Notarization of a passport is unacceptable. A copy of your passport that has been certified by the Indian government is acceptable. You need to read the instructions to form W-7. It lists 13 acceptable forms of documentation including visa issued by the U.S. State Department; foreign voter's registration card; and a civil birth certificate.
You can also contact an IRS authorized Acceptance Agent to apply for an ITIN. Here's a link to the agents in Washington http://www.irs.gov/Individuals/Acceptance-Agents---Washington.