Notice Validly Served Despite Refusal: Court Upholds Service at Business Premises

Get the full picture - access the original judgement of the court order here

Case Name:

Dr. Sheo Murti Singh Vs. Commissioner of Income Tax (High Court of Allahabad)

Civil Misc. Writ Petition (Tax) No. 611 of 2015

Date: 5th August 2015

Key Takeaways:

• The court confirmed that a notice can be validly served by affixing it at a conspicuous place if the recipient refuses to accept it.
• The decision emphasizes the importance of following procedural rules under Order V Rules 17 and 18 of the Code of Civil Procedure.
• The ruling clarifies that service at a business location is acceptable if the recipient is not available at their residence.

Issue

Was the notice under Section 148 (of Income Tax Act, 1961) validly served when the petitioner refused to accept it, and it was subsequently affixed at his clinic?

Facts

Dr. Sheo Murti Singh, a doctor by profession, was issued a notice under Section 148 (of Income Tax Act, 1961) for reassessment of his income for the year 2008-09. The notice sent to his residence was returned unserved. Inspectors then attempted to serve it at his clinic, where he refused to accept it. Consequently, the notice was affixed at the clinic’s main door.

Arguments

• Petitioner: Argued that the notice was not validly served as it was not delivered to his residence and that the proceedings were vitiated.
• Respondent (Income Tax Department): Contended that the service was valid as per legal provisions, given the petitioner’s refusal to accept the notice.

Key Legal Precedents

• Order V Rule 17 (of Income Tax Rules, 1962) and 18 of the Code of Civil Procedure: These rules allow for affixing a notice at a conspicuous place if direct service is not possible.
• Section 148 (of Income Tax Act, 1961) and Section 282 (of Income Tax Act, 1961): These sections govern the issuance and service of notices for reassessment.

Judgement

The court held that the notice was validly served under Section 148 (of Income Tax Act, 1961). The refusal by the petitioner and subsequent affixing of the notice at his clinic complied with the procedural requirements. The court dismissed the writ petition, affirming the validity of the notice and the reassessment proceedings.

FAQs

Q1: Why was the notice affixed at the clinic instead of the residence?

A1: The notice was initially sent to the residence but returned unserved. The inspectors then went to the clinic, where the petitioner refused to accept it, leading to the affixing at the clinic.

Q2: Does this mean notices can always be served at a business location?

A2: Notices can be served at a business location if the recipient is not available at their residence and refuses to accept the notice.

Q3: What should the petitioner do next?

A3: The petitioner can raise objections before the assessing authority regarding the reassessment proceedings.

The petitioner is a Doctor by profession. For the assessment year 2008-09 the petitioner filed his return of income on 27.3.2009 declaring his net income as Rs.1,20,036/-. The petitioner contends that he received a notice dated 21.5.2015 issued under Section 142(1) (of Income Tax Act, 1961) (hereinafter referred to as the "Act") through which the petitioner came to known that proceeding under Section 148 (of Income Tax Act, 1961) had been initiated for reassessment of the income for the assessment year 2008-09. In response to the said notice, the petitioner filed an application praying that a certified copy of the inspector's report and a certified copy of the order sheet be given to enable the petitioner to proceed forward. The Income Tax officer vide its letter dated 10.7.2015 informed the petitioner that the petitioner should first comply with the notice under Section 142(1) (of Income Tax Act, 1961) and thereafter the details, as per his letter, would be provided. The petitioner, being aggrieved by the action of the respondent and initiation of the reassessment proceeding, has filed the present writ petition.

We have heard Sri Gaurav Mahajan, the learned counsel for the petitioner along with Sri J.C. Bharadwaj, the learned counsel for the petitioner and Sri Ashok Kumar, the learned counsel for the Department.

The learned counsel for the petitioner submitted that for

initiation of the proceedings under Section 148 (of Income Tax Act, 1961), the

essential requirement is, that a notice under Section 148 (of Income Tax Act, 1961) of the

Act should have been served, which in the instant case has not

been done till date and, consequently, the entire proceedings

stood vitiated as no valid service of notice under Section 148 (of Income Tax Act, 1961)

of the Act had yet been served upon the petitioner. The

petitioner contends that the notice dated 25.3.2015 was issued

under Section 148 (of Income Tax Act, 1961), which came back unserved on

30.3.2015 and that the said notice was never served though it

is alleged that service was made by the Department not at his

residence, but at his clinic.

At the time, when the writ petition was entertained, we

had directed the learned counsel appearing for the Department

to produce with the original record since it was a local matter.

The record has been produced to which we have perused and

we find the following.

A notice dated 25.3.2015, under Section 148 (of Income Tax Act, 1961),

was sent by Speed Post at the residential address of the

petitioner, which admittedly came back unserved. The record

indicates that the Income Tax Officer deputed two Inspectors

to make personal service of the said notice upon the petitioner.

