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Case Number

Writ Petns. Nos. 583 and 584 to 589 of 1963

Advocates

K. Srinivasan
S.R. Rajasekhara Murthy for G.R. Ethirajulu Naidu

Judges

K.S Hegde
G.K Govinda Bhat, JJ.

Acts

Rules 9(1), 12 and 15 of Order V. Rule 9(1) Order V
SECTION 22 INDIAN INCOME TAX ACT
Rule 9(1) of Order V, Civil Procedure Code,
S. 63(2) of the Indian Income-tax Act, 1922,
SECTION 148 INCOME TAX ACT 1961
S. 63(1) of the Income-tax Act, 1922.
cases.8. Rule 12 of Order V.C.P.C
sub-section (1) of Section 282
sub-section (2) of Section 282
rule 12 of Order V.C.P.C11.
Rule 15 of Order

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Smart Summary

Structured Summary of the Court's Opinion

Factual and Procedural Background

These are connected petitions raising common questions of law concerning liability for the assessment year 1958-1959. All petitioners are children of one Nagappa. Originally Nagappa was assessed in respect of the income in question; that assessment was set aside by this Court in I.T.R.C. No. 3 of 1962 on 13-8-1962. Following that, the Income-Tax Officer, City Circle II (respondent), issued notices under Section 148 of the Income-Tax Act, 1961, to the petitioners.

Several of the petitioners (Writ Petns. Nos. 583, 584, 585 and 588 of 1963) are minors; notices in their names were not addressed to their guardians and were allegedly served on K. Shivanna, the clerk (ex-employee) of Nagappa. For the assessment year in question the petitioners had earlier submitted returns under Section 22 of the Indian Income‑Tax Act, 1922, and the Income‑tax Officer had previously held them not to be assessable while assessing Nagappa. The petitioners seek a writ of prohibition or direction preventing the respondent from assessing them in pursuance of the Section 148 notices.

Legal Issues Presented

Whether the notices served on K. Shivanna, which were not in conformity with Section 282 of the Act, can support any further proceedings.
Whether notices issued in the names of the minor petitioners (without being addressed to their guardians) are invalid, and therefore cannot support an assessment.
Whether, on the facts of these cases, there is any question of reopening the assessment made on the petitioners where, it is contended, they had not in fact been assessed at all.

Arguments of the Parties

Petitioners' Arguments (as formulated by counsel Sri K. Srinivasan)

The notices served on K. Shivanna do not conform with Section 282 of the Act; consequently, no valid further steps can be taken in pursuance of those notices.
The notices issued in the names of the minor petitioners are invalid because minors cannot sue or be sued and must be represented by guardians or next friends; hence no assessment can be made on that basis.
On the facts, the petitioners were not previously assessed and therefore there is no valid basis to reopen any assessment against them.

Respondent / Revenue's Arguments (as recorded)

