SERVICE OF NOTICE

LIST OF NOTIFICATIONS REPRODUCED IN THE <!--[if gte mso 9]> SERVICE OF NOTICE By Dr. Ilyas Zafar, Advocate, Lahore A notice is a communication to a party asking it either to show cause or to Act as required, before an order is passed against it. Service of Notice on the assessee is the very basis of the validity of the proceedings. If a notice is not properly served, all proceedings become, invalid and illegal. Under certain provisions, the notice cannot be regarded as a mere procedural requirement, and if a valid notice is not issued in accordance with law, proceedings taken in pursuance of invalid notice, or consequent order passed, would be void and inoperative. Mere issuance of notice is not an adequate requirement, but it is essential to serve the requisite notice within the prescribed time. A notice cannot be said to have been issued to a person, unless she is served with it. The issuance of notice and the service of notice are two distinct aspects. Burden of proof and jurisdiction: It is the duty of the department to establish that service was made either on the assessee himself or on somebody duly authorized by him to receive such notice. Only valid services of notice can confer jurisdiction, and defect in notice or a wrong service of the notice, invalidate the notice and confer no jurisdiction, to initiate proceedings in pursuance of such notice. Various provisions of the late Income Tax Ordinance, 1979 and new Ordinance of 2001 require the service of notice specifically, which are as under: Income Tax Ordinance, 1979.---Sections 56, 58, 61, 62,' 62A, 65, 75(1), 76(2), 81(3), 85,, 87, 92, 93, 99(6), 116, 131(1), 132(6), 136(2), 144, 150, 154 and 156. Section 154 deals with the service of notice generally. Income Tax Ordinance, 2001.---Sections 32(4), 93(5), 114, 116, 124(3), 128(1), 132(7), 133, 138, 140, 141, 144(4), 152(6), 165, 172(3)(f), 176(1), 179, 218 and 221. Section 218 treats with the service of notice generally which include personal service or on his representative, registered post or courier service or served on the individual in the manner prescribed for service of a summon under the C.P.C. 1 have already discussed the issuance and service of notices under certain provisions of Income Tax Ordinance, 1979 in my previous Article "Best Judgment Assessment published in 2000 PTD 351. The provisions relating to service of notice under the other direct tax statuses, like Sale Tax Act, 190, C. E. Duty, 144 and Customs Act, 1969 are analogous to the provisions under the Income Tax Law. Service of notice under other relevant statues, which have bearing on the subject of service of notice are the General Clauses Act, 1897 (section 27), Evidence Act, 1872 (section 114), Qanun-e-Shahadat, (Article 129), Transfer of Property Act, 1882 (section 106), Contract Act, 1872 (sections 182, 186, 187, 188, 196, 197), Partnership Act, 1932 (section 24), Sale of Goods Act, 1930 (sections 27-30), and the Arbitration Act, 1940 (sections 8-9, 14, 35 and 42 etc. Modes of Service: Section 152 and section 218 of late and new Income Tax Ordinance provide for the service of notice generally and the following two modes of service have been provided. (a) either by post. (b) or in the manner provided for service of a summons issued by a Court under the Code of Civil Procedure, 1908. The service by post means service by registered post as laid down in section 27 of the General Clauses Act, 1897. By virtue of the insertion of Rule 1-A in Order V of the C.P.C., simultaneous issue of summon for service by, registered post has become necessary in addition to personal service, under Rules 12, 16 and 18, service by affixation (Rule 17) and substitute service under rule 20 of Order 5, of C.P.C. service by registered post, however create a presumption, which is rebuttable. Service of notice, on recognized agents, like manager, accountant, clerk, employee, part-time employee, munim/munshi, partner, sleeping partner, member of assessee's family residing with the assessee, assessee's Advocate, receiver, secretary or managing director of company, on person having previously acted or appeared on behalf of the assessee, is an effectual service, but is rebuttable. Service of affixture cannot be made in the first instant. Exercise of due and reasonable diligence with a view to trace out the party arises only when he is not found by the process server. The mere fact that the serving officer do not find the assessee, to be served with the notice at his address, is not sufficient to establish that he could not be found. It must be shown not only that the serving officer went to that place at a reasonable time, when the assessee was expected to be present but also that if he was not found, and proper and reasonable attempt had been made to find him either at that address or else where. If after such reasonable attempt, if any, made the position cloudless that the party was not found, then and then only, could it be said that lie could not be found. Merely by reason of temporary absence from the usual place of residence, the defendant cannot be said to be not found. In a case where the report of the serving officer do not mention the names and addresses of the persons who identified the place of business of the assessee, where the service was effected by affixture, but the assessee ahs not place of business at the relevant time and service was not attempted at the residence of the assessee, the service is not valid. Service by affixation can be resorted to, only if no other mode is practicable and whether a particular mode is practicable or not is a matter to be decided by the Assessing Authority. If the officer after applying his mind to the facts of the case expresses the opinion that service by other modes is not possible, he can order the service to be effected by affixation. He cannot exercise his judgment before the facts are brought to his notice. He cannot anticipate the facts and form an opinion before hand, so as to give instructions to the process server to effect service by affixture without reporting the matter to him. The opinion that service by other modes is not practicable is to be formed by the Assessing Authority and not by his subordinate, like the inspector. The important factors to be considered for service by affixture are:--‑ (a) When other modes are available and have been exhausted or attempted. (b) After use of due and reasonable diligence. (c) When other modes of