The Inspectors' report indicates that they went to serve the

notice at the residence of the petitioner and found that the

petitioner had gone to his clinic. The Inspector thereafter,

accordingly, went to the clinic where the petitioner was busy

in his chamber, examining his patients. A request was sent by

the Inspectors to meet the petitioner. The report indicates that

the Inspectors waited at the clinic for almost half an hour, and

thereafter, the petitioner came out and, at that stage, the notice

was served which he refused on the ground, that he has no

time to receive the notice as he has to go out on an emergency

call. The report further indicates that the Inspectors tried to

serve the notice upon the other members of the staff who all

refused and, accordingly, the notice was thereafter affixed at

the main door of the clinic. The fact of return of service and

thereafter deputing the Inspector are also recorded on the order

sheet. We also find that thereafter a notice under Section

142(1) of the Act was issued to the petitioner on 21.5.2015.

In the light of the aforesaid facts, the learned counsel for

the petitioner contended that there was no proper service under

Section 148 (of Income Tax Act, 1961) read with Section 282 (of Income Tax Act, 1961) along with

Order V Rule 17 (of Income Tax Rules, 1962) and Order V Rule 18 (of Income Tax Rules, 1962) of the Code of Civil

Procedure and, consequently, all the proceedings initiated

pursuant to the notice under Section 148 (of Income Tax Act, 1961) are invalid

and liable to be quashed.

Having heard the learned counsel for the petitioner and

having perused the record, we are of the opinion, that a valid

notice under Section 148 (of Income Tax Act, 1961) has been served upon the

petitioner by refusal. In our opinion, such service by refusal is

a valid service under Section 148 (of Income Tax Act, 1961) read with Section 282 (of Income Tax Act, 1961) of the

Act and Order V Rules 17 and 18 of the C.P.C.

The contention of the learned counsel for the petitioner,

that the provision with regard to the procedure of service as

provided under Order V Rule 17 (of Income Tax Rules, 1962) and 18 has not been

complied, is patently erroneous. Order V Rule 17 (of Income Tax Rules, 1962) clearly

indicates that when the notice cannot be served, the serving

officer shall affix the copy of the summons on the outer door

or at some other conspicuous part of the house in which the

petitioner ordinarily resides or carries on business. In the

instant case, the Inspector's report clearly indicates that the

petitioner personally refused and thereafter the notice was

affixed at the outer door of his clinic. The contention that the

service was not made at his residence, but at his clinic is

immaterial. The fact remains, that the service was made at his

business place and that the petitioner himself refused to accept

the notice. The Inspector's report also indicates the time and

manner of service which is in compliance with the Order V

Rule 18 (of Income Tax Rules, 1962) of the C.P.C. In the light of the aforesaid, we are of

the opinion, that the service of the notice under Section 148 (of Income Tax Act, 1961) of

the Act was validly made.

An alternative submission was made, namely, that

the original assessment proceeding for the assessment year

2008-09 has not as yet been completed since the petitioner

received the notice under Section 142(1) (of Income Tax Act, 1961). In

response to this attack, the learned counsel for the Department

submitted that the definition of the word “assessment” as

defined under Section 2(8) (of Income Tax Act, 1961) includes re-assessment

and, therefore, a valid notice Section 142(1) (of Income Tax Act, 1961) had

been issued. It was further contended that assessment

proceedings for the assessment year 2008-09 could not

continue at this stage as the period for making such assessment

had not been completed in view of the provisions of Section

142 of the Act.

On this issue, we are of the opinion, that once we have

held that a valid notice under Section 148 (of Income Tax Act, 1961) had been

issued, it is open to the petitioner to raise this objection before

the assessing authority, as to whether the original assessment

proceeding for the assessment year 2008-09 are pending or not

and whether a valid notice under Section 142(1) (of Income Tax Act, 1961) has

been issued. If such objections are filed, the assessing

authority will consider the same while making the re-

assessment order under Section 148 (of Income Tax Act, 1961).

In view of the aforesaid, we do not find any merit in the

writ petition and is dismissed.

The original record, which we have perused, is being

returned to Sri Ashok Kumar, the learned counsel for the

Department.

Before parting, we are of the opinion, that the Income

Tax Officer had committed an error in not supplying the

details as asked by the petitioner vide his letter dated 3.7.2015.

It is not open to the Income Tax Officer to force the petitioner

to comply with the notice issued under Section 142(1) (of Income Tax Act, 1961) of the

Act as a condition precedent for supply of information that

was demanded by him. We, accordingly, direct the Income Tax

Officer to supply the information as demanded by the

petitioner vide his letter dated 3.7.2015 within five working

days from the date of receipt of the certified copy of this order.

Dated : 5.8.2015

AKJ

(Surya Prakash Kesarwani,J. (Tarun Agarwala,J.)