In the counter-affidavit the Revenue stated that the notice "has been received by the ex-employee of the assessee and the trustee" and that this practice had been in vogue for many years; the trustee/employee had acted in pursuance of earlier notices, submitted returns and initiated proceedings, and had not objected to service on past occasions.
The Revenue relied on provisions of the Civil Procedure Code (Order V Rules 9(1), 12 and 15) and on Section 282(2)(a) to justify service on K. Shivanna.
The Revenue argued the matters raised involved questions of fact that should be decided in the first instance by income‑tax authorities and further contended that, despite any procedural illegality, there was no doubt as to the petitioners' liability to tax. The Revenue invoked the Court's prior decision in K. Ramakrishnappa … v. The Agricultural Income‑Tax Officer (1963) to argue that relief should be refused in appropriate circumstances (i.e., where fraud or similar conduct was involved).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court in This Opinion
Calcutta Discount Co., Ltd. v. Income‑Tax Officer (1961) 41 ITR 191 : AIR 1901 SC 372	The Court has power to prohibit executive authorities from acting without jurisdiction, particularly where such action subjects citizens to lengthy proceedings and harassment.	Used to explain that although issuing notices under Section 148 is not a judicial act, the High Court may in a proper case prohibit executive action taken without jurisdiction.
Narayana Chetty v. Income‑Tax Officer, Nellore (1959) 35 ITR 338 : AIR 1959 SC 213	Service of the prescribed notice (under the corresponding statutory provision) is a condition precedent to valid reassessment under Section 147; absence or invalidity of the notice renders proceedings illegal and void.	Cited to support the proposition that a notice under Section 148 is not a mere procedural formality but a condition precedent to reassessment; invalid notices invalidate the proceedings.
Ram Nivas Hanumanbux Somani v. S. Venkataraman (1959) 37 ITR 329 (Bom.)	Authority on interpretation/application of provisions analogous to Section 282(2)(a) (decision of Bombay High Court).	The Court observed that Section 282(2)(a) was inapplicable to the present cases (which involve individuals, not a Hindu undivided family), and therefore it was unnecessary to consider the correctness of the Bombay High Court decision for present purposes.
Commr. of Income‑tax, Burma v. Dev Brothers (1935) 3 ITR 213 : AIR 1935 Rang 144	Service on a servant or subordinate is not equivalent to service on the person prescribed by statute; mere reaching of a notice to someone connected with the business is insufficient without service in the manner prescribed by law.	Cited and applied for the proposition that service on a servant (here, Shivanna) does not constitute valid service; the mere fact that an employee received previous notices did not prove valid service on the assessee.
C.P. v. Baxiram Rodmal (1934) 2 ITR 438 : AIR 1934 Nag. 175	Similar authority supporting that service on employees/servants is not service in law where statutory mode is not followed.	Referred to as supporting authority for the principle that employees/servants do not qualify as valid recipients of service under the governing rules.
Ravith Bibi v. Agricultural Income‑tax Officer (1964) 1 ITJ 137 (Mad.)	Minors cannot sue or be sued and must be represented by guardians or next friends in proceedings to which they are parties.	Relied on to conclude that notices issued in the names of minor petitioners (not addressed to their guardians) are invalid.
Shridhar Udai Narayan v. Commissioner of Income‑Tax, U.P. & V.P. (1962) 45 ITR 577 (All.)	Decision dealing with the scope of S.63(2) of the 1922 Act (corresponding to S.282(2)) and the meaning of "adult member of the family".	The Court noted this decision but held it did not bear on the present questions because that case concerned assessment on a Hindu undivided family; therefore it did not assist on the issue of notices to minors or service on servants here.
K. Ramakrishnappa … v. The Agricultural Income‑Tax Officer, Chikmagalur… (1963) 47 ITR 884 : AIR 1963 Mys. 186	Illustrative principle: where an assessee has practiced fraud on the assessing authorities, the Court may decline to exercise its discretion under Article 226 to grant relief.	Distinguished by the Court as inapplicable here: unlike that case, the petitioners are not accused of fraud and the irregularity stems from errors by the taxing authorities rather than conduct by the petitioners.

Court's Reasoning and Analysis

The Court proceeded in a structured manner. It first observed that issuing notices under Section 148 is not a judicial or quasi‑judicial act, but nonetheless the High Court may in a suitable case prohibit executive action taken without jurisdiction or in a manner likely to cause undue harassment (citing Calcutta Discount Co.). The Court emphasised the legal significance of service: service of the notice prescribed under Section 148 is a condition precedent to reassessment under Section 147 (citing Narayana Chetty).

The Court then analysed service under Section 282 of the Act. It held that subsection (2) of Section 282 (which deals with addressing notices in cases such as firms or Hindu undivided families) was inapplicable because these petitions involved individual petitioners, not an HUF. Therefore the relevant question was whether subsection (1) of Section 282 had been complied with.

The notices were not sent by post, so the Court asked whether they were served in compliance with the Code of Civil Procedure (CPC) mode of service. The Court examined Order V Rules 9(1), 12 and 15 of the CPC as relied on by the Revenue:

Rule 9(1): Service via an agent is permissible only where the agent is empowered to accept service. The respondent's counter‑affidavit did not establish that K. Shivanna was such an agent; it only averred past practice and that the ex‑employee had acted previously. Hence Rule 9(1) did not apply.
Rule 12 (and Order III Rule 6): Service on an agent requires that the agent be appointed by an instrument in writing signed by the principal (or a certified copy filed in Court). There was no allegation or proof that Shivanna had been formally appointed in writing to accept service; hence Rule 12 offered no basis for valid service.
Rule 15: Service on an adult male member of the defendant's family is permissible when the defendant is absent and has no agent; however, a servant is expressly excluded from the definition of "member of the family" in the explanation. Shivanna was at best a servant, and the Revenue did not claim the petitioners were absent. Thus Rule 15 did not furnish valid service.

The Court rejected the Revenue's contention that Section 282(2)(a) applied: that clause applies to assessments on Hindu undivided families and not to assessments of individuals alleged to have escaped assessment. It therefore found that the statutory modes of service were not complied with.

The Court reinforced its conclusions by reference to authority (Commr. of Income‑tax, Burma v. Dev Brothers and C.P. v. Baxiram Rodmal) holding that service on servants or employees does not satisfy the prescribed statutory modes of service; mere reception of a notice by an employee is not sufficient proof of valid service on the assessee.

On the issue of minors, the Court held that minors cannot sue or be sued and must be represented by guardians or next friends; accordingly notices issued in the names of the minor petitioners (not addressed to guardians) were invalid. The Court cited Ravith Bibi in support of this view and explained that the Allahabad High Court decision relied upon by the Revenue (Shridhar Udai Narayan) concerned HUF assessments and did not bear on the point here.

