Wp/11695/2004 Of M/S Kiran Machines v. The Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:08.03.2006 CORAM: THE HON’BLE MR. JUSTICE K.MOHAN RAM W.P.No. 11695 of 2004 andW.V.M.P.No.2367 of 2005 and W.P.M.P.No.13760 of 2004 M/s. Kiran Machines179 Old Mahabalipuram RoadSholinganallurChennai - 600 119.... Petitioner-vs-1.The Income Tax Officer Ward I(4),121, Mahatma Gandhi Road,Nungambakkam, Chennai 600 034.2.The Tax Recovery Officer,Business Range-I,Room No.304, III Floor, New Block,121, Mahatma Gandhi Road,Nungambakkam, Chennai 600 034.... RespondentsPrayer : The Writ Petition filed under Article 226 of theConstitution of India for issue of Writ of Certiorari, calling forthe records of the first respondent in relation to the assessment ofthe petitioner for the year ending 31.3.1999, quash the assessmentorder dated 31.3.2003 made therein. For Petitioner :Mr.G.Ethirajulu, Advocate for Mr.B.KumarasamyFor Respondents :Mrs.Pushya Sitaraman, Sr.C.G.S.C.O R D E R With the consent of the counsel on both sides, the writpetition itself is taken up for final disposal. https://hcservices.ecourts.gov.in/hcservices/ 2.The prayer in the writ petition is to quash the assessmentorder dated 31.3.2003. petitioner and a copy of this show cause letterwasalsoservedonthepetitioner'srepresentative on 27.3.2003." 5.The main grievance of the petitioner is that noopportunity was given to him to produce further evidence to supporthis claim. If the notice had been served on him personally, hewould have appeared and submitted his further objections. 6.On the other hand, the learned Senior Central GovernmentStanding Counsel for the Income Tax Department invited my attentionto Section 282 of the Income Tax Act 1961, which reads as follows:"282 (1)A notice or requisition under thisAct may be served on the person therein namedeither by post or as if it were a summons issuedby Court under the Code of Civil Procedure, 1908(5 of 1908).(2)Any such notice or requisition may beaddressed --(a)In the case of a firm or a Hinduundivided family, to any member of the firm or tothe manager or any adult member of the family;" The Learned Standing Counsel submitted that the first respondent byvirtue of the provisions contained in section 282 of the Income TaxAct, has caused service of notice by affixture. The learned counselalso drew my attention to Order 5 Rule 20 of Civil Procedure Code,which reads as follows: "20. Substituted Service:- (1) Where the Courtis satisfied that there is reason to believe thatthe defendant is keeping out of the way for thepurpose of avoiding service, or that for anyother reason the summons cannot be served in theordinary way, the Court shall order the summonsto be served by affixing a copy thereof in someconspicuous place in the Court-house, and alsoupon some conspicuous part of the house (if any)in which the defendant is known to have lastresided or carried on business or personallyworked for gain, or in such other manner as theCourt thinks fit.(1A) Where the Court acting under sub-rule(1) orders service by an advertisement in anewspaper, the newspaper shall be a dailynewspaper circulating in the locality in whichthe defendant is last known to have actually andvoluntarily resided, carried on business orpersonally worked for gain. Relying on the above two provisions, the learned Senior CentralStanding Counsel submitted that the affixture is also one of theprescribed modes of service and as such no exception can be taken,in this case, regarding the mode of service adopted. Relying on the above two provisions, the learned Senior CentralStanding Counsel submitted that the affixture is also one of theprescribed modes of service and as such no exception can be taken,in this case, regarding the mode of service adopted. 7.It is no doubt true that the first respondent undersection 282 can invoke the provisions of Civil Procedure Code andOrder 5 Rule 20 CPC provides for 'Substituted Service'. As per thesaid provision, before resorting to substituted service, under order5, Rule 20, the Court should be satisfied that there is reason tobelieve that the defendant is keeping out of the way for thepurpose of avoiding service, or that for any other reason thesummons cannot be served in the ordinary way, and then only theCourt shall order the summons to be served by affixing a copythereof in some conspicuous place in the Court-house, and also uponsome conspicuous part of the house (if any) in which the defendantis known to have last resided or carried on business or personallyworked for gain, or in such other manner as the Court thinks fit. 8.Here in this case, admittedly, the first respondent hasnot recorded any such satisfaction in his order before causingservice of notice by affixture. It is also pertinent to point outthat as per Order 5 Rule 20 (1A), the first respondent could haveordered paper publication if the address of the petitioner was notknown or same could not be furnished by his representative. But,that too has not been done in this case. When an order ofassessment levying tax is being passed, it is incumbent upon thefirst respondent to serve the notice in accordance with the abovesaid provisions. But, in this case, that has also not been done.Thus, the principles of natural justice have been violated and onthis ground, the impugned order is liable to be set aside. 