mention that, while issuing notices under section 148, the Income-tax Officer is not acting judicially or quasi-judicially and, consequently, no writ of certiorari or prohibition can be issued. But it is wellsettled that this court has power to issue in a fit case an order prohibiting the executive authority from acting without jurisdiction, particularly where such an act subjects or is likely to subject any citizen to lengthy proceedings and unnecessary harassment: see the decision of the Supreme Court in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta [1961] 41 I.T.R. 191; [1961] 2 S.C.R. 241.

There is no doubt that a notice prescribed under section 148 of the Act for initiating reassessment proceedings is not a mere procedural requirement; the service of the prescribed notice on the assessee is a condition precedent to the validity of any reassessment made under section 147. If no notice is issued or if the notice issued is shown to be invalid, then the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void: see the decision of the Supreme Court in Y. Narayana Chetty v. Income-tax Officer, Nellore [1959] 35 I.T.R. 388; [1959] Supp. 1 S.C.R. 189. Having said that much, let us now proceed to consider the points in controversy.

Admittedly, the notices issued under section 148 were not served on any of the petitioners. They were all served on one K. Shivanna, clerk of Nagappa, the father of the petitioners. Can the respondent proceed to assess the petitioners in pursuance of those notices? The procedure for the service of notice is laid down in section 282. That section reads:

"282. (1) A notice or requisition under this Act may be served on the person therein named either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908 (V of 1908).

(2) Any such notice or requisition may be addressed--

(a) in the case of a firm or a Hindu undivided family, to any member of the firm or to the manager or any adult member of the family;

(b) in the case of a local authority or company, to the principal officer thereof;

(d) in the case of any other person (not being an individual), to the person who manages or controls his affairs."

In the present case sub-section (2) of section 282 has no application. Herein we are dealing with individuals. Therefore, all that we have to see is whether the requirements of sub-section (1) of section 282 are complied with. Admittedly, no notice was sent to the petitioners by post. This leaves us with the question whether the notices said to have been served in these cases can be considered as having been served in accordance with the provisions contained in the Civil Procedure Code, 1908. In the Code of Civil Procedure, the procedure for service of summons is provided in Order V. The rules relied on by the learned counsel for the revenue are rules 9(1), 12 and 15 of Order V. Rule 9(1) of Order V says:

"Where the defendant resides within the jurisdiction of the court in which the suit is instituted, or has an agent resident within that jurisdiction who is empowered to accept the service of the summons, the summons shall, unless the court otherwise directs, be delivered or sent to the proper officer to be served by him or one of his subordinates." (underlining* is by us.)

In the counter-affidavit filed by the respondent, it is not said that K. Shivanna is an agent of the petitioners empowered to accept the notices issued to them. All that is stated therein is (paragraph 2 of the counteraffidavit) that:

"Notice has been received by the ex-employee of the assessee and the trustee, that has been in vogue for so many years. He is an employee of the family. The fact that it is effective service is made out from the fact that the trustee has acted in pursuance of the impugned notice. Earlier also, the trustee has appeared and submitted returns and initiated proceedings in this Hon'ble court in response to notices similarly addressed and served. No objection as to service was taken on any of these occasions..."

These averments do not make out that either K. Shivanna is the agent of the petitioners or that he was empowered to accept notices on their behalf. Hence, rule 9(1) of Order V, Civil Procedure Code, is inapplicable to the facts of these cases.

Rule 12 of Order V, Civil Procedure Code, reads:

"Wherever it is practicable, service shall be made on the defendant in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient."

It is not the case for the revenue that it was not practicable to serve the notices in question on the petitioners. Nor is it shown that the petitioners had an agent empowered to accept service of notices on them. Order III, Civil Procedure Code, deals with recognised agents and pleaders. Rule 2 sets out who the recognised agents are. Rule 6 specifies agents who can accept notices. That rule says:

"(1) Besides the recognized agents described in rule 2 any person residing within the jurisdiction of the court may be appointed an agent to accept service of process.

(2) Such appointment may be special or general and shall be made by an instrument in writing signed by the principal, and such instrument or, if the appointment is general, a certified copy thereof shall be filed in court." (underlining* is ours)

It is not the case of the revenue that K. Shivanna had been appointed as an agent by means of an instrument in writing, signed by the petitioners.

Hence, the revenue cannot take any assistance from rule 12 of Order V, Civil Procedure Code.

This takes us to rule 15 of Order V, which says:

"Where in any suit the defendant is absent and has no agent empowered to accept service of the summons on his behalf, service may be made on any adult male member of the family of the defendant who is residing with him.

Explanation.--A servant is not a member of the family within the meaning of this rule."

In the first place, Shivanna cannot be said to be a member of the family of the petitioners. He is at best a servant. Servant is excluded from the scope of rule 15. That apart, it is not the case of the revenue that the petitioners were absent. Hence, this rule is also inapplicable to the facts of these cases.

