Berulal Tiwari Vs. Commissioner of Income-tax - Court Judgment

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direct taxation - service of notice - sections 143 (2), 144b and 261 of income tax act, 1961 - income tax officer (ito) sought information from assessee for making assessment - assessee wanted time - ito after knowing that assessment would be barred by limitation served order on assessee by so-called affixture - assessee challenged assessment and validity of notice by affixture - prejudice caused to assessee remedied by commissioner by giving direction to ito for fresh assessment after giving proper opportunity to assessee - held, no question of law arises from order of commissioner in present reference. head note: income tax assessment--under s. 144b--draft assessment order served by affixture held: the commissioner(a) set aside the assessment with a direction to redo the assessment after giving appropriate opportunity to the assessee. undoubtedly, the commissioner has power to set aside the assessment and direct the making of a fresh assessment by giving appropriate opportunities to the assesee. whatever prejudice was caused to the assessee was remedied by the commissioner(a) setting aside the assessment and directing a fresh assessment. therefore, this is not a case where the assessee should have any grievance and no question of law arises from the order of the tribunal. note- section 144b is omitted by the d.t.l. (amendment) act, 1987 w.e.f. 1-4-1989. income tax act 1961 s.144b - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - the income-tax officer knew that the assessment would be barred by limitation on march 31, 1978. it, therefore, appears that some sort of draft assessment order under section 144b was passed on march 29, 1978, and an endeavour was made to serve that order in order to overcome the limitation prescribed under section 153 of the act.y.v. anjaneyulu, j.1. the income-tax appellate tribunal, hyderabad, referred the following three questions of law for the consideration of this court under section 256(1) of the income-tax act, 1961 (hereinafter referred to as 'the act'). '1. whether, on the facts and in the circumstances of the case, the hon'ble tribunal is justified in holding that the provisions of section 144b are complied with and that the draft assessment order is a notice 2. whether, on the facts and in the circumstances of the case, the hon'ble tribunal is justified in holding that the draft assessment order is properly and validly served by affixture in accordance with the provisions of section 282 and the civil procedure code 3. whether the hon'ble tribunal is justified on the facts and in the circumstances and in law in remanding the case to the income-tax officer contrary to the mandatory provision of section 153 ?' 2. we have heard learned counsel for the assessee, sri razak, and also learned counsel for revenue. we must, at the outset, point out that the problems such as those that had arisen in this case are due to the tax officer allowing the assessment proceedings to drag on leisurely without any decisive action till almost the limitation was about to set in. this case relates to the assessment year 1975-76 and the assessment was going to be time-barred on march 31, 1978. the record does not indicate whether the income-tax officer fixed this case for hearing prior to march, 1978, and whether the assessment proceedings dragged on because of the assessee's request for adjournments. according to the tribunal's order, the notice fixing the case for hearing under section 143(2) of the act was made out on march 16,1978, and the case was fixed for hearing on march 22, 1978, leaving just ten days for the limitation to run out. as usual, the tax authorities wanted all sorts of details for making the assessment. being unable to furnish all the required information within the short time that was available, the assessee wanted time. the income-tax officer adjourned the case to march 25, 1978. on march 25, 1978, the assessee could not furnish the information on the ground of his sickness and wanted more time. the income-tax officer knew that the assessment would be barred by limitation on march 31, 1978. it, therefore, appears that some sort of draft assessment order under section 144b was passed on march 29, 1978, and an endeavour was made to serve that order in order to overcome the limitation prescribed under section 153 of the act. the assessee avoided receiving the order and being desperate, the income-tax officer served the order by so-called affixture. the assessee has questioned the validity of service by affixture and claimed that the assessment was barred by limitation. the income-tax officer should blame himself for the problems that arose in this case subsequent to his passing the draft assessment order. we would express our disapproval of the way in which income-tax officers drag on the assessment proceedings till almost the last minute and rush through the entire process of assessment when the limitation was about to set in without giving adequate opportunities to the assessees. the commissioner of income-tax, exercising administrative jurisdiction over these officers, should keep a close watch on the proceedings and should discourage any attempt on the part of the tax officers in dragging on the assessment proceedings till the last minute causing difficulties both to the assessee and to the department. 3. the assessee in this case had obviously filed an appeal against the assessment and raised all possible contentions against the validity of the assessment validity of service of notice, etc. while appreciating the assessee's contention, the commissioner of income-tax (appeals) set aside the assessment with a direction to redo the assessment after giving appropriate opportunity to the assessee. we are told that pursuant to the direction of the commissioner of income-tax (appeals), a fresh assessment has been made and the matter had been processed further. 4. undoubtedly, the commissioner of income-tax has power to set aside the assessment and direct the making of a fresh assessment by giving appropriate opportunities to the assessee. whatever prejudice was caused to the assessee was remedied by the commissioner of income-tax (appeals) setting aside the assessment and directing a fresh assessment. we do not, therefore, think that this is a case where the assessee should have any grievance. we do not think that, strictly viewing the matter, any question of law arises from the order of the tribunal. even assuming that the three questions referred are questions of law, we would answer them in favour of the revenue and against the assessee. there shall be no order as to costs.