service not practicable. (d) Discretion not to be left to the process server or lessor authority than the Assessing Authority. (e) After examination by the Court where necessary. (f) After prior order from the Assessing Authority. Section 154(6) provides that an assessee cannot question the validity of any notice or the validity of the service of any notice, if he has already submitted to the jurisdiction of the taxation officer and filed a return in response to such notice. By filling the return, he submitted to the jurisdiction and cannot challenge this jurisdiction either at the assessment or at any subsequent stage, unless he files the returns under protest. Where the Court is satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in ordinary way, the Court shall order for service of summon by:--‑ (a) Affixing a copy of the summon at some conspicuous part of the house, if any, in which the defendant is known to have last resided or carried on business or personally worked for gain; or (b) Any electronic device of communication which may include telegram, telephone, phonogram, telex fax, radio and television; or (c) Urgent mail service or public courier services; or (d) Beat of drum in the locality where the defendant resides; or (e) Publication in press; or (f) Any other manners or mode as it may think fit; provided that the Court may order the use of all or any of the aforesaid manners and modes of service simultaneously; and Service substituted by order of the Court shall be as effectual as if it had been made on the defendant personally. Where service is substituted by order of the Court, the Court shall fix such time for appearance of the defendant as the case may require which shall not ordinarily exceed 15 days. Important principles as laid down in the judgments of superior Courts are epitomized hereunder: For reopening the case under section 65 of the late Ordinance or section 122 of new Ordinance the issuance of notice under these provisions is precedent. If the copy of notice under section 65 does not bear the signatures of the assessee as acknowledgment of receipt, notices under sections 58, 61 and-62 of the late Ordinance, cannot be issued. The issuance of Notice under sections 14(2) and 16(2) of the Wealth Tax Act, 1963 simultaneously is not legal and renders the proceedings pursuant thereto coram non judice, as the aims and objects of both sections are wholly different and both these sections cater for similar situations. The alike situation is for the notices under sections 56 and 61 .of the late Income Tax Ordinance, 1979. In these days, it is a normal grievance of the A.R.'s and the assessees, that the Trib. Sends the hearing notices by post (under certificate of posting) and in case of non-appearance; resort to Rule 20(2) of the I.T.A.T. Rules, 1981, especially in the case of Departmental's Appeals. Such hearing notices are not received by the assessee due to change of their addresses or for any other reason, and remain un-served. In case of non-appearance, the notice under registered post should have been sent. In a case 1996 PTD 5, where the CIT(A) in his order had indicated that the assessee-appellant in the case, was not traceable and all the efforts made to service the notice on him had failed, as such he was deciding the appeal ex parte. The Tribunal held that such manner was not proper one, on the part of the Commissioner to decide the appeal for if the process server of the Commissioner could not trace the assessee, he could serve the notice through the I.T.O. or substituted service could be effected by the Commissioner. The Tribunal further held that prima facie, it appeared that the Commissioner decided the appeal without allowing the assessee an opportunity of hearing. It is strange, why the Tribunal does not apply the same principle on itself. If the assessee's plea is that the notice had not been served on him, onus is on the Revenue to prove proper service of notice. Primarily the question pertaining to service of notice a party is a question of fact but when an issue pertaining to jurisdictional notice is raised, it becomes a mixed question of fact and law. (2002 PTD 102 HC Kcy). It shall become predominately a question of law, which is of course dependent on a finding of fact. In case a notice under section 16(2) of the Wealth Tax Act, 1963 having been served on the assessee, which was a mandatory requirement under the law, order setting aside the assessment by the First Appellate Authority was vacated and assessment order of the Assessing Officer was cancelled by the Tribunal (2002 PTD 272). Failure of the assessee to question the authority or jurisdiction of the Assessing Officer to issue the alleged notice, and to initiate the said proceedings against him, would not confer jurisdiction, on the Assessing Officer, which did not vest in him in law. Submission to jurisdiction of a Court or Authority do not confer jurisdiction on such Court or Authority, where it did not exist. (1999 PTD 4037). Regarding notice and assessment against a dead person, the assessee's son replied that his father had expired but filed the return on behalf of his father but failed to turn up in pursuance of the notice issued. The Assessing Officer accordingly proceeded to determine the income CIT(A) remanded the case for de novo proceedings in accordance with law. The Tribunal held that CIT(A) definitely joined the illegal assessments by setting them aside instead of annulling same. Non-service of notices on all legal heirs was a jurisdictional defect, which can't be ignored Assessment were declared nullity and were annulled in the circumstances (1998 PTD 408). Section 154 of the late Ordinance. Speaks of the validity of notice issued under this Ordinance or validity or service of notice, shall not be called in question after the returns in response to such notice has been filed or compliance thereto has been made. This provision only refers to the form or mode of service of a notice and not to the requirement of law for issuing any notice Income-tax Officer, while making assessment or proceedings under section 56, if had violated mandatory requirements of law regarding proper service of notice on the assessee, any irregularity, error or mistake committed by I.T.O. in completing the proceedings would tantamount an "error in jurisdiction" rather than "error of jurisdiction" incase of which proceedings are not to be void but only defective, which defect is normally curable.