Section 282 of the Income-tax Act, 1961 provides that a notice may be served either by post, or in any of the ways in which a summons issued by a Court can be served under the Code of Civil Procedure. These two modes of service are alternative and it is the option of the department to adopt one or the other.

In C.I.T. v. Malchand (28 I.T.R. 684), the Calcutta High Court held that the considerations by which the legal sufficiency of service by registered post has to be judged are entirely different from those which apply to service through or by peon or a process-server. Under section 27 of the General Clauses Act, 1897, there is a presumption of effective service if the notice was properly addressed, prepaid and posted by registered post.

The mere fact that the physical delivery of the notice was made to a person other than the addressee, who had no authority to receive the letter on the addressee?s behalf, would not be sufficient to prove that there had been no proper service. It would depend on the circumstances of each case whether this presumption has been rebutted by proof of further facts and the onus of proving such further facts is on the assessee.

When an assessee pleads that he has not been properly served with any notice, the onus is on the department to substantiate, with relevant materials, that the notice had been properly served. Where the department failed to prove proper service of notice, it was held that a reassessment order passed by the assessing officer was bad in law.

In C.I.T. v. Lunar Diamonds Ltd. (281 I.T.R. 1), the Income-tax Appellate Tribunal had set aside the assessment order on the ground that the notice under section 143(2) of the Income-tax Act had been served upon the assessee beyond the period of one year prescribed by law. The division bench expressed its doubts as to whether a notice had at all been sent to the assessee since the envelope merely contained the name of the assessee without its address.

It was quite possible that the notice may have been sent to the assessee at some wrong or even incomplete address. After taking into consideration, an affidavit filed by the assessee stating that it had not received the notice, the Delhi High Court concluded that the burden that lay upon the Commissioner of Income-tax to prove that the notice was served upon the assessee within the prescribed time had not been satisfactorily discharged.

In RL Narang v. C.I.T. (136 I.T.R. 108), it was held by the Delhi High Court that the provisions of section 27 of the General Clauses Act, 1897, are attracted wherever service by post is concerned. Section 27 of the General Clauses Act stipulates that wherever a Central Act authorises or requires any document to be served by post, then service shall be deemed to have been effected properly if a correctly addressed and stamped envelope containing the document is dispatched by registered post.

The revenue can rely on section 143(2) of the Income-tax Act, 1961, only if it proves that the notice issued by it was served on the assessee before the expiry of one year from the end of the month in which the return had been furnished by the assessee. Section 27 of the 1897 Act specifies that service of such a notice would be legally proper if the transmission is through registered post.

In C.I.T. v. Shankar Lal Ved Prakash (300 I.T.R. 243), the assessee filed his return on August 29, 1997. Notice under section 143(2) was sent to the assessee on August 25, 1998, by registered post. The assessee asserted that the notice was served on him on September 1, 1998, i.e., the day immediately after the expiry of the period envisaged by the sub-section. The Assessing Officer had asked the assessee to produce documentary evidence that the notice in question was indeed delivered only on September 1, 1998, but the assessee failed to furnish any such evidence. The Tribunal held that the Assessing Officer had not proved that the notice had been served within time.

On appeal, the Delhi High Court held that the notices under section 143(2) were undisputedly dispatched on August 25, 1998; the assessee had acquiesced to the statement that the envelope had reached Civil Lines Post Office on the next day itself. August 25, 1998, fell on a Tuesday. Despite the assertion that the envelope had reached the Civil Lines Post Office on August 26, 1998, it would be fair for the Court to presume that a local letter would reach the addressee within three days, i.e., Friday August 28, 1998.

It was contended that the assessee was not duty-bound to appear before the Assessing Officer since the notice was received beyond the period of limitation. This assumes that the assessee was aware of the legal provisions on that date or soon thereafter presumably after taking legal advice. In both contingencies it would have been normal for him to address a communication to the Assessing Officer forthwith or at least within a month to the effect that proposed proceedings had been rendered legally inefficacious.

The assessee could also have obtained a certificate from the postal department since he was fully aware of the importance of the date of delivery. The assessee had failed to discharge the burden which shifted to him immediately on his assertion that he had received the notice on a particular date. Therefore, the notice was not barred by limitation.

In conclusion, the Court directed the Assessing Officers to take care to dispatch notices at least a fortnight before the expiry of the date of limitation. These officers must also ensure the availability of certification from the postal authorities of the date of delivery on which the envelopes/notices were served on the addressee. If there is an inordinate hiatus between the date of despatch and the date of service, the reasons for it, i.e., whether the addressee had deliberately refused to accept or evaded service, should be recorded.

The author is advocate, Supreme Court