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PUNJAB & HARYANA HIGH COURT
Balbhadhar Mal Kuthiala
Versus
Commissioner Of Income-tax, Punjab
Civil Reference No. 6 of 1952,
Decided On : FEBRUARY 6, 1957
INCOME TAX - SERVICE OF NOTICE - PRESUMPTION OF SERVICE - REFUSAL TO ACCEPT REGISTERED LETTER - TRIBUNAL'S ORDER DISMISSING APPEAL FOR DEFAULT - VALIDITY - INHERENT POWER OF TRIBUNAL TO REVIEW OR SET ASIDE OWN ORDER - JURISDICTION OF HIGH COURT UNDER SECTION 66 OF THE INCOME-TAX ACT - SCOPE AND LIMITATIONS - SUBSEQUENT EVENTS AND DOCUMENTS - RELEVANCE AND ADMISSIBILITY - GENERAL CLAUSES ACT, SECTION 27 - EVIDENCE ACT, SECTIONS 16 AND 114.
Fact of the Case:
The assessee filed an appeal before the Income-tax Appellate Tribunal, which was fixed for hearing on 6th December, 1949. A notice of hearing was sent to the assessee by registered post, but the letter was returned by the post office with an endorsement by a postman "Inkariwala hai" (refuses to accept). The Tribunal dismissed the appeal for default on 13th December, 1949. The assessee applied for restoration of the appeal and for its decision after affording an opportunity to him of being heard, but the Tribunal rejected the application. The assessee then filed a petition under section 66 (1) of the Income-tax Act for determination of the following questions: (i) Whether, in the circumstances of the case, the order of dismissal of the appeal is valid in law? (ii) Whether, in the circumstances of the case, the Tribunal was justified in drawing the conclusive inference that the notice of hearing was in fact served upon the assessee? (iii) Whether, in the circumstances of the case, the Tribunal did give in law a real opportunity to the appellant of being heard?
Finding of the Court:
The High Court held that: (i) Where a properly addressed registered letter is received back with the endorsement "refused" made by the postman, the letter may be presumed to have been refused by the addressee, even without examination of the postman or other evidence regarding tender and refusal. (ii) The presumption of service of notice arises only in cases where the letter sent by post is not returned by the postal authorities as undelivered, but where it is so returned, for whatsoever reason, there is a direct and self-evident proof of the fact that the letter was not delivered. (iii) The report of the postman that the addressee had refused to accept the letter cannot be taken notice of or admitted into evidence without formal proof, and there would be no presumption of service in such a case. (iv) The Tribunal had no inherent power to review or set aside its own order dismissing the appeal for default. (v) The jurisdiction of the High Court under section 66 of the Income-tax Act is limited to the determination of the questions raised and referred by the Appellate Tribunal. The High Court cannot raise and start determining any question which has not been referred either under sub-section (1) or (2) of section 66. (vi) Subsequent events and documents cannot be taken into consideration by the High Court in determining the questions referred by the Tribunal.
Issues: 1. Whether a presumption of service of notice arises where a properly addressed registered letter is returned by the post office with an endorsement by a postman "Inkariwala hai" (refuses to accept)? 2. Whether the Tribunal was justified in drawing the conclusive inference that the notice of hearing was in fact served upon the assessee? 3. Whether the Tribunal gave in law a real opportunity to the appellant of being heard?
Ratio Decidendi: 1. The presumption of service of notice arises only in cases where the letter sent by post is not returned by the postal authorities as undelivered, but where it is so returned, for whatsoever reason, there is a direct and self-evident proof of the fact that the letter was not delivered. 2. The report of the postman that the addressee had refused to accept the letter cannot be taken notice of or admitted into evidence without formal proof, and there would be no presumption of service in such a case. 3. The Tribunal had no inherent power to review or set aside its own order dismissing the appeal for default. 4. The jurisdiction of the High Court under section 66 of the Income-tax Act is limited to the determination of the questions raised and referred by the Appellate Tribunal. The High Court cannot raise and start determining any question which has not been referred either under sub-section (1) or (2) of section 66. 5. Subsequent events and documents cannot be taken into consideration by the High Court in determining the questions referred by the Tribunal.
Final Decision: The High Court answered the first question in the affirmative and the second question in the negative. The third question was not answered as it could arise only if the answer to the first question had been in the negative.
1. This is a reference by the Appellate Tribunal under section 66 (1) of the Income-tax Act for determination of the following questions :
"(i) Where a property addressed registered letter, postage prepaid, is returned by the post office with an endorsement by a postman Inkariwala hai (in the category of refusal), does a presumption arise of due service of the letter on the addressee ? and, following as a corollary,
(ii) If the answer to the above question is in the negative, whether the order of the Tribunal, dismissing the appeal for default, is not liable to be recalled on the ground that it is null, as the appellant had not been given an opportunity of being heard in support of his appeal ?"
2. The facts giving rise to the reference are :
The petitioner, Balbhadhar Mal Kuthiala, preferred an appeal before the Income-tax Appellate Tribunal against an assessment of the year 1945-46. The appeal was submitted by post and it reached the Tribunal on 6th June, 1949. The appeal was fixed for hearing for 6th December, 1949, and a notice thereof was issued to the petitioner at his Simla address, as given in the memorandum of appeal, by registered post pre-paid and acknowledgment due. The registered letter was delivered to the post office on 28th October, 1949. The addressee being not available in Simla, the post office there redirected the letter to Kuthiala House, Hoshiarpur. The postal authorities at Hoshiarpur returned the cover to the office of posting with an endorsement in pencil Inkariwala hai (refuses to accept), presumably made by the postal peon. On 6th December, 1949, when the appeal was called for hearing, no one was present on behalf of the appellant. On 13th December, 1949, the Tribunal dismissed the appeal with the following order : "A notice fixing the hearing of assessees appeal for 6th December, 1949, was issued by the office on 27th October, 1949. The notice was issued to the assessee under registered post acknowledgment due, it was returned by the post office with the remarks that the addressee refused to receive the service of the notice. This refusal is tantamount to a service. Nobody was present on the date of the hearing. The appeal is, therefore, dismissed for default of appellants appearance."
3. Information of this order reached the assessee on 7th February, 1950, On 13th February, he submitted an application to the Tribunal for restoration of his appeal and for its decision after affording an opportunity to him of being heard in support of the contentions raised in the appeal. This application was accompanied by an affidavit of the petitioner stating that no registered letter purporting to be from the Income-tax Appellate Tribunal was ever presented to him by the postal authorities and that he had never refused to accept the same. The Tribunal rejected the application, vide their order dated 27th October, 1950, mainly on the ground that the Tribunal had no inherent power of reviewing or setting aside their own order. Simultaneously, the petitioner had presented another application to the Tribunal under section 66 (1) of the Income-tax Act praying that a statement of the case be drawn up and the following questions referred for determination of the High Court :
(i) Whether, in the circumstances of the case, the order of dismissal of the case, preferred by the appellant, in limine is an order valid in law ?
(ii) Whether, in the circumstances of the case, the Tribunal was in law justified to draw the conclusive inference that the notice of hearing was in fact served upon the assessee ?
(iii) Whether, in the circumstances of the case, the Tribunal did give in law a real opportunity to the appellant of being heard ?
4. The Appellate Tribunal accepted this application, but confined the reference to the questions reproduced above. The assessee wanted that the draft statement should also include a reference to his having made a miscellaneous application for setting aside the Tribunals order dated 6th Dece
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