1949 (3) TMI 19 - HC - Income Tax

Court allows second petition under different relief, clarifies notice service rules

MANGAT RAM KUTHIALA (DECEASED) AND OTHERS Versus COMMISSIONER OF INCOME-TAX, PUNJAB, AND ANOTHER

The court held that the second petition under Articles 226 and 227 was competent as it sought different relief from the previous application. It also ... - Issues Involved1. Competence of the second petition under Articles 226 and 227.2. Tribunal's inherent power to review its order.3. Presumption of due service of notice.4. Delay and gross negligence in filing the petition.Detailed Analysis1. Competence of the Second Petition under Articles 226 and 227The preliminary objection raised by the learned Advocate-General was that the second petition was not competent as it was between the same parties, for the same purpose, and seeking the same relief. Reference was made to Halsbury's Laws of England and several cases to support this contention. However, the court found that the previous application under Articles 226 and 227 was not for the same relief as the present petition. The earlier application sought a direction to respondent No. 2 to make certain additions to the reference under Section 66(1) of the Indian Income-tax Act, 1922, whereas the present petition sought to quash the order dated October 27, 1950, and to direct respondent No. 2 to hear and dispose of the application on merits and according to law. Therefore, the court held that the present petition was competent.2. Tribunal's Inherent Power to Review its OrderThe petitioners contended that the Tribunal had an inherent power to review its order, especially when the assessee had no opportunity of hearing due to non-service of notice. The Tribunal had dismissed the application for setting aside its order on the ground that it had no inherent power of review. However, the court observed that the hearing of the parties is a statutory imperative under Section 33(4) of the Indian Income-tax Act, 1922. If a party can prove that it was never properly served with the notice, it cannot be said that such a party had an opportunity of being heard. The court held that the Tribunal had inherent jurisdiction to entertain and decide the application for setting aside the order if there was proof of non-service of notice. The court referred to the case of Bhagwan Radha Kishen v. Commissioner of Income-tax, which supported the view that the Tribunal had inherent jurisdiction to set aside an order of dismissal for default if there was no service of notice.3. Presumption of Due Service of NoticeThe first question framed for determination was whether a presumption of due service arises when a properly addressed registered letter is returned by the post office with an endorsement of refusal. The Division Bench had previously answered this question in the affirmative, holding that the return of the registered cover marked as 'refused' is presumptive evidence of service and refusal. However, the court noted that if a party can prove that the return was not a true return and that there was no presentation of the registered cover, then it should be allowed to prove that as a fact.4. Delay and Gross Negligence in Filing the PetitionThe learned Advocate-General argued that the petition should be dismissed due to gross negligence and delay, as the order sought to be quashed was dated October 27, 1950, and the present petition was filed on February 11, 1957. The petitioners explained that they were misled by the observation of the learned Accountant Member of respondent No. 2, which led them to believe that they could seek relief in the manner they did in their first application under Articles 226 and 227. The court accepted this explanation and held that the delay was not due to gross negligence and was properly explained. Therefore, the delay was not a ground for dismissal of the petition.ConclusionThe court quashed the order of respondent No. 2 dated October 27, 1950, and directed respondent No. 2 to dispose of the application dated February 13, 1950, on merits and according to law. There was no order as to costs.