The Commissioner of Income Tax vs S.M. Perianna Pillai

Curgenven, J.—In this case the Commissioner of Income Tax refers the following question for the decision of this Court:

Where an assessee applies for adjournment by post or by telegram of an enquiry in respect of which he has been required by a notice u/s 23(2) to

produce evidence and the Income Tax Officer grants an adjournment, is the letter (or the telegram, where it is a telegram) intimating the fact of the

adjournment to the assessee either a notice u/s 23(2), or a requisition within the meaning of Section 63, of the Act?

To understand precisely the nature of this question, it is necessary to look at the circumstances out of which it arose.

The assessee made his return on 19th June, 1928, and on 22nd September a notice under Sections 23(2) and 22 (4) was issued to him

requiring him to produce his accounts on 4th October. On 3rd October he sent a telegram pleading a private engagement and asking for an

adjournment for two weeks. If this has been granted in full it would have entailed a postponement of the hearing until 18th October. The Income

Tax Officer did not grant it in full, but he did adjourn the case until the 12th. This he intimated to the assessee by means of a postcard despatched

on the 4th. The assessee did not appear or cause the production of his accounts on the 12th, and since he had thereby failed to comply with the

terms of the notice the Income Tax Officer, u/s 23(4), made the assessment to the best of his judgment.

The argument addressed to us upon these facts by Mr. T. R. Venkatarama Sastri may be set forth as it stands in the Commissioner''s letter of

reference:

(1) That the postcard communicating the grant of the adjournment should itself be taken to be the notice u/s 23(2) ; the fact that the original notice

was u/s 22 (4) as well as u/s 23(2) may for the moment be ignored as default in compliance with notice under either entails assessment u/s 23(4).

(2) That it should therefore have been served on the petitioner by registered post, and

(3) That as the postcard was not sent by registered post there was no valid service of notice to justify an assessment u/s 23(4).

It might reasonably have been inferred, from the language of the question, that the power of the Income Tax Officer to grant an adjournment

was to be presumed; but in fact this line of reasoning is founded upon a denial that he has, at least in circumstances such as the present, any such

power. Not having it, ft is said that his only course, when he desires to intimate to an assessee a change of date of hearing, is to issue a second

notice in terms of the first (save as regards date), in accordance with the theory that the first notice becomes null and void so soon as the original

date of hearing is past. Accordingly unless the postcard in the present case can be regarded as a notice u/s 23(2)--which it clearly is not--the

assessee received no such notice as he was obliged to comply with. It is sought to qualify the rigidity of this doctrine by. the application of the

theory of waiver. If the assessee allows his case to be adjourned to an agreed date, he cannot afterwards be heard to contend that he received no

valid, notice for that date.

I can discover no sufficient ground for denying to an Income Tax Officer the power of adjournment independently of the doctrine of waiver.

Section 23(3) appears to contemplate it when it says, ''On the day specified in the notice issued under Sub-section (2), or as soon afterwards as

may be,'' and I can find no justification for restricting the latter words to any particular stage of the inquiry. It may be that the mode of expression

used in Section 23(3) is not so fully proof against criticism as the language, for instance, of Section 31 (1) relating to appeals, where it is said that

the Assistant Commissioner ''may from to time adjourn the hearing''. But if the Income Tax Officer, as is suggested, has no option but to hear the

case ''on the clay specified in the notice, failure to do so rendering the notice inoperative, the words ''as soon after as may be'' are irreconcilable

with the intention of the Act.

Apart from the presence of these words, I think that the power of an officer entrusted with an enquiry to adjourn his proceedings, as occasion

requires, is so necessary, convenient and universally conceded that, unless it is expressly withheld by statute or rule having the force of law, it must

be taken to vest in.., him. It is not possible to regard a question of this kind apart from considerations of practical expediency in its relation to the

transaction of public business; and it seems scarcely credible that the legislature, which may be supposed to have kept such considerations in view,

would have intended to place this constraint upon an executive officer in the disposal of his work.

Accepting then that a hearing u/s 23(3) may be adjourned, it follows that no second notice u/s 23(2) for the adjourned date was required by

law; and this in effect answers the first part of the question. Mr. Venkatarama Sastri based his case entirely upon this position, but the question put

to us also inquires whether the letter or telegram replying to the application for adjournment is a requisition within the meaning of Section 63 of the

Act. u/s 63 (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.

u/s 27 of the General Clauses Act if such a document is sent by post, it must be registered. The question is whether, in the circumstances stated,

an unregistered communication will suffice.