9.The learned Senior Standing Counsel also fairly submitsthat the first respondent ought to have followed the procedurecontained in Order 5 Rule 20 of Code of Civil Procedure. But, shefurther submits that as the first respondent is not a legallytrained person, he has failed to follow the same. She furthersubmitted that there is an alternative remedy of filing an appealand this Court should not entertain the Writ Petition. 10.In 2003 (2) S.C.C. 107 (Harbanslal Sahnia Vs. Indian OilCorporation Limited and Others) the Honourable Supreme Court ofIndia held that "in an appropriate case, in spite of availability ofthe alternative remedy, the High Court may still exercise its writjurisdiction in at least three contingencies; (i) where the writpetition seeks enforcement of any of the fundamental rights; (ii)where there is failure of principles of natural justice; or (iii)where the orders or proceedings are wholly without jurisdiction orthe vires of an Act is challenged". In this case, as pointed out above, proper notice has not beenserved on the petitioner to enable him to effectively participate inthe assessment proceedings and put forth its objections. In suchcircumstances, it is not proper to ask the petitioner to takerecourse to alternative remedy of appeal. When the facts of thiscase clearly shows that there is failure of principles of naturaljustice and the petitioner has made out a strong case, I am of theconsidered view that this Court should invoke the extraordinaryjurisdiction under Article 226 of the Constitution of India. In this case, as pointed out above, proper notice has not beenserved on the petitioner to enable him to effectively participate inthe assessment proceedings and put forth its objections. In suchcircumstances, it is not proper to ask the petitioner to takerecourse to alternative remedy of appeal. When the facts of thiscase clearly shows that there is failure of principles of naturaljustice and the petitioner has made out a strong case, I am of theconsidered view that this Court should invoke the extraordinaryjurisdiction under Article 226 of the Constitution of India. 11. Finally the Learned Senior Standing Counsel for the IncomeTax Department submitted that without going into the merits of thecase, a direction may be issued to the first respondent to assessthe assessment proceedings afresh. She further submitted that timelimits may be fixed for further objections by the petitioner and forconcluding assessment proceedings. Accordingly, without going intothe merits of the case on the sole ground that no proper notice hasbeen served on the petitioner before passing the impugnedproceedings and there is failure of principles of natural justice,the impugned proceedings of the respondent is quashed and the writpetition is allowed. 12. The petitioner is directed to file its further objections,if any, before the first respondent, within a period of four weeksfrom the date of receipt of a copy of this order and on receipt ofsuch further objections, the first respondent shall give anopportunity of hearing to the petitioner and pass orders ofassessment in accordance with law and on merits as expeditiously aspossible. It is to be noted that this Court has not expressed anyopinion on the merits of this case and the first respondent is atliberty to pass orders without being in any way influenced byanything said in this order. 13. With the above directions, this writ petition is allowed.No costs. Consequently, connected W.V.M.P. and W.P.M.P. areordered to be closed. /true copy/ rpa/srk https://hcservices.ecourts.gov.in/hcservices/ To 1.The Income Tax Officer Ward I(4),121, Mahatma Gandhi Road,121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. 2.The Tax Recovery Officer,Business Range-I,Room No.304, III Floor, New Block,121, Mahatma Gandhi Road,Nungambakkam, Chennai 600 034.Business Range-I,Room No.304, III Floor, New Block,121, Mahatma Gandhi Road,Nungambakkam, Chennai 600 034. 1 cc to Mr.B.Kumarasamy, Advocate, Sr. 11559 1 cc to Pushpa Sitaraman, Sr. St. Counsel for Income Tax, SR. 11543 W.P.No. 11695 of 2004 and W.V.M.P.No.2367 of 2005 andW.P.M.P.No.13760 of 2004 PPV (CO)kk 13/4