Validity of reassessment notice under sections 147148: service on an agent without written authority invalidates reassessment

Validity of a reassessment under section 147/notice under section 148 turned on whether the notice was duly served. The court reasoned that service on an agent is effective only where the agent has specific written authority to receive notices; implied or presumed authority based on managerial duties was not established. Because no written authorization to accept service was proved and service on the manager without such authority did not satisfy Code of Civil Procedure requirements for due service, the notice under section 148 was invalid and the consequent reassessment under section 147 could not be sustained.

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Issues: Whether the notice dated March 25, 1967 issued under section 148 of the Income-tax Act, 1961 was validly served on the assessee (a firm) such that reassessment proceedings under section 147 could be validly initiated.

Analysis: The notice under section 148 must be served on "the assessee" and, where service is effected by a process-server (not by post), the mode of service prescribed by the Code of Civil Procedure is attracted (see Order 5 and Order 3 provisions). In the case of a firm, section 282(2) permits addressing a notice to any member, but service on a manager or agent requires that the agent be empowered to accept service. The CPC provisions (Order 5 r.9, r.12, r.15 and Order 3 r.6) contemplate service on an agent only where the agent is expressly authorised or is an agent empowered to accept service; such authority is ordinarily required to be in writing. The facts show service was effected on the firm's manager who had no established written authority to accept notices on behalf of the firm. Previous appearance by or actions of the manager did not alone establish the necessary written agency for valid service of a s.148 notice. Earlier decisions cited establish that mere awareness of the notice or prior acceptance of notices does not substitute for the statutory mode of service.

Conclusion: The notice dated March 25, 1967 under section 148 was not validly served on the assessee; consequently the reassessment under section 147 is invalid. The question is answered in the negative and in favour of the assessee.

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