2017 (4) TMI 922 - HC - Income Tax

Deemed to have constructive notice of a case - appearance of Advocate on behalf of Revenue - Held that - In terms of Rule 658 of the Bombay High Court (Original Side ) Rules, the party, at whose instance the References have been made, (in this case the Applicant-Assessee) is required to take all steps to bring References to final conclusion and for that purpose, shall serve notice upon the opposite party within a period of two months from the receipt of the References by the High Court from the Tribunal. The Applicant-Assessee has admittedly not served these References upon the Respondent-Revenue. It, therefore, appears that the Applicant-Assessee was not interested in pursuing these References. Merely because the References have now come up on board almost sixteen years after being filed, the Applicant-Assessee is seeking to revive its interest in the matter by pleading constructive notice. In the facts of this case, there is no notice of the References to the Revenue, constructive or otherwise. Therefore, we hold that the Applicant-Assessee is not interested in prosecuting the References as they have not been served upon the Revenue. In the above view, both these References are returned unanswered.

Summary

Issues:
1. Lack of appearance by Respondent-Revenue
2. Constructive notice of References
3. Requirement of serving notice on the opposite party
4. Applicant's interest in pursuing the References

Analysis:

The judgment by the Bombay High Court pertains to two References under Section 256(1) of the Income Tax Act, 1961, for Assessment Year 1991-92. The primary issue addressed is the absence of representation by the Respondent-Revenue in court proceedings. The court notes the lack of an affidavit confirming the service of References to the Respondent-Revenue, which prompts consideration of returning the References unanswered in accordance with Rule 658 of the Bombay High Court (Original Side) Rules.

Regarding the concept of constructive notice, the Applicant's Counsel argues that the Respondent-Revenue should be deemed to have had constructive notice of the References due to prior representation by a Counsel. However, the court emphasizes the necessity of a vakalatnama authorizing an Advocate to appear on behalf of the Revenue. Without such authorization, constructive notice cannot be assumed, leading to the conclusion that the References were not served upon the Respondent-Revenue.

Furthermore, the court highlights the obligation on the party initiating the References, in this case, the Applicant-Assessee, to serve notice on the opposite party within a specified timeframe to bring the References to a final conclusion. Since the Applicant failed to serve the References on the Respondent-Revenue, indicating a lack of interest in pursuing the matter, the court deems the Applicant not interested in prosecuting the References.

Ultimately, the court decides to return both References unanswered, emphasizing the Applicant's lack of interest in pursuing the case due to non-service of References on the Revenue. The judgment concludes by disposing of the References with no order as to costs, highlighting the importance of procedural compliance and active participation in legal proceedings to maintain the integrity of the judicial process.