It was urged by the learned counsel for the revenue that the service of notices in these cases is in accordance with section 282(2)(a). We have earlier observed that section 282(2)(a) is inapplicable to these cases. Herein, we are not dealing with the case of assessments on a Hindu undivided family. The petitioners are proceeded against as individuals who have escaped assessment. Clause (a) of sub-section (2) of section 282 of the Act has application only in the case of assessments of Hindu undivided families. In that view, it is unnecessary to consider the correctness of the decision of the Bombay High Court in Ramnivas Hanumanbux Somani v. S. Venkataraman, Income-tax Officer, C-III Ward, Bombay [1959] 37 I.T.R. 329.

The contention of Sri K. Srinivasan that service on a servant is no service in law is supported by the decision of the Rangoon High Court in Commissioner of Income-tax v. Dey Brothers [1935] 3 I.T.R. 213. Therein the assessee who resided at Calcutta owned a business at Rangoon styled as Dey Brothers. This business was carried on by one D who was appointed as manager by the assessee. A process issued by the Income-tax Officer in connection with the assessment of the business was served, in the absence of D, on M, one of his assistants working in the shop, who signed on the back of the copies, "for Dey Brothers", under a rubber stamp. The question was whether there was sufficient service of the notice. The court held that the mere fact that the notice had in some way or other reached the person upon whom it was to be served was not sufficient but there must be service as prescribed in section 63(1) of the Income-tax Act, 1922. It further held that neither the fact that M had accepted previous notices nor the fact that according to the practice obtaining in the business the employees were expected to hand over all communications to the manager was sufficient evidence to support a finding that D had been duly served. Similar was the view taken by the Nagpur Judicial Commissioner in Commissioner of Income-tax v. Baxiram Rodmal [1934] 2 I.T.R. 438.

For the reasons mentioned above, we hold that the notices served in these cases which form the basis for the proceedings under section 147 of the Act are wholly invalid notices and the petitioners cannot be assessed in pursuance of those notices.

We are also in agreement with Sri K. Srinivasan that the notices issued in the name of the minor-petitioners are invalid notices. Under our laws minors can neither sue nor be sued. In all proceedings to which they are parties, they must be represented either by guardians or by next friends. To us, this position appears to be obvious. If authority is needed in support of this view, we may usefully refer to the decision of the Madras High Court in Ravith Bibi v. Agricultural Income-tax Officer, Dindigul [1964] 52 I.T.R. 471. As against this decision, the learned counsel for the revenue invited our attention to the decision of the Allahabad High Court in Shridhar Udai Narayan v. Commissioner of Income-tax [1962] 45 I.T.R. 577. That decision deals with the scope of section 63(2) of the Indian Income-tax Act, 1922, which corresponds with sub-section (2) of section 282 of the Act. Therein, it was held that the words "adult member of the family" do not necessarily mean that he should be major according to law. That decision does not bear on the point under consideration by us. That case dealt with an assessment on a Hindu undivided family.

In view of the above findings, we do not think that it is necessary to pronounce on the third point formulated by Sri K. Srinivasan.

The learned counsel for the revenue strenuously contended that we should not grant the relief prayed for, firstly, because the questions raised, being essentially questions of fact, must at the first instance be decided by the income-tax authorities, secondly, because, whatever may be the illegality in the procedure adopted, there is no doubt about the liability of the petitioners to pay the tax and that being so, this case falls within the rule laid down by this court in K. Ramakrishnappa v. Agricultural Income-tax Officer, Chikmagalur [1963] 47 I.T.R. 884. As seen earlier, there is not dispute about the facts. It is not denied that the petitioners in Writ Petitions Nos. 583, 584, 585 and 588 of 1963 are minors. Nor is it denied that notices were sent to them and not to their guardians. It is also not denied that the notices issued on all the petitioners were served on Shivanna. It is not the case of the revenue, as mentioned earlier, that Shivanna is the agent of the petitioners empowered to receive notices. Therefore, these cases come within the rule laid down by the Supreme Court in Narayana Chetty v. Income-tax Officer, Nellore [1959] 35 I.T.R. 388; [1959] Supp. 1 S.C.R. 189.

The decision of this court in K. Ramakrishnappa v. Agricultural Income- tax Officer, Chikmagalur [1963] 47 I.T.R. 884 is wholly inapplicable to the facts of these cases.

Therein, we were dealing with a case where the assessee had played fraud on the assessing authorities. For the reasons mentioned in that decision, we declined to exercise our discretion under article 226 in his favour. That is not the case here. If the petitioners have escaped assessment--which question we have not gone into--it is not because of any fraud played by them, but because of the errors committed by the taxing authorities. An assessee is entitled to avail himself of the benefit of the errors committed by the income-tax authorities.

For the reasons mentioned above, we allow these petitions and direct the respondent not to proceed with the proceedings initiated by him against the petitioners in pursuance of the notices issued by him under section 148 of the Act and impugned in these proceedings. No costs.

Petitions allowed.