COMMISSIONER OF' INCOME-TAX (NORTH ZONE), LAHORE Versus ABDUL HAMID MUHAMMAD JAMIL

MUSHTAQ HUSSAIN,J .--For the assessment year 1952-53 the General Index Register of the Income-tax Department, Lyallpur bore the names of--

(a) Messrs Abdul Hamid Muhammad Jamil, Lyallpur--An Association of Persons; and

(b) Abdul Hamid Muhammad Jamil--An individual carrying on business in this name and style.

2. The Association of persons referred to above filed a return for the year 1952-53, which contained a note--

"Association of Persons dissolved on 3rd February, 1952"

The assessment of the income of the Association of Persons for the period ending 3rd February, 1952, i.e., up to the date of dissolution was finalised on the 18th of December, 1953. '

3. The other assessee, i.e. the "individual" filed a return for the period 4th February 1952, up to 31st March, 1952. The assessment was finalised in this case also.

4. On 17th May, 1954 the Income-tax Officer notified Messrs Abdul Hamid, Muhammad Jamil under Section 34(b) that it had been under- assessed. The A .O. P. filed a return in response to this notice on 7th July, 1954 with the remarks 'As per original return as already filed'. Assessment under section 23(3) read with section 34 against the 'individual' assessee followed on the 30th March, 1957.

5. The individual assessee successfully appealed and the learned Appellate Assistant Commissioner found that the notice under Section 34 having been issued to the A.O.P. only the income of A.O.P. could be assessed under section 34 and not that of the individual.

6. The Income-tax Officer appealed to the Tribunal but without any success. The Tribunal fully agreed with the learned Appellate Assistant Commissioner and held that the notice had been issued to the A.O.P. and the individual having received no notice under this section he could, therefore, not be assessed under that section. The Commissioner Income-tax applied to the Tribunal for referring the following two questions to this Court for opinion:-

(i) Whether on the facts and in the circumstances of the case, the notice under section 34, dated .17th May, 1954, requiring the assessee to file a return was valid in law?

(ii) If the answer to the first question is in the negative whether the assessee's compliance with the requirements of the notice without any objection as to its validity did not amount to a waiver of the irregularity?"

7 The Tribunal, however found that only the following question could be referred to this Court:-

"Whether, in the facts and circumstances of the case, when no notice under section 34 of the Act in respect of the charge year 1952-53 was served on the assessee, the assessment made on him under Section 23(3), read with section 34, for the charge year 1952-53 could be validly made on the basis of the assessee's return dated the 7th July, 1954?" and acted accordingly.

8. The case came up before a Division Bench consisting of one of us (Mushtaq Hussain, J) and Muhammad Yaqub Ali Khan, J (as he then was), which came to the conclusion that the question referred raised a point which was wholly different from that put up by the Department and did not arise from the statement of the case. The matter was, therefore, referred back on 18th October, 1965 to the Tribunal for disposing of the reference under section 66(1) of the Act. The Tribunal came to the conclusion that question No. 1 framed by the Commissioner did not arise because the Tribunal having found that no notice was issued to the individual. The further question of determining its validity did also not arise.

9. As for the second question the Tribunal found that it was so linked with the first question that it arose only if the first question was answered in the negative. It, therefore, declined to refer any question to this Court.

10. Hence this petition.

11. Mr. Lone appearing for the petitioner has vehemently submitted that section 34 does not contain any principles of public policy and the notice to be issued under it is only for the benefit of an individual. This argument of learned counsel for the petitioner is wholly devoid of substance. Notices are always issued for the benefit of those to whom they are directed. The statute requires that notice shall precede a certain action. The notice becomes a jurisdictional fact and the authority wanting to proceed against such a person has no jurisdiction to do so unless it is proved that the notice which is a precondition had in fact been issued. In Vellayan Chettiar and others v. The Government of Madras etc. P L D 1947 PC 160 the Board held referring to an earlier decision that:

"Upon the first issue the decision of this Board in 54 I. A. 338, appears to be decisive. It was there said that section 80 is express, explicit and mandatory, and admits of no implications or exceptions. The question there was whether a suit in which an injunction was claimed, was a suit within the section. In the present case the question is whether, a notice having been given on behalf of one plaintiff stating his cause of action, his name, description and place of residence and the relief, which he claims, a suit can then be instituted by him and another. It is clear to their Lordships that it cannot. The section according to its plain meaning requires that there should be in the language of the High Court of Madras 'identity of the person who issues the notice with the person who brings the suit'. See A I R 1931 Mad. 175 and on appeal AIR 1935 Mad. 389. To hold otherwise would be to admit an implication or exception for which there is no jurisdiction

There could not be a more explicit interpretation on the point against the petitioner.

