His Grace the Archbishop of Verapoly vs Income Tax Officer

Varadaraja Iyengar, J.—This is a petition under Article 226 and 227 of the Constitution of India fried by His Grace the Archbishop of Veropoly for and on behalf of the Ernakulam Latin Archbishopric, It calls in question two orders of the Respondent, Income Tax Officer, Ernakulam Circle, Ernakulam, assessing him, as trustee of Religious Institution to Income Tax for the years r 124 and 1125 M.E. (the accounting periods being the calendar years 1947 and 1948 respectively) u/s 8(4) of the Cochin Income Tax Act of 1.117, corresponding to S. 23(4) of tire Indian Act.

The assessment order 1124 is filed as Ext. I. It mentions that the procurator to His Grace the Archbishop was served with notice u/s 27 (2) o� the Cochin Income Tax Act corresponding to Section 22(2) of the Indian Act but he had defaulted to submit returns of income and statements in terms of the said notice. It further mentions that the procurator had also been served with statutory notices u/s 27, (4) corresponding to Section 22(4) of the Indian Act, to produce accounts and compliance with the terms of this notice had also been defaulted. The order proceeds to say that the procurator had been given repeated adjournment even bordering on unmerited leniency to file returns and produce account books and because further waiting was useless, the Income Tax authority was making a best judgment assessment u/s 28(4) of the Act (Cochin).

The assess ability of the Archbishopric to Income Tax under tire Cochin Income Tax Act, in respect of all voluntary contributions received by it, had also been already established by the assessment order for 1123 and the appeal there from before the appellate Assistant Commissioner, Ernakulam. In the result the voluntary contributions which were received during the year in question was estimated at Rs. 73,000 and allowing a total expenditure of Rs. 3,000 as necessarily incurred for raising the funds, the net income was found to be list. 70,000 and a total tax of Rs. 3L,782-4-0 was fixed as the Income Tax and super-tax due.

The assessment order for tho year 1125 is filed as Ext. II, It proceeds on the same basis as Ext.: I just summarised. The voluntary contributions received during the concerned year was fixed at Rs. 1,10,000 and deducting the estimated collection charges of Rs. 5,000 the net assessable income was found to be Rs. 1,05,000. Income Tax and super-tax amounting in the aggregate to Rs. 59,593-12-0 was levied as against the Assessee.

The procurator to tho Archbishop is the Rev. Fr. George Kanapilly. He admits in the affidavit filed in support of the petition herein that the notices referred to in Ext. I order had been really served upon him. The service of the notices in respect of the assessment year 1125, though not admitted in the affidavit, has also been conceded before us during argument. We may take it therefore that the statutory notices under the Clauses (2) and (4) of Section 27; had been served on the Assessee as regards both the accounting years 1947 and 1948.

The procurator''s affidavit however denies that there had been any real delimit in complying with the notices of requisition and goes into great detail about the circumstances under which the so called default arose. A supporting affidavit from T. V. Ganesa Iyer who is a practising Chartered Account ant at Emakulam and who had been engaged by the procurator to assist him in the matter has also been filed. A counter-affidavit in answer to the above affidavits has been filed by the present Additional Income Tax Officer at Emakulam on behalf of the Department. The facts gatherable from these affidavits are as follows.

A notice u/s 44 of the Cochin Income Tax Act, corresponding to Section 34 of the Indian Act, was served on the procurator on 14-10-1950 calling upon him to submit the return of total income and total World income of the diocese for the year 1125 M.E. ''Similar notice with regard to the year 1124 was served on 12-2-1951. The procurator thereupon on-gaged the professional services of T.V. Ganesa Iyer, to act on his behalf in the matter in question. The proceedings dragged on for considerable time on account of adjournments taken by the Assessee and also by the Department until 15-1-1953.

On that day the procurator applied for time .on the ground that he had been unable to contact -Ganesa Iyer sufficiently early. The adjournment was allowed and the case was posted to 10-2-1953 but'' the Income Tax Officer in his letter of 15-1-1953 inti-.mating the grant of adjournment warned the Assessee that the case would have to be closed without delay and that failure to comply with the demand for production of the. required documents on the adjourned .date viz., 10-2-1953

"will result in an of prate assessment, estimating the voluntary contributions assessable under the Cochin Act at a round sum of Its. 50,000".