So far as the express terms of the Income Tax Act go, there is no provision either for the manner in which an application for an adjournment

should be made, or for the manner in which it should be replied to. It cannot therefore be said that any reply sent is a ""notice or requisition under

the Act"" in the sense that the notice prescribed by Section 23(2) is ""a notice under the Act,"" i.e., such as the Act requires to be served upon an

assessee. Accordingly, no statutory obligation lay upon the Income Tax Officer to issue any reply. Pie could have proceeded--it is not denied--to

dispose of the case on the 4th October u/s 23(4). If he decided to put off disposing of it until the 12th it was open to him to do so. But, even so, I

cannot discover that the assessee had any legal right to a communication apprising him of the fact. It is not the practice, much less a rule of

procedure, even in a Court of Justice that an adjournment date is so intimated to an absent party. No doubt if a party chooses to apply, in person

or by representative, at the Court or Office he can learn what orders have been passed. But be cannot insist upon a telegram or a. letter by post,

any more than he can insist upon a letter by special messenger. Accordingly I think that the postcard sent to the assessee in this case was not

dictated by the terms of the statute but was merely an act of consideration and supererogation, the omission of which would have entailed no legal

consequence. Upon this view it cannot be held that it amounted to a ""requisition under the Act.

I reach this conclusion with the less hesitation because I cannot avoid the apprehension that if it were necessary to hold that the reply to a

postal application for an adjournment must be by registered post a quite natural consequence would be a refusal on the part of Income Tax

Officers to entertain any such applications to the detriment rather of the assessee than of the officer. Something has been said in the course of the

arguments about the requirements of natural justice, as applied to the proceedings of public officers and upon this topic the observations of Lord

Haldane, L.C., and of Lord Shaw of Dunfermline in Local Government Board v. Arlidge (1915) A.C. 120 are not inapposite. I quote from the

latter''s judgment:

The words ''natural justice'' occur in arguments and sometimes in judicial pronouncements in such cases. My Lords, when a central administrative

board deals with an appeal from a local authority it must do its best to act justly, and to reach just end by just means. If a statute prescribes the

means it must employ them. If it is left without express guidance it must still act honestly and. by honest means. In regard to these certain ways and

methods of judicial procedure may very likely be imitated; and lawyer-like methods may find especial favour from lawyers. But that the judiciary

should presume to impose its own methods on administrative and executive officers is a usurpation. And the assumption that the methods of natural

justice arc ex necessitate those of Courts of Justice is wholly unfounded.

Where an executive officer, or a department of Government, supplements the procedure laid down by statute, the principles formulated in this

quotation afford a test whether the supplementary procedure is in accordance with natural justice and will not be interfered with. I think that the

procedure in the present case answers to this test.

I would answer both the branches of the question put to us in the negative. The petitioner will pay the Commissioner''s costs. Advocate''s fee,

Rs. 250.

Pakenham Walsh, J.

This is a question referred by the Income Tax Commissioner under the following circumstances: The assessee submitted on 19th June, 1928, a

return of his income. On 22nd September, 1928, the Income Tax Officer served on him a notice under Sections 23(2) and 22 (4) of the Act

calling upon him to produce on 4th October, 1928, certain accounts and the evidence he wished to rely on in support of his return. On 3rd

October, 1928, the assessee sent the following telegram to the Income Tax Officer: ""To-morrow my family Puja at Palani. Praying adjournment for

two weeks."" The Income Tax Officer gave an adjournment till 12th October, 1928, sending the intimation by ordinary post. The assessee did not

appear on 12th October, 1928 and the Income Tax Officer made the assessment to the best of his judgment u/s 23(4). The assessee then moved

the Income Tax Officer u/s 27 of the Act to cancel the assessment. He alleged that he returned with his family to his house only on 16th October,

1928, when he found the postcard there intimating the adjournment to 12th October, 1928. In the course of the enquiry it was admitted that the

assessee had not left any address at the office, nor made any arrangements to acquaint himself with any orders that the Income Tax Officer might

pass on his telegram for adjournment. The postcard had been admittedly delivered at the assessee''s usual address and in good time to acquaint

him with the adjournment. The Income Tax Officer held that the assessee had placed himself out of communication by his own default and declined

to re-open the assessment. An appeal against this decision to the Assistant: Commissioner proved unsuccessful. The assessee then argued before

the Commissioner

(1) that the postcard communicating the grant of adjournment should itself be taken to be a notice u/s 23(2),

(2) that it should therefore be served on the assessee by registered post, and

(3) that as the postcard was not sent by registered post there was no valid service of the notice to justify an assessment tinder Section 23(4).

