http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: COMMISSIONER OF INCOME-TAX, PUNJAB

       Vs.

RESPONDENT: DAULAT RAM KHANNA

DATE OF JUDGMENT: 29/03/1967

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. SHAH, J.C. RAMASWAMI, V.

CITATION:  1967 AIR 1552            1967 SCR  (3) 298

ACT: Income  Tax  Act  (11 of 1922) s.  63-Notice  under  s.  34- direction  by  Income-tax  Officer to affix  at  address  of assessee-No affixture on the notice board of the  Income-tax Office-Sufficiency of substituted service.

HEADNOTE: Code  of  Civil Procedure (Act 5 of 1908), O. V.  r.  20(1)- Scope of. Under s. 63 of the Income-tax Act a notice under the Act may be served as if it were a summons under the Civil  Procedure Code.   Order  V,  r.  20(1)  of  the  Code  prescribes  two alternative  methods of service when the summons- could  not be  served in the ordinary way, namely, (1) by affixing  one copy  of  the summons in the court-house and  another  in  a conspicuous  part  of  the  residential  house  or  business premises  of the party to be served; and (2) "in such  other manner  as  the  Court thinks fit".  These  words  confer  a discretion on the court to adopt any other manner of service and include a direction to affix a copy in such manner as to give notice to the person to be served, but without affixing a copy thereof in the court-house. [301A-B] Therefore,  where proceedings under s. 34 of the  Income-tax Act,  1922,  were  started against  the  assessee,  a  Hindu Undivided family, by issuing a notice, but the notice  could not  be  served  on its karta, and  the  Income-tax  Officer ordered substituted service by directing the process  server to affix the notice only at the address of the assessee  and satisfied  himself that the notice was affixed in  a  proper manner, it must be held that the notice was properly  served on the assessee. [299C-E; 301F] Jhabar Mal Chokhani v. Commissioner of Income-tax 49  I.T.R. 391, overruled. Narendra  Kishore  Das v. Banamali Sahu Dibakar  Sahu  Firm, A.I.R. 1951 Orissa 312, approved. Deccan Cooperative Bank Ltd. v. Parsram Tolaram, A.I.R. 1942 Sind  96 and Narendra Prasad Sinha v.  Maharani Janki  Kuer, A.I.R. 1947 Pat. 385, referred to.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 580 of 1966. Appeal  by special leave from the judgment and  order  dated September  3,  1964 of the Punjab High Court  in  Income-tax Reference No. 23 of 1962. B.Sen,  T.  A.  Ramachandran  and S. P.  Nayyar  for  R.  N. Sachthey, for the appellant. S. K. Aiyar and B. P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Sikri,  J. This appeal by special leave is directed  against the  judgment  of the High Court of Punjab,  Chandigarh,  in Income  Tax  Reference  No. 23 of 1962, made to  it  by  the Income-Tax 299 Tribunal under s. 66 (1) of the Indian Income Tax Act, 1922. The following question was referred to the High Court :-               "Whether on the facts and the circumstances of               the  case the notice under section 34  of  the               Income-Tax  Act  was properly  served  on  the               assessee within the prescribed period." The relevant facts, in brief, are that the respondent,  Shri Daulat Ram Khanna, hereinafter referred to as the  assessee, is a Hindu Undivided family, and the dispute relates to  the year of assessment 1945-46.  Proceedings under s. 34 of  the Income-Tax  Act were started by the Income Tax Officer,  ’B’ Ward, Amritsar, against the assessee by issue of a notice on March  29, 1954.  The Process Server went to the  assessee’s shop for service of the notice on the assessee on March  30, 1954, but he could not serve it on the assessee because  the karta  of the assessee was not present.  The Process  Server reported to the Income-Tax Officer on the same day that  the assessee  had refused to accept the service of  the  notice. On  receipt of the said report, the Income Tax  Officer,  on the  same  day, i.e., March 30, 1954, sent  the  notice  per registered post and also ordered substituted service of  the notice by directing the Process Server to affix the same  at the  address  of the assessee.  The notice  was  affixed  on March  31, 1954.  We need not give the facts  regarding  the service  of  the notice by registered post  because  it  was received by the, assessee on April 5, 1954.  In view of  the fact that the notice was affixed according to the directions of the Income-Tax Officer, he, after recording the statement of  the Process Server, held that the service of the  notice by affixture was proper. The  assessee  appealed.  The  Appellate  Assistant  Commis- sioner,  inter alia, held that as a copy of the  notice  was not  pasted  on  the outer wall of the office  room  of  the Income-Tax Office, the substituted service- was invalid. Further,  on  appeal, the Appellate Tribunal held  that  the notice  was properly served under Order V. r. 20(1)  of  the Code  of Civil Procedure, and as the Income-Tax Officer  was not a Court, it was not incumbent on him to affix a copy  of the  notice  on the notice board of the  Income-Tax  Office. The  Tribunal, therefore, held that the notice was  properly served  and set aside the order of the  Appellate  Assistant Commissioner. The High Court, following its earlier decision in Jhabar Mal Chokhani  v.  Commissioner of Income-Tax(1)  held  that  the substituted service was invalid and answered the question in the negative.  It also refused to allow the counsel for  the Revenue to raise the (1)  49 1. T. R. 391. 3 00 point  that the notice under S. 34 had been served  in  time even  if  the service be taken to have been  effected  after