On 10-2-1953, according to the affidavits of the procurator and Ganesa Iyer, the lattor was present at the Income Tax Office with all the necessary .returns and accounts and ready to elucidato the position on behalf of the Assessee. But the Income Tax Officer was fully engaged with particular work for the whole day and all other cases were adjourned though without announcing the date of next hearing. Such next hearing date, it would appear, was fixed to 10-3-1953 by specific notice issued by the Income Tax Officer on 5-3-1953 but because there was no ''appearance on 10-3-1953 by either the procurator or Ganesa Iyer, the Income Tax Officer proceeded to ''make the assessment orders aforesaid on 17-3-1953 u/s 28 (4).

As a matter of fact the notice of 5-3-1953 had been served on 6-3-1953 upon some person, not the procurator nor any person known to him or connected with the Archbishop''s Palace. So, immediately on receipt of the assessment orders, Exts. I and II of 17-3-1953( the procurator wrote to the Income Tax Officer explaining the apparent default and requesting a re-opening of the assessments u/s 37 of the Cochin Income Tax Act corresponding to Section 27 of the Indian Act, but the Income Tax Officer refused to re-open the assessments. The Petitioner subsequently took the matter successively before the Commissioner and the Central Board of Revenue but with ''no success. This petition has accordingly been filed for quashing the two assessment orders, Exts. I and , as well as the subsequent proceedings taken by the Income Tax Department to collect the taxes assessed and further to issue a writ of mandamus or appropriate writ or order directing the income tax'' Officer to proceed to make fresh assessments in accordance with law.

The main grounds taken by the Petitioner are:

(i) that there was no justification in all the circumstances for the Income Tax Officer to resort to-Section 28 (4) of the Income Tax Act (Cochin) for purpose of assessment and subsequently to refuse to reopen the assessment u/s 37 of the Act on cause shown by the Petitioner;

(ii) that the Income Tax Officer had really misunderstood the position when he thought that the Petitioner was a defaulter because he did not appear on the last date of'' 10-3-1953, for no blame could at-.teach to the Petitioner for such non-appearance since the service of the notice of 5-3-1953 intimating the posting date was not properly served & the Petitioner could not also be imputed wide knowledge of the posting otherwise; and

(iii) that the assessments in question were prima facie illegal because the estimates adopted exceeded I by far, the figure of Rs. 50,000 held out by the Income Tax Officer himself in his show-cause notice of "I 16-1-1953 and were also otherwise not justified.

The petition is contested by the Respondent. J In the counter-affidavit filed by him it is specially averred that there is no record in the office to show that Ganesa Iyer was present with the accounts on 10-2-1953 and that the matter was not taken that day , for want of time and that therefore the case set up by the Petitioner as to compliance with the statutory notice on 10-2-1953 or at all cannot bo said to be substantiated. Assertion is further made that tho notice of 0-3-1953 was properly served on the Assessee and the procedure adopted by the Income Tax Officer was in consequence justified. , It was only a case of largo number of opportunities granted to tho Assessee but which had not been availed of. Objection was also taken on die ground that the petition was belated and was not entertainable on that very ground.

Mr. Rama Iyer, learned Counsel for the Respondent, pressed the preliminary objection on the ground of delay and referred in this connection to the Full Bench decisions of this Court in Mahadeva Iyer v. State, 1954 Ker LT 427: (A I R 1954 Ker 469) (A) and Swaraj Motors Ltd. v. Municipal Council, Alwaye, 1954 Ker LT 443 : AIR 1954 Ker 468) (B) for the proposition that the conventional period permitted for presentation of civil revision petition may be regarded as a reasonable time for the presentation of applications for writs, orders or directions under Article 226 and that judged by this test,.'' the writ petition herein should be held to be filed after undue delay and accordingly not maintainable.

But these same decisions say there is no hard and fast rule in the matter and it would be within the discretion of a Judge or Bench trying the petition to interfere in appropriate cases even if the application is presented beyond the period of the aforesaid time. In this case it could hardly be said that the Petitioner had not been vigilant about his remedies,'' though whether he moved in the matter always wise- only may be a matter for question.'' The assessment'' orders of the Income Tax Officer were in the first stance sought to be re-opened u/s 37 of the lass come-tax Act (Cochin) by that Officer himself. The Commissioner was thereafter approached. His order ''rejecting the revision petition is dated 20-4-1954. The Central Board of Revenue was then moved by petition of 17-8-1954 but they also refused to interfere by order dated 25-11-1954.

