Rebuttable presumption of service defeated where registered notice was not communicated to the assessee, barring advance-tax penalty.

A notice for advance tax sent by registered post to the assessee's furnished address gives rise to a rebuttable presumption of service under the General Clauses Act, but that presumption was rebutted on the facts because the company manager did not deliver the notice or communicate its contents to the assessee. As no valid service of the written order under section 18A(1) of the Income-tax Act, 1922 was established, the statutory precondition for penalty under section 18A(9)(a) was absent. The penalty could not therefore be sustained, and the questions were answered in favour of the assessee.

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Issues: (i) whether the assessee was validly served with an order in writing for payment of advance tax under section 18A(1) of the Income-tax Act, 1922; (ii) whether, if such service was not valid, the assessee incurred liability to penalty under section 18A(9)(a) of the Income-tax Act, 1922.

Issue (i): whether the assessee was validly served with an order in writing for payment of advance tax under section 18A(1) of the Income-tax Act, 1922

Analysis: A notice sent by registered post to the address furnished by the assessee attracts the statutory presumption of service under section 27 of the General Clauses Act, 1897, once it is properly addressed, prepaid and posted. That presumption is rebuttable. On the facts found, the registered cover was received by the manager of the company at the address given by the assessee, but the findings were that he did not deliver the notice to the assessee or communicate its contents to her. Those findings rebutted the presumption of service.

Conclusion: The assessee was not validly served with the notice under section 18A(1) of the Income-tax Act, 1922.

Issue (ii): whether, if such service was not valid, the assessee incurred liability to penalty under section 18A(9)(a) of the Income-tax Act, 1922

Analysis: Penalty under section 18A(9)(a) could arise only if the assessee had been required by a due notice under section 18A(1) to furnish the estimate contemplated by section 18A(2). Since no valid notice was served, the statutory precondition for penalty was absent.

Conclusion: The penalty provision was not attracted and no penalty could be sustained.

Final Conclusion: Both reference questions were answered against the Revenue, and the penalty order was set aside.

Ratio Decidendi: A notice sent by registered post raises only a rebuttable presumption of service, and penalty for default in furnishing an advance-tax estimate cannot be imposed unless the assessee was first required by a valid notice under the governing provision.

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