' NASIM SIKANDAR, J.---The petitioner in this reference application under section 136(2) of the late Income Tax Ordinance, 1979 (for short the Ordinance) is an AOP and is engaged in manufacturing and marketing of bread and buns etc. Sold under the brand name of "Dawn Bread".
2. For the assessm ent year 1995-96 as against returned net loss of Rs,1,89,319 an assessment was framed at Rs,31,96,239. The assessm ent framed was set aside in appeal on 14-12-1998 for de novo consideration by the Assessing Officer.
3. After remand the Assessing Officer/DCIT Circle-15 Multan Zone, Multan assessed the income on 29-6-199 at Rs,40,87,998. The assessee succeeded partly in appeal on 22-9-1999 as the learned CIT (Appeals) allowed the some relief by deleting the addition made by the Assessing Officer under the "agency discount to distributor" as also the addition under the head "salary".
4. Departmental appeal filed against the order of the First Appellate Authority came up for hearing and was disposed of by a Division Bench of the Tribunal on 10-4-2001. In para-3 of the order the learned members noted that the respondent had opted to be absent despite service through U.P.C.
Vide Diary No,5098, dated 28-9-2000. Therefore, he was proceeded ex parte and the case was decided by resort to rule 20(2) of the ITAT Rules 1981.
5. After reproducing part of the first appellate order the learned members proceeded to hold that findings of DCIT were more reasonable and were according to law while those of CIT(Appeals) were "twist of facts and record". Accordingly the order of CIT(Appeals) was cancelled both with respect to distribution expenses and the addition made under the head "salary".
6. The assessee/petitioner then made an application for reference to this Court under section 136(1) of the late Ordinance proposing as many as five questions which were claimed to have arisen out of the said order of the Tribunal. The learned Tribunal however, re-cast the questions proposed by the petitioner and referred the following question of law for the opinion of this Court:-- - "Whether in the facts and circumstances of the case the applicant was justified in opting not to appear before the Income Tax Appellate Tribunal despite proper service through -this office Diary vide U.P.C. Bearing No,5098, dated 28-9-2000 whereas he several times responded to ITAT communications vide the same mode of service?"
7. Being dissatisfied with the reference of the above question the petitioner has filed reference application under section 136(2) of the late Ordinance praying for consideration of all questions earlier placed before the Tribunal for reference to this Court. At the time of arguments however, the petitioner has pressed only Question No,3 as proposed in his reference application. The question reads as under:--- "Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified to proceed ex parte on the basis of notice sent through U.P.C.?"
8. Since in substance the question referred by the Tribunal and the above question pressed by the assessee are identical, we proceed to consider the legal validity of a notice issued under postal certificate (U. P . C .).
9. Learned counsel for the petitioner/assessee states that the question as framed by the tribunal wrongly assumes receipt of notice sent under postal certificate. Also it assumes, without having recorded a finding in this regard, that earlier notices sent through that mode were duly received by the petitioner/assessee. These assumptions, according to him are not supported from any material or record. Also states that neither the provisions of late Ordinance nor the Civil Procedure Code or for that matter even the Rules of the Tribunal provide for service of orders, summons etc, under postal certificate.
10. The provisions of section 154 of the late Ordinance provided for service of notice, order or requisition on a. Person named therein "either by post or in the manner provided for service of a summons issued by a Court under the Code of Civil Procedure". Section 27 of the General. Clauses Act, 1897 provides that where-ever in a Provincial or a Central Statute the expression "served by post" or any other similar expression is used, then "the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post a letter containing the document".
This section further provides for raising of a presumption in that specific background. It is laid down that unless the contrary is proved the service of addressee shall be deemed to have been effected at the time at which the letter would be delivered in the ordinary course of post. It naturally means two things. Firstly, that where a letter containing the document is posted in the manner laid down in the section, it shall be presumed to have reached the addressee at the time it would be delivered in the ordinary course of post. Secondly, that the presumption raised is rebutable which was so found by this Court in a case reported as re: Messrs Muhammad Abdullah and Sons v. The Commissioner of Income Tax Lahore (PLD 1955 Lah. 417). Where a letter has been addressed in the manner given in the section, a person denying service shall have to prove that service of notice was not in fact effected on him. In the aforesaid judgment this Court expressed the opinion that a further presumption arose on account of an endorsement made on the letter by the postal authorities. It was held that where a postal notice served in accordance with the requirements of Displaced Persons (Compensation and Rehabilitation) Act, 1958 was returned with the endorsement "refused" on it, there was preponderance of authority in favour of raising a presumption and holding that the registered cover has been refused by the assessee. However, the presumption so drawn was again held to be rebuttable and the onus for which rebuttal was held on the addressee. In re. Messrs Sampak Paper & Board Mills. (Pvt.) Limited v. Rana Maqsood Ahmad 1995 PLC 429 this Court expressed the view that presumption as to service by post would not be available when posting by registered post was not proved.
