# COMMISSIONER OF INCOME-TAX, PUNJAB v. DAULAT RAM KHANNA

- **Citation:** [1967] 3 S.C.R. 298
- **Court:** Supreme Court of India
- **Decided:** 1967-03-29
- **Case number:** Civil Appeal No. 580 of 1966
- **Bench:** J. C. Shah, S. M. Sikri, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-income-tax-punjab-v-daulat-ram-khanna-4049
- **Pages:** 4

## Headnote

Income Tax Act (11 of 1922) s. 63-Notice under s. 34-Direction
by Income-tax Officer to affix at address of assessee-No a/fixture on the
notice board of the Income-tax Office-Sufficiency of substituted service.
Code of Civil Procedure (Act 5 of 1908), O. V. '" 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.
[30!A-BJ
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; 30!F]
Jhahar Mal Chokhani v. Commissioner of Income-tax 49 J.T.R. 391,
overruled.
Narendra Kishore Das v. Banamali Sahu Dibakar Sahu Firm, A.LR.
1951 Orisso 312, approved.
A
B
c
D
E
Deccan Cooperative Bank Ltd. v. Parsram Tolaram,
A.LR.
1942
·F
Sind 96 and Narendra Prasad Sinlu1 v. Maharani Janki
Kuer,
A.I.R.
1947 Pat. 385, referred to.

## Text

COMMISSIONER OF INCOME-TAX, PUNJAB
v.
DAULAT RAM KHANNA
March 29, 1967
[J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJ.]
Income Tax Act (11 of 1922) s. 63-Notice under s. 34-Direction
by Income-tax Officer to affix at address of assessee-No a/fixture on the
notice board of the Income-tax Office-Sufficiency of substituted service.
Code of Civil Procedure (Act 5 of 1908), O. V. '" 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.
[30!A-BJ
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; 30!F]
Jhahar Mal Chokhani v. Commissioner of Income-tax 49 J.T.R. 391,
overruled.
Narendra Kishore Das v. Banamali Sahu Dibakar Sahu Firm, A.LR.
1951 Orisso 312, approved.
A
B
c
D
E
Deccan Cooperative Bank Ltd. v. Parsram Tolaram,
A.LR.
1942
·F
Sind 96 and Narendra Prasad Sinlu1 v. Maharani Janki
Kuer,
A.I.R.
1947 Pat. 385, referred to.
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 ReferG
ence No. 23 of 1962.
B. Sen, T. A. Ramachandran and S. P. Nay.var 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 again~t the
judgment of the High Court of Punjab, Chandigarh, in Income
Tax Reference No. 23 of 1962, made to it by the Income-Tax
H
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C.I.T. V. DAULAT RAM (Sikri, J,)
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 di_recting 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 a>sessee appealed. The Appellate Assistant Commissioner, inter a/ia, 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 "".as not incumbent on him to affix a copy of the notice on th~
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
Clwkhani v. Commi.uioner of Income-Tax(') held that the substituted service was invalid and answered the question in the negative.
It also refu;ed to allow the counsel for the Revenue to raise the
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(I) 49 I. T. R. 391.
:JOO
SUPREME COURT REPORTS
[1967] 3 s.c.R.
point that the notice under s. 34 had been served in time even if
the service be taken to have been effected after 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. (') the High Court erred in not allowing the second point to
b.e raised, and secondly, he contends, that the earlier case of the
High Court in Jhabar Mal Chokhani v. Commissioner of lllcome
Tax(') was wrongly decided.
As we agree with the latter con·
tention. 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 us
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 0. V. r. 20( I) of the Civil Procedure Code which
reads as follows :-
" (I ) Where the Court is satisfied that there is reason
to believe that th.e 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 lust resided or carried on business or personally
worked for gain, or in such other manner as the Court
thinks~!~-.
--·----·- . ..
------
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 uflixed in some conspi·
cuous part of the residential house or business premises. He suys
thnt it is not obligatory on the Court to ndopt this method. but the
Court can. in view of the circumstances. order the service of the
notice in ~my other manner as it thinks fit. Mr. Sen further says
thnt it would be noticed that the word "also" has not been repeated
in the Just ten words of the sub-rule. underlined above. He says that
in a particular case it is in tht: discretion of the Court to order
service of the notice by registered post or by affixing n copy thereof
and then satisfying itself that. the copy has been affixed in a proper
manner.
(I) [196<) IS. C.R. ~9: 401.T.R. I.
(1) [1965] 1 S. C.R. si1.
(~) 49 LT.R. 391.
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c.1.T. v. DAULAT RAM (Sikri, J,)
30 I
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 Coun 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
l11come Tax(') had relied on Deccan Co-operative Bank Ltd. v.
Parsram Tolaram(') but that case considered 0. 21, r. 46, sub·r.
(2), and in our view, t.he High Court wrongly regarded that provi·
sion being in pari materia with 0. V. r. 20(1 ), because, in r.
46(2) the last ten words in 0. 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(') is also distinguishable as it also deals with 0. 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 anci the service is effected in the most
E
expeditious and best manner. For example, if the person to be
serv~d 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 Klshore
Das v. B~nam~li Sahu Dibakar Sa/tu Firm(') the Division Bench
F
of the Or1ssa 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
servic~ of
su~ons
through registered post."
. I~ our opinion, the case of Jhabar Mal Chokhanl v. Comm1s.1wnc1· of Income Tax(') was wrongly decided, In the result we
G
accept the appeal, ~ct as~de the judgment of the High Court and
answer
the
que~uon m the affirmative and against the
assessee. In the circumstances of the case there will be no order
as to costs.
V.P.S.
ff
(1)491.T.R.391.
(2) A. I. R. 1942, Sind, 96.
(3) A. l. R. 1947. Pat. 385.
(4)A.1. R. 1951. Oriw1, )12.
A ppea/ allowed.