The Commissioner has accordingly referred the following question to the High Court:

Where an assessee applies for adjournment by post or by telegram of an enquiry in respect of which he has been required by a notice u/s 23(2) to

produce evidence and the Income Tax Officer grants an adjournment, is the letter (or the telegram, where it is a telegram) intimating the fact of the

adjournment to the assessee either a notice u/s 23(2), or a requisition within the meaning of Section 63, of the Act?

Section 63(1) reads:

A notice or requisition under the 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.

It is not denied that if this was a notice or a requisition under the Act it must be sent by registered post and if it were at the same time a notice

u/s 23(2) and not so sent, the Income Tax Officer could not, in default of the assessee''s appearance, proceed to make an assessment to the best

of his judgment u/s 23(4). The second question as propounded becomes unnecessary if the fact is answered in the negative. It is clear that a notice

u/s 23(2) is necessarily also a requisition since the party is either required to attend in person or to produce his books or, as the notice form shows,

to do both.

If a notice or requisition is issued under any other section, then though it may be necessary under the terms of Section 63 to send it by

registered post, the failure to do so would not affect the power of the Income Tax Officer to act u/s 23(4). 1 take it, therefore, specially reading it

with the arguments of the assessee set out by the Commissioner as the basis of his question, that the question before us really is this:

Where an assessee applies for adjournment by post or telegram of an enquiry in respect of which he has been required by a notice u/s 23(2) to

produce evidence and the Income Tax Officer grants an adjournment, is the letter (or the telegram, where it is a telegram) intimating the fact of the

adjournment to the assessee either a notice or a requisition u/s 23(2)?

If it is held to be so, it will of course attract the terms of Section 63 (1) and if it is not so, while it might still attract the terms of Section 63 (1), it

would be no ground for objecting to an assessment u/s 23(4) in default of the assessee''s appearance on the adjourned date, that the terms of

Section 63 had not been complied with. The argument of the learned Advocate is briefly this: If on the day appointed for the enquiry the assessee

is absent or fails to comply with all the terms of the notice issued u/s 23(2), the Income Tax Officer must at once proceed to assess him u/s 23(4),

or if he does not do so, but intimates to him a fresh date of hearing he must issue him a fresh notice u/s 23(2). In fact he would go so far as to deny

the Income Tax Officer any inherent power of adjournment in cases where the assessee fails to appear even though the assessee should have

asked for such adjournment himself (unless he complies with the date asked for by the assessee) and would read that part of Section 23 which

runs

On the day specified in the notice issued under Sub-section (2), or as soon afterwards as may be, the Income Tax Officer, after hearing such

evidence as such person may produce .... shall, by an order in writing, assess the total income of the assessee.

as if the words ran

On the day specified in the notice issued under Sub-section (2) or, provided the assessee has appeared in compliance with the terms of the notice

as soon afterwards as may be,'''' etc.

Now it would require very strong reasons to read into a section words like these which are not there and which deny to the Income Tax

Officer a very ordinary and necessary power of granting adjournment even though the assessee may not have appeared or complied with the

notice u/s 23(2). To support this contention he argues that in Section 23(4) there is no allusion to any adjourned date. Apart from that being a very

slight ground to read into Section 23(3) words which are not there, it has been pointed out for the Crown that Section 23(4) read with Section 22

(2) shows clearly that the penalty of an assessment u/s 23(4) (which for the sake of convenience, though not quite accurately, may be called a

random assessment) need not necessarily be imposed the moment the default is committed. One of the defaults entailing a random assessment u/s

23(4) is failure to make a return under Sub-section (1) of Section 22, but Sub-section (3) of Section 22 provides that if the assessee having failed

to submit a return or having found an omission or error in his return furnishes a return or a revised return, as the case may be, at any time before the

assessment is made, any return so made shall be deemed to be a return made in due time under this section. Hence though Section 23(4) does not

mention any adjourned date, Section 23(2) lays down that there is a locus penitentiae right up to the time when the actual assessment is made. No

argument therefore can be drawn from the wording of Section 23(4) to support the introduction of such words u/s 23(3) as would deprive the

