Presumed service by refusal and valid dismissal for default upheld under tribunal appellate procedure

Where a notice sent by registered post is returned with an endorsement of refusal, service is presumed unless the addressee rebuts that presumption; the tribunal may rely on the returned notice as effective service. Rule 24 of the Income-tax Appellate Tribunal Rules, 1946, was upheld as consistent with the tribunal's appellate power to dismiss an appeal for default when the appellant, after due service, does not appear or prosecute the appeal. The absence of an express restoration rule did not render the rule invalid, since the tribunal retained authority to set aside a default dismissal where no service was in fact effected or sufficient cause for non-appearance was shown.

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Issues: (i) Whether an endorsement of refusal by the postal authorities was sufficient in law to raise a presumption of service of the notice of hearing. (ii) Whether Rule 24 of the Income-tax Appellate Tribunal Rules, 1946, was ultra vires for authorising dismissal of an appeal for default and for the absence of an express rule enabling restoration.

Issue (i): Whether an endorsement of refusal by the postal authorities was sufficient in law to raise a presumption of service of the notice of hearing.

Analysis: Service of a notice sent by registered post is governed by the statutory provisions permitting service by post and by the rule that, where the postal endorsement shows refusal, service is deemed to have been effected unless the contrary is proved. The tribunal was entitled to act on the returned notice marked as refused, and the burden lay on the assessee to displace the presumption.

Conclusion: The presumption of service arose, and the answer was in the affirmative, against the assessee.

Issue (ii): Whether Rule 24 of the Income-tax Appellate Tribunal Rules, 1946, was ultra vires for authorising dismissal of an appeal for default and for the absence of an express rule enabling restoration.

Analysis: The appellate tribunal's power to pass orders on an appeal after hearing both parties was read as including the ability to dismiss an appeal when the appellant, after due service, chose not to appear or not to prosecute the appeal. The rule was treated as consistent with the statutory scheme. The absence of an express restoration rule did not negate the tribunal's inherent jurisdiction to set aside a dismissal for default where no service had in fact been effected or sufficient cause for non-appearance was shown.

Conclusion: Rule 24 was held not to be ultra vires, and the answer was in the negative, against the assessee.

Final Conclusion: Both referred questions were decided against the assessee, sustaining the tribunal's power to treat refusal of service as effective service and to dismiss an appeal for default under the rules.

Ratio Decidendi: Where notice is sent by registered post and returned with an endorsement of refusal, service may be presumed unless rebutted, and a procedural rule empowering dismissal for default is valid if it operates consistently with the tribunal's statutory appellate power and inherent authority to restore in appropriate cases.

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