Valid service of income-tax notice governs jurisdiction; service on unauthorised person fails and assessment cannot proceed.

Section 34 notice had to be validly served within the statutory period because service of notice was a condition precedent to assumption of jurisdiction. The limitation in that provision governed service itself, not merely issue of the notice, and the proviso concerning completion of assessment after valid service could not be read as substituting "issue" for "serve". Service on a person who was neither the principal officer nor otherwise duly authorised was not valid service under section 63, and Order V Rule 15 of the Code of Civil Procedure was inapplicable on the facts. On that basis, the notice was time-barred and further assessment proceedings could not continue.

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Issues: Whether a notice under section 34 of the Indian Income-tax Act had to be served on the assessee within the prescribed period of limitation, and whether service on a person who was neither the principal officer nor otherwise duly authorised constituted valid service.

Analysis: The limitation in section 34 was held to govern the service of notice itself, because the giving of notice was a condition precedent to the assumption of jurisdiction. The provision in the proviso to sub-section (3) dealt with the period for completing assessment after valid service and could not be read as converting the word "serve" in sub-section (1) into "issue". The Court also held that service on Mahabir Prasad was not valid service on the petitioners, since he was not the principal officer of any association of persons and the requirements of service under section 63 were not satisfied. The Court further noted that Order V Rule 15 of the Code of Civil Procedure, 1908 had no application on the facts.

Conclusion: The notice was not served within the prescribed time, the Income-tax Officer had no jurisdiction to proceed under section 34, and the petitioners were entitled to prohibition against further assessment proceedings.

Ratio Decidendi: Where service of notice is made a condition precedent to assumption of jurisdiction, the statutory period applies to valid service and not merely to issue of the notice; service on an unauthorised person does not satisfy that requirement.

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