Income Tax Officer of the power of granting an adjournment in case the assessee had not complied with the terms of the order u/s 23(2). The

argument in the circumstances of the present case implies a further fallacy. The Income Tax Officer having granted an adjournment there was no

default by the assessee on 4th October, 1928, when he did not appear. The Income Tax Officer could not therefore on any fair or judicial principle

of procedure have visited him with the penalty of an assessment u/s 23(4) for his non-appearance on that date. If that is so, where was the point at

which the Income Tax Officer had to start proceedings all over again u/s 23(2)? Obviously this occasion could not, on the argument, have arisen till

the assessee absented himself on 12th October, 1928, but the basis of the learned Advocate''s argument is that the notice intimating the

adjournment to the 18th October was the fresh notice u/s 23(2) which required registration. It may be thought that to deny the Income Tax Officer

a power of adjournment in cases where the assessee is absent and even though the letter asks for it, is going further than is necessary to prove the

assessee''s contention in this reference, but I think the learned Advocate is quite correct in arguing for this extreme position and that it is really

essential to his plea, for otherwise the obvious answer that there is no necessity at all for the Income Tax Officer to send any reply to a letter or

telegram asking for adjournment is almost fatal to his case. It has not. and cannot be contended that any such duty of reply is cast on the Income

Tax Officer, nor can it be denied that if he has a power of adjournment he may whether to suit his own convenience or that of the assessee simply

write on the file ""adjourned to such and such a date,"" or post it on the board (if such a board is kept). Such an endorsement on the file or notice on

the board he is not bound to communicate to the assessee if the latter is absent. It is for the assessee to bestir himself and make enquiries or to

look on the notice board or elsewhere. If this is so, and it cannot, I consider, be controverted, then the Income Tax Officer is neither bound to

proceed u/s 23(4) on the original date of hearing nor to begin matters all over again by fresh notice u/s 23(2) so that really the two arguments that

he has no power of adjournment if the assessee does not appear and the corollary that he must either act at once u/s 23(4) or begin with a fresh

notice u/s 23(2) are absolutely essential to establish the contention that a notice of adjournment: is a notice u/s 23(2). I consider that the assessee

has failed to make out either of these preliminary contentions. In my view and for the determination of the case it is not material to decide whether a

notice or a requisition, if it is not one u/s 23(2), has to be registered. By the terms of Section 63 if the notice is one under the Act it clearly must be

registered, but if it is not a notice u/s 23(2) the failure to do so will not make an assessment u/s 23(4) invalid. That is why that part of the reference

question which asks whether the letter in this case is a requisition u/s 63 has no bearing on the matter before us if the answer to the first question be

in the negative. It raises a question with which we are not concerned. If I had to decide it I should say that it is not a notice under the Act at all.

Again on the abstract and academic question whether a notice of adjournment made on the request of the assessee is a mere notice, or is also a

requisition (which question really does not arise in this case) I do not feel bound to give an answer, once it is found that it is not a notice or

requisition u/s 23(2). If I had to express an opinion I should say that it must necessarily be a notice (by which I take it is meant an intimation which

brings something to somebody''s notice). 1 doubt that it is a requisition because a party is supposed by the original summons or notice to go on

appearing till his case is finished, whether this is explicitly so stated in the original summons or not. Any other construction would mean that the

assessee would have complied with the original summons in this case if he had merely gone to the office on the clay in question, flung his books

down before the Income Tax Officer and walked off. The words ""attend at my office"" must surely mean more than this and must mean ""attend for

as long as I shall require you on that day and also attend in the same way on subsequent dates to which the case may be adjourned."" But in fact

nothing turns here on whether the postcard was a notice or a requisition or a notice plus a requisition. If it was any of these things and was issued

u/s 23(2), then, the assessee''s contention is correct. If it was not issued u/s 23(2), it does not affect the question of the right of the officer in case of

default to proceed u/s 23(4). Again I do not feel myself bound to deal with a case where an assessee attends on the due date and finds that the

Income Tax Officer is not sitting and has fixed no date of adjournment. Such conduct by the Income Tax Officer would, unless unavoidable, be a

clear dereliction of his duties. I am rather inclined to think that if there were such a dereliction or if by ""force majeure,"" say a sudden accident to the