Having found the notices invalid for the reasons above, the Court did not consider it necessary to decide the third point (whether there had been any prior assessment to reopen). The Court also addressed the Revenue's submission that factual issues and the petitioners' liability should be left to the tax authorities: the Court observed there was no dispute about the salient facts (minors, notices not to guardians, service on Shivanna, no evidence of agency) and distinguished the K. Ramakrishnappa decision, noting that unlike that case there was no allegation of fraud by the petitioners; the irregularity resulted from errors by the taxing authorities and the petitioners were entitled to the benefit of such errors.

Holding and Implications

Final Disposition: The petitions are allowed. The Court directed the respondent not to proceed with the proceedings initiated against the petitioners in pursuance of the notices issued under Section 148 of the Act impugned in these proceedings. The Court ordered no costs.

Implications:

Direct effect on the parties: The respondent is prohibited from proceeding with reassessment proceedings based on the challenged Section 148 notices (the notices were held wholly invalid).
The notices served on a servant (K. Shivanna) were held not to constitute valid service under Section 282 and the relevant provisions of the Code of Civil Procedure; notices in the names of minors (not addressed to their guardians) were held invalid because minors must be represented.
The Court did not purport to lay down any broad new principle beyond applying existing authority: it applied settled principles about service and the position of minors; the opinion does not announce a novel precedent beyond its application to the facts before the Court.

Order recorded: Petitions allowed. No costs.

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C.N Nataraj And Others, v. Vth Income Tax Officer, Bangalore, .

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

2. All the petitioners are the children of one Nagappa. The question of their liability to be assessed for the assessment year 1958-1959 arises in these petitions. Originally, Nagippa 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.C No. 3 of 1962 on 13-8-1962. 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 herein, after referred to as “the Act”. The petitioners in Writ Petition 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 Nagippa to be liable to pay the 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 1958-1959 in pursuance of the notices referred to earlier.

3. 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 these notices; (ii) the notices issued in the name of the petitioners in writ petition Nos 583, 584, 585 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.

4. But before examining the points for nulated by Sri K. Srinivasan, it is necesary 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 well settled 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 (1961) 41 ITR 191 : (AIR 1901 SC 372). 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 Narayana Chetty v. Income-Tax Officer, Nellore, (1959) 35 ITR 338 : (AIR 1959 SC 213). Having said that much, let us now proceed to consider the points in controversy.

5. 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 Nigappi, 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:

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

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

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

6. 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 whether the requirements of sub-section (1) of Section 282 are complied with Admittedly, no notice was sent to Page: 257the petitioners by post. This leaves us with the question whether the notices said to have been served in these eases 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) 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 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 (here in ‘ ’) 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 Counter-affidavit) 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.

XXXXX”

7. These avernments 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.

8. Rule 12 of Order V.C.P.C 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.”

9. 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 P.C 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 recognised 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 (here in ‘ ’) is ours).

10. 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.C.P.C

11. 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.”

12. 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.

13. It was urged by the learned counsel for the Revenue that the service of notices in these cases is in accordance with S. 282(2)(a). We have earlier observed that S. 2S2(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-s. (2) of S. 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 Ram Nivas Hanumanbux Somani v. S. Venkataraman, (1959) 37 ITR 329 (Bom.).

14. 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 Commr. of Income-tax, Burma v. Dev Brothers, (1935) 3 ITR 213 : (AIR 1935 Rang 144). Therein, the assessee who resided at Calcutta owned a business at Rangoon styled 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 been 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 S. 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 Commr. of Income-tax, C.P v. Baxiram Rodmal, (1934) 2 ITR 438 : (AIR 1934 Nag. 175).

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

16. We are also in agreement with Sri K. Srinivasan that the notice 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, reported in (1964) 1 ITJ 137 (Mad.). 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, U.P & V.P, (1962) 45 ITR 577 (All.). That decision deals with scope of S. 63(2) of the Indian Income-tax Act, 1922, which corresponds with sub-s. (2) of S. 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. Page: 258That case dealt with an assessment on a Hindu undivided family.

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

18. 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. The Agricultural Income-Tax Officer, Chikmagalur…*., (1963) 47 ITR 884 : (AIR 1963 Mys. 186). As seen earlier there is no dispute about the facts. It is not denied that the petitioners in Writ Petition 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 (1959) 35 ITR 388 : (AIR 1959 SC 213). The decision of this Court in (1963) 47 ITR 884 : (AIR 1963 Mys. 186) 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 Art. 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 placed 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.

19. 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 S. 148 of the Act impugned in these proceedings. No costs.

L.H/C.W.M/D.V.C

Petitions allowed.

C.N Nataraj And Others, v. Vth Income Tax Officer, Bangalore, .

Structured Summary of the Court's Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners' Arguments (as formulated by counsel Sri K. Srinivasan)

Respondent / Revenue's Arguments (as recorded)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

C.N Nataraj And Others, v. Vth Income Tax Officer, Bangalore, .

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