Substituted service by affixation and reassessment on fresh information were upheld where personal service failed and income had escaped assessment.

Service of notice by affixation under the Indian Income-tax Act, 1922 was held valid where repeated attempts at personal service failed, the assessee was not found at the address, inmates refused service, and registered post did not produce acknowledgment, satisfying the conditions for substituted service under the Code of Civil Procedure. Reassessment under section 34(1)(a) was also held maintainable and not time-barred because the authorities acted on fresh information that emerged after the earlier proceedings, in a case involving concealment and escaped income. The earlier assessment and penalty proceedings did not prevent action on that fresh material, and the reassessment was upheld.

---

---

Issues: (i) Whether service of notice under section 34(1)(a) by affixation was valid in the circumstances. (ii) Whether the reassessment under section 34(1)(a) was barred by limitation or otherwise invalid because of the prior assessment and penalty proceedings.

Issue (i): Whether service of notice under section 34(1)(a) by affixation was valid in the circumstances.

Analysis: Under section 63 of the Indian Income-tax Act, 1922, notice may be served by post or in the manner of a summons under the Code of Civil Procedure, 1908. The relevant civil procedure rules permit affixation only when personal service cannot be effected after reasonable diligence and no authorised agent or other proper recipient is available. On the facts, repeated attempts at personal service failed, the assessee was not found at the address, the inmates refused service, and service by registered post also did not yield acknowledgment. These circumstances justified the conclusion that service by affixation was permissible.

Conclusion: The service of notice by affixation was valid.

Issue (ii): Whether the reassessment under section 34(1)(a) was barred by limitation or otherwise invalid because of the prior assessment and penalty proceedings.

Analysis: The assessment year was 1946-47, and the reassessment was founded on information that came to light after the earlier proceedings. The Court held that the notice under section 28(1)(c) and the subsequent action under section 34(1)(a) were within the statutory time framework applicable to a case involving concealment and escaped income. The earlier authorities relied on by the assessee were distinguished, because here the assessment authorities obtained fresh information after the earlier assessment and were entitled to proceed on that basis.

Conclusion: The reassessment was not barred by limitation and was valid.

Final Conclusion: The reference was answered in favour of the Revenue, with the assessment upheld and costs awarded against the assessee.

Ratio Decidendi: Where repeated attempts at personal service fail and the statutory conditions for substituted service are satisfied, service by affixation is valid; further, reassessment based on fresh information within the applicable limitation period is maintainable where income has escaped assessment.

---