11. A postal certificate is only an acknowledgement issued by the postal authorities of having received an ordinary post for delivery. The purpose of issuance of such certificate which is issued on affixation of postal stamp of certain value is only to verify the receipt of ordinary post. Per para 17 of the Post Office Guide July, 1991 Edition issued by the Director-General Pakistan Post Office the object in granting certificates of posting is to afford the public an assurance that letters and other articles entrusted to servants and messengers for posting have actually been posted. Para 18 of the Guide explains the manner of obtaining a certificate of posting. The certificate so issued is handed over to the person presenting the articles and it has no nexus or relevancy with the factum of delivery of the letter or the article. For a registered post on the other hand not only a proper receipt is issued by the department but a complete record of the same is maintained including the signature of receiptants/addressee for preservation for the aforesaid period. Also a registered post, 'when delivered even where acknowledgement due is not annexed herewith the signatures of the addressee are obtained on record for preservation for the aforesaid period. As noted above a postal certificate is issued only as a kind of receipt of the ordinary post which was sent by another person either through a servant or a stranger who is informed of the fact that the ordinary letter had;actually been delivered to the postal authorities. The postal certificate, therefore, evidences only the receipt of an ordinary post by the postal authorities. No presumption under the law as to its delivery is raised nor the addressee is required to sign any document before receiving the post.
12. The provisions of section 154(i) of the late Ordinance and those of section 27 of the General Clauses Act, 1897 when read together mean that presumption of effective service will arise only if the method explained in' section 27 of the Act has been strictly followed. This naturally means that a notice, order and requisition issued in a manner not prescribed in that section will not give rise to a presumption of effective service. It will however, be seen at the same time that if an assessee, witness or other person actually appears or is represented after receipt, of a notice issued under U.P.C. Then subsection (6) of section 154 providing for a bar to challenge the validity of service will come into play.
13. The second mode of service of summons provided for in section 154 is explained in Rules 17 and 20 of Order-V of C.P.C. This method can be resorted to both as alternative as well as alongwith the method provided for service through post. Rule 17 of Order V of C.P,C. Provides for service of notice upon an agent of a party while rule 20 of that order provides for substituted service. The provisions of sub section (1) of section 154 to our understanding do not contemplate any bar that a notice, order or requisition must first be served through post and if that method does not succeed then in the manner provided for Order-V, C.P.C. The purpose of law obviously being to employ every mode so that the respondent, a party or a witness has sufficient knowledge that some proceedings -are pending before Income Tax Authorities including the Tribunal. The two methods given in the section are, therefore, not exclusive of each other. However, the requirement of law or the presumption of service given in section 27 of the General Clauses Act; 1897 will be available if the procedure in sending that notice under section has been followed.
14. The upshot of the above is that issuance of a notice under postal certificate is neither illegal nor improper. Therefore, a person appearing in response to notice will be hit by the mischief of subsection (6) of section 154 of the late Ordinance. However, a presumption of effective F service under these provisions of Ordinance read with section 27 of the General Clauses Act, 1897 will arise only if the letter, document or summons are sent in the manner given in the section. The presumption of effective 'service will arise at the time at which the letter would be delivered in the ordinary course of post.
15. Since in the present case the notice for appearance was issued under postal certificate and there was nothing on record to show that it was properly delivered to the assessee, the presumption of service did not arise at all irrespective of the fact that on previous occasions the assessee responded to a notice sent under postal certificate. Accordingly, the appeal filed by the assessee shall be deemed pending before the Tribunal to be disposed of in accordance with law after affording an opportunity of hearing to the parties.
16. Disposed of.
17. This order will also dispose of PTR 1 of 2001, PTR 2 of 2001 and ,PTR 3 of 2001.