12. Learned counsel for the petitioner, however, submitted that it has been held in this very ruling that only a substantial compliance is necessary. We regret we have not been able to find any such observation-in this particular case but even if it is assumed for the sake of argument, no compliance whatsoever was made with the mandatory provisions relating to the issuance of the notice in this case and, therefore, the question whether substantial compliance of the provision has been made is just illusory.

13. We, may, at this stage, also refer to a decision of the Supreme Court of Pakistan in the case of Mrs. E. A. Evens P L D 1964 SC 536 in which their Lordships observed as follows:--

"It would thus appear that this section by its own force created a statutory tenancy in favour of such persons who were in occupation of evacuee premises at the time of their transfer. This statutory tenancy was to be in addition to any other right, which they may have in such- premises but upon the same terms and conditions upon which they occupied the premises before their transfer. Proviso' (b) to subsection (1) further fixes the date from which the statutory tenancy is to commence; namely, where a notice of the transfer has been served on the tenant by the transfer within one month of such transfer by registered post (acknowledgement due) then the tenancy commences from the date of the transfer but under subsection (2) where no such 'notice is served, then from the date of the receipt of such notice by the tenant. The service of the notice is, therefore, not merely a formality for acquainting the tenant of the transfer of the premises or merely in the nature of a notice of attornment, but it is designed to fix the terminus a quo of the period of protection.

It is difficult to accept upon the 'wording of this section that such a notice could even be implied notice or information received aliunde. In the face of the language of the proviso, which requires that the notice should be served 'by registered post (A.D.), such an interpretation is not possible. To hold that, notwithstanding such clear and unambiguous words, even implied notice would be sufficient to render the words, 'by registered post (A.D.)' in the proviso redundant, which cannot be done. Every word in a statute has to be given a meaning and the only meaning that these words are capable of hearing is that express notice in writing must be given in the manner prescribed.

We are inclined, therefore, to take the view that reading the provisions of the Act as a whole section 30 was not intended to protect private rights, for, mere allottee did not by the allotment alone acquire any right in the property but were designed as a matter of public policy to give general protection to such occupants not only as to irremovability for a reasonable period but also as to occupation upon payment of a reasonable rent."

14. It was also submitted that whether notice was received or not the respondent had proceeded to file a return in consequence of the notice issued to the A.O.P. and he should, therefore, be deemed to have received it. There is no such presumption attaching to this act. Far from waiving the right to notice, no time was left by the assessee in filing objections on the ground of absence of notice.

15. In any case this question was also adverted to by the Supreme Court in Evans' case their Lordships observed:-----

"We are of the view, therefore, that a person protected by Section 30 of the Act of 1958 could not lawfully contract out of that protection, for such a contract would be void being against public policy."

16. We are then told that the defect with regard to non-service of notice was amply covered by section 63(3) of the Income-tax Act. Apart from the fact that this provision was added in year 1960 i.e. several years after this particular case was decided, the fact remains that even this provision deals only with the validity of service of any notice. In the present case the fact that the notice was served upon a person other than the assessee is not denied. There is, therefore, no question of validity of service of notice involved in the case. The admitted position is that no notice was even issued to or served upon the assessee and, therefore, Section 63(3) is not attracted to the facts of the case.

17. Mr. Lone was of the view that section 63(3) contains only a declaration of the law as it existed and the mere fact that it was enacted several years after the assessment proceedings in the present case culminated would not detract from its applicability to the facts of this case. This submission suffers from a two-fold infirmity. Firstly, the language of the subsection which runs as follows:-

"(3) The validity of any notice issued under subsection (2) of Section 22 or Section 34 or the validity of service of any such notice shall not be called in question after the return in response to such notice has been filed." is not declaratory in nature. It enacts a new concept so far as the service of notice is concerned and there being nothing indicative of any intention on the part of the Legislature to apply it retrospectively it cannot be so applied. Secondly, declaratory statutes also, if they affect individual rights cannot be given retrospective effect except by Legislative command, which is wholly absent in section 63(3).

18. We were also told that the authority to act is conferred by Section 5(5) of the Income-tax Act and it is from that section that the Income-tax Officers derive their power. It was argued that the exercise of this power was not dependent upon the service of a notice and would, therefore, amount only to an irregularity, which is curable.

19. Section 5 enumerates the Income-tax authorities and confers upon them power to act-under the Income-tax Act. There is nothing in this section, which gives the power to an Income-tax Officer to act as against the provisions of the Income-tax Act. In any case this section does not make the functionary above the law or give him any power to act arbitrarily against express 'provisions of the Act. It does not override the provisions of section 34 either. The defect in the case, therefore, is not just an irregularity and even if it were an irregularity there is hardly any provision, which is for curing such an irregularity.

20. In these circumstances we fully agree with the Tribunal that the questions raised by the Income-tax Commissioner do not arise and we dismiss the application with costs.

M. B. A./C-13/L Application dismissed.