Income Tax Officer which incapacitated him from giving directions, or his sudden death, the enquiry were left in the air on the day fixed for it, it

might very well be that proceedings would have to begin all over again. The Act does not expressly provide for any such break in the enquiry. A

question of this sort may be decided when and if it arises. It is not before us to decide. Although the contention in the present case is purely one of

law, it is quite clear that if the assessee''s argument is accepted that every notice of an adjourned date, even if made at the petitioner''s request (if it

is not the date required by the petitioner), necessitates a fresh registered notice u/s 23(2), the result will simply be in practice that all such

adjournments will be refused and the assessment will be decided u/s 23(4) forthwith. That will work as a great hardship to assessees. The grant of

an adjournment is a concession. It was argued that it is no concession if the date asked for by the assessee is not granted. I dissent entirely from

this view. The request for an adjournment in these cases implies prima facie a request that the right to make an assessment u/s 23(4) shall not be

exercised. The mere granting of this is a great concession. Then the petitioner''s wishes as regards the adjourned date are met partly though not in

full. Let us suppose a telegram or letter for adjournment received as in this case either on the day before the hearing or on the date of hearing. The

Income Tax Officer is not able to adjourn the enquiry for as long as the assessee wishes. He can grant an adjournment to the next day or the day

after, but a registered letter, even if posted at once, cannot reach the assessee in time. In such cases on the contention raised he must refuse even

the shorter adjournment which he was prepared, to grant, or else start proceedings all over again. It is also quite clear if the petitioner''s contention

is correct that the registered notice of adjournment must not only intimate the adjourned date but an entirely fresh list of the other documents or

evidence required (admittedly joint notices under Sections 22 (4) and 23(2) are legal and the notice in this case is such). If the Income Tax Officer

does not take all this trouble, it will not be a valid notice. The facts in the present case make this clear. The assessee must and does contend that

even if he had got and read the postcard in time to attend the hearing on the 12th, he would not have been bound to attend it as the notice was not

registered. So that even knowledge gained from a notice to him by the Court itself would not make the notice a valid one. It follows therefore that

a mere reference in a fresh registered notice to the evidence required in a previous notice can and will be equally impugned as not constituting a

valid notice of what evidence the assessee is required to produce. Ex hypothesis an entirely fresh proceeding u/s 23(2) has been started and the

terms of Section 23(2) must be complied with fully and literally. This will certainly not be an inducement to the Income Tax Officers to spend

trouble, time and money in granting requests by Post or wire for adjournments which they are admittedly not bound to notice or answer at all. A.

decision in In the matter of Lachhman Das Narain Das (1924) 2 I.T.C. 1 has been referred to by the learned Advocate for the assessee. I do not

think it has any bearing on this case. It was held there that if the Income Tax Officer during an enquiry u/s 23(2) required more evidence he can call

for it, and it might be advisable to do so by a fresh notice u/s 23(2). Now it is clear that such notice would be only one supplementary to the one

already sent and it need not contain the particulars already given in the previous notice. To hold that a supplementary notice can be sent under

Sub-section (2) when the Income Tax Officer requires fresh evidence is a very different proposition from holding that a notice, which the Income

Tax Officer need not send at all, intimating an adjournment made on a letter or telegram by the assessee asking for it, is a fresh notice or even a

supplementary notice u/s 23(2). I would answer the question (in the form in which I understand it is really intended to be put) thus: That where an

assessee applies for adjournment by post, or telegram of an enquiry in. respect of which he has been required by a notice u/s 23(2) to produce

evidence and the Income Tax Officer grants an adjournment, the letter (or the telegram, where it is a telegram) intimating the fact of the

adjournment to the assessee is neither a notice nor a requisition u/s 23(2) and does not affect the power of the Income Tax Officer to assess u/s

23(4) if the assessee fails to appear on the date of adjournment or commits any of the other defaults rendering him liable to be assessed under that

section.

If an answer has to be given to the second part of the question referred to us I would answer it also in the negative.

Kumaraswanii Sastri, J.

I have had the advantage of reading the judgment of my learned brothers. I agree with them that the answer should be in the negative and have

nothing useful to add. The petitioner will pay Rs. 250 vakil''s fee to Commissioner.