Valid substituted service by affixation and service on one partner of a reconstituted firm upheld under income-tax law.

Under the Indian Income-tax Act, 1922, service of notice may be validly effected by affixation where repeated personal attempts fail because the assessee avoids service, and substituted service is authorised and reasonably calculated to give notice; reassessment proceedings and ex parte assessments are therefore not invalid on that ground. In the case of a firm, a notice issued in the firm's name may validly be served on one partner of a reconstituted firm, and service remains sufficient for assessment of the firm as constituted at the relevant time. The challenge based on defective service was rejected.

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Issues: (i) Whether notice under section 34(1)(a) of the Indian Income-tax Act, 1922 was validly served by affixation on the assessee-firm and whether the reassessment proceedings and ex parte assessments were valid; (ii) whether notice issued in the name of a firm could validly be served on one partner of the reconstituted firm after a change in constitution.

Issue (i): Whether notice under section 34(1)(a) of the Indian Income-tax Act, 1922 was validly served by affixation on the assessee-firm and whether the reassessment proceedings and ex parte assessments were valid.

Analysis: The applicable procedure was governed by the repealed Act because the notices had been issued before the commencement of the Income-tax Act, 1961. Under section 63 of the old Act, service could be effected in the manner prescribed for summons under the Code of Civil Procedure. Repeated attempts were made to serve the notices personally, but the partners refused service and avoided acceptance. The assessing authority then directed substituted service by affixation, which fell within the discretion available under Order 5 Rule 20 of the Code of Civil Procedure, 1908. The record showed sufficient satisfaction that ordinary service was not possible and that the mode adopted was designed to give notice to the assessee.

Conclusion: Valid service by affixation was effected, and the Tribunal was not right in treating the reassessment proceedings and ex parte assessments as void.

Issue (ii): Whether notice issued in the name of a firm could validly be served on one partner of the reconstituted firm after a change in constitution.

Analysis: A notice in the name of a firm could be addressed to a member of the firm under section 63(2) of the old Act. The business of the firm continued after reconstitution, and the assessment was to proceed against the firm as constituted at the time of assessment under section 26(1) of the old Act. In that situation, service on one partner of the reconstituted firm was legally sufficient.

Conclusion: The service on one partner of the reconstituted firm was valid, and the assessee's objection failed.

Final Conclusion: The court upheld the validity of service of notice under the old Act, sustained the reassessment proceedings, and rejected the challenge to assessment on the ground of defective service, while also confirming that service on a partner of the reconstituted firm was sufficient.

Ratio Decidendi: Where repeated attempts at personal service fail because the assessee avoids service, substituted service by affixation under Order 5 Rule 20 of the Code of Civil Procedure, 1908 is valid if it is authorised by the assessing authority and is reasonably calculated to give notice; in the case of a firm, service on one partner is sufficient under the old Income-tax Act.

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