The Petitioner approached the Commissioner once again on 23-3-1955. During all this time Petitioner had not taken professional assistance, but realising apparently on legal advice that his remedy Jay elsewhere the present petition was filed though late on 18-4-1955. Having heard the arguments on both sides and considered the whole matter, we are inclined to excuse the delay which has intervened before the presentation of the petition. We accordingly overrule the preliminary objection.

We will now take up the merits of the petition. We may observe at the outset that the averment made in the affidavit of the Respondent about the non-attendance of Ganesa Iyer on .10-2-1953 need not detain us long. For one thing, the Officer who has sworn the affidavit does not speak out of his personal knowledge. He is only the successor to the office and has to depend on the records in the office to give him the requisite information. The nature of this record is not also disclosed in the affidavit. On the other hand, Ganesa Iyer has positively affirmed in the affidavit filed before us that he appeared before the Income Tax Officer on the date in question with all relevant papers but the ease was not taken up that day as the Officer was engaged with the hearing of another case and that the case of the Petitioner along with certain other cases was adjourned for the day but the adjourned date of hearing was neither fixed nor announced by the Income Tax Officer on that day.

Again in the petition u/s 27 filed so early as 18-4-1953 for the re-opening of the assessments, assertion is made of the appearance of the auditor representative on 10-2-1953 and the adjournment of the Petitioner''s case along with others by the Income Tax Officer for want of time. And, in reply thereto dated 24-4-1953 by the Officer, this assertion is not only not refuted but reliance is placed for the ex parte assessments on the non-attendance on 10-3-1953 in pursuance to the letter of 5-3-1953. We hold therefore that there was no default on the part of the Petitioner, in the matter of the attendance, with relevant records on 10-2-1953, at ,the Income Tax Office.

The question thus reduces itself to whether any default could be ascribed to the Petitioner on account of non-attendance on the last posting date, viz., 10-3-1953. Mr. Rama Iyer, learned Counsel for the Respondent, referred in this connection to Exts. VII and VIII as the endorsements relating to service of the notice of 5-3-1953. The records referred to by learned Counsel were only copies of the respective endorsements. The original local delivery of Tapal book containing these endorsements was however produced before us during the course of the arguments. The procurator on being called on by us to explain his position with regard to these endorsements, has filed affidavit dated 5-10-1955 to say that the signature of the person acknowledging receipt of the notice was neither his nor that of any person known to him and connected with the Archbishop''s palace. Learned Counsel had nothing further to say and indeed was willing to have it taken that there was no proper service of the notice in question.

Now, as held in AIR 1934 175 (Nagpur) , Income Tax Officers in doing the very important work of assessing Income Tax, must take the elementary precaution of seeing that the person with whom they are dealing is in fact authorised to represent the Assessee, and they are not entitled to assume this merely because such person had on occasion signed a notice or produced account books for inspection and that a notice served on such person who is not authorised to accept service is not a valid service on the Assessee. And similarly in Commr. of Income Tax v. Messrs. Dey Brothers, AIR 1935 Rang. 144 (SB) (D), it was held that where a notice under the Income Tax Act was delivered otherwise than by post to any clerk or servant on the premises where the Assessee carries on business, and according to the practice obtaining In the business the employee was expected to hand on any communication which he had received to the manager, that was not evidence upon which the Income Tax authorities could find as a fact that the manager was served with the summons. We hold therefore that the Petitioner had no notice of the hearing date of 10-3-1953 and cannot therefore be said to be in default in the matter of his non-appearance on that particular date.

The power to make a best judgment assessment on the basis of default presupposes a non-compliance with the statutory notices. In the light of our finding as above that the Assessee was at the relevant times ready and willing to comply with the notices concerned, we have to hold that the assessment orders Exts. I and II cannot stand. It has become unnecessary in the light of our conclusion, as above, to discuss the other questions debated at the bar as to whether the assessment orders were prima facie illegal or otherwise unjustified.

We therefore, issue a writ of certiorari as-prayed for quashing the assessment orders Exts. I and II dated 17-3-1953 passed by the Respondent Income Tax Officer as well as the subsequent proceedings taken by the Income Tax Department for collection of the tax so assessed and we further direct that the concerned proceedings be finalised after giving reasonable opportunities to the Petitioner to be heard. No order as costs.