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

March 31, 1954.  He had relied before the High Court on  the Indian Income-tax (Amendment) Act, 1959, and the decision of this Court in S. C. Prasher v. Vasantson Dwarkadas.(1) The  learned  counsel for the Revenue, Mr.  B.  Sen,  urges, first,  that in view of Commissioner of Income Tax v.  Straw Products Ltd. ( 2) the High Court erred in not allowing  the second  point to be raised, and secondly, he contends,  that the earlier case of the High Court in Jhabar Mal Chokhani v. Commissioner  of Income Tax(3) was wrongly decided.   As  we agree  with  the latter contention, it is not  necessary  to deal with the first point raised by him. Under s. 63 of the Income-Tax Act a notice may be served  as if it were the summons issued by the court under the Code of Civil Procedure.  The answer to the question depends on  the true  interpretation  of  O.  V. r. 20 (1  )  of  the  Civil Procedure Code which -reads as follows :-                "  (  1 ) Where the Court is  satisfied  that               there is reason to believe that the  defendant               is  keeping out of the way for the purpose  of               avoiding  service,  or  that  for  any   other               -reason  the summons cannot be served  in  the               ordinary  way,  the  Court  shall  order   the               summons  to  be  served  by  affixing  a  copy               thereof  in  some  conspicuous  place  in  the               court-house,  and also upon  some  conspicuous               part of the house (if any) in               which  the  defendant is known  to  have  last               resided  or carried on business or  personally               worked  for main, or in such other  manner  as               the Courtthink’s fit." Mr.   Sen  divides  the  above  sub-rule  into  two   parts. According  to him, the first part deals with a copy  of  the summons  being affixed in the court-house and  another  copy being  affixed in some conspicuous part of  the  residential house  or  business  premises.   He  says  that  it  is  not obligatory on the Court to adopt this method, but the  Court can, in view of the circumstances, order the service of  the notice  in  any  other manner as it  thinks  fit.   Mr.  Sen further  says that it would be noticed that the word  "also" has not been repeated in the last ten words of the sub-rule, underlined  above.  He says that in a particular case it  is in  the  discretion  of the Court to order  service  of  the notice by registered post or by affixing a copy thereof  and then  satisfying itself that the copy has been affixed in  a proper manner. (1)  [1964]  S. C. R. 29:49 I.T.R. 1.           (2)  [1965]2 S. C. R. 881. (3)  49 I.T.R. 391. 30 1 In  our view, there is great deal of force in what  Mr.  Sen urges.   It seems to us that the last ten words in  sub-rule (1)  of r. 20, do confer a discretion on the Court to  adopt any  other manner of service.  The sub-rule  prescribes  one manner  which the Court may follow and this manner  consists of  two  acts;  (1) affixing a copy of the  summons  in  the court-house, and (2) affixing it in some conspicuous part of the  residential  house  or the  business  premises  of  the defendant.   If  the High Court were right we  would  expect that the word "also" would be repeated and inserted  between the  word  "or"  and  "in"  in  the  last  ten  words.   The alternative  manner  which the Court decides  to  adopt  for serving must of course be such as gives notice to the person to be served. The  High  Court in Jhabar Mal Chokhani v.  Commissioner  of Income  Tax(1) had relied on Deccan Co-operative Batik  Ltd.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

v. Parsram Tolaram(2) but that case considered O. 21, r. 46, sub-r. (2), and in our view, the High Court wrongly regarded that  provision being in pari materia with O. V.  r.  20(1), because,  in r. 46 (2) the last ten words in O. V. r.  20(1) which we have underlined do not figure.  The decision of the Patna High Court in Narendra Prasad Sinha v. Maharani  Janki Kuer  (3 ) is also distinguishable as it also deals with  O. 21, r. 46(2). It seems to us that the object of the Legislature in  giving a discretion to the Court is to enable the Court to see that unnecessary steps are not taken and the service is  effected in  the most expeditious and best manner.  For  example,  if the person to be served had, to the knowledge of the  Court, temporarily  gone outside India, the Court might have  sent, even  before  the  insertion  of  r.  20A,  the  summons  by registered  post  to his address abroad without  affixing  a copy thereof in the court-house.  In Narendra Kishore Das v. Banamali  Sahu Dibakar Sahu Firm (4 ) the Division Bench  of the  Orissa High Court held that "the last mode of  service, namely ,or in such other manner as the Court thinks fit’, no doubt, gives the Court the jurisdiction to have the  service of summons through registered post." In  our  opinion, the case of Jhabar Mal  Chokhani  v.  Com- missioner  of  Income Tax(1) was wrongly  decided.   In  the result  we accept the appeal, set aside the judgment of  the High  Court and answer the question in the  affirmative  and against  the  assessee.  In the circumstances  of  the  case there will be no order as to costs.                                              Appeal allowed. V.P.S. (1)  49 1. T. R. 391. (2)  A. 1. R. 1942, Sind, 96. (3)  A. 1. R. 1947.  Pat. 385. (4)  A. 1. R. 1951.  Orissa, 312. 302