Service of notice irregularity may be waived where the assessee knew of the notice and acted on it

Service of notice on an employee was challenged on the ground that the employee lacked written authority to accept service as an agent under the Code of Civil Procedure. The court noted that, although such authority would ordinarily require legal support, the assessee had full knowledge of the notice, received it through its own employees, treated it as operative, and later sought time to produce accounts on that footing. Any defect in service was therefore a mere irregularity causing no prejudice, and an irregularity meant for a party's benefit may be waived. The assessee was estopped from objecting to service.

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Issues: Whether service of notice on an employee of the assessee firm was effective so as to bind the assessee, and whether the assessee had waived any irregularity in service by acting on the notice.

Analysis: A notice under the income-tax law may be served in the manner provided by the Code of Civil Procedure, but authority to accept service under Order V, rule 12, requires legal support and, in the context of appointment of an agent to accept service, written authority under Order III, rule 6. On the facts, no satisfactory basis was shown for holding that the employee had been expressly empowered in that sense. However, the assessee had full knowledge of the notice, received it through its own employees, treated it as operative, and later sought time to produce accounts after the second notice, thereby acting on the footing that the earlier notice had been served. The defect, if any, was a mere irregularity causing no prejudice, and an irregularity intended for the benefit of a party can be waived.

Conclusion: Service of notice was effective to bind the assessee, and the assessee was estopped from objecting to the irregularity.

Ratio Decidendi: A defect in service that causes no prejudice may be waived by the party for whose benefit the service rules exist, and subsequent conduct accepting and acting upon the notice can estop that party from challenging service.

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