2019 (10) TMI 1178 - SC - Income Tax

Judgment passed exparte - Application filed for Recall of the Judgment on the ground that the Applicant-Company was not served with the Notice of the SLP at the registered office of the Company, nor was a copy of the SLP served on the Applicant - Company - HELD THAT - The ground taken by Mr. Sanjeev Narayan that even though Notice was served on 13.12.2018, he assumed that they were some Income Tax Return Documents lacks credibility. It is difficult to accept that the envelope containing the dasti Notice from this Court was considered to be some Income Tax Return documents . The deponent does not at all disclose as to when the envelope containing the dasti Notice was ever opened. The ground urged that the Chartered Accountant was suffering from an advanced stage of cataract, and hence was constrained from informing his clients is again not worthy of credence. The dasti Notice was admittedly served on him on 13.12.2018 at his office, which was much prior to his surgery which he states took place on 04.01.2019. Mr. Narayan had sufficient time to inform the Applicant Company of the proceedings, prior to his surgery. Furthermore, Mr. Narayan appeared before the Income Tax Authorities to represent the Applicant Company and its sister concerns on various dates prior to his surgery i.e. on 14.12.2018, 21.12.2018, 28.12.2018 and 29.12.2018. This Court is satisfied that the Applicant Company was duly served through their authorized representative, and were provided sufficient opportunities to appear before this Court, and contest the matter. The Applicant Company chose to let the matter proceed ex-parte. The grounds for Recall of the Judgment are devoid of any merit whatsoever. Applicant Company having failed to make out any credible or cogent ground for Recall of the judgment

Summary

Issues:
1. Service of Notice at the registered office.
2. Change in registered office address.
3. Knowledge of the Judgment.
4. Affidavit of dasti service.
5. Representation by Chartered Accountant.
6. Recall of Judgment.
7. Definition of "principal officer".
8. Credibility of reasons for non-appearance.
9. Sufficiency of opportunities given.
10. Merit of Recall Application.

Issue 1: Service of Notice at the registered office
The Applicant sought recall of the Judgment on the grounds of not being served with the Notice of the SLP at the registered office of the Company. The Applicant argued that the Notices were sent to the earlier registered office address, which had been changed twice since then. However, the Department contended that the service was duly made at the office address of the authorized representative, who had the power of attorney from the Company.

Issue 2: Change in registered office address
The Applicant changed its registered office address multiple times, leading to a discrepancy in the service of Notices. The Applicant claimed that the change in address was not updated in the Court records, resulting in non-receipt of the Notice. However, the Department argued that service was properly effected on the authorized representative, who was the agent of the Company.

Issue 3: Knowledge of the Judgment
The Applicant learned of the Judgment through a news clipping published in the Economic Times, following which the Application for recall was filed. The Applicant argued lack of actual notice of the Judgment as a ground for recall, while the Department maintained that the authorized representative had knowledge and opportunities to inform the Company.

Issue 4: Affidavit of dasti service
The Affidavit of dasti service filed by the Revenue Department showed an acknowledgment receipt by the Chartered Accountant of the Applicant Company. The Chartered Accountant claimed to have received the documents but believed them to be Income Tax Return documents, citing health reasons for not informing the Company promptly.

Issue 5: Representation by Chartered Accountant
The Chartered Accountant, as the authorized representative, received the service but claimed not to have been engaged before the High Court or the Supreme Court. The Department presented the Power of Attorney appointing the Chartered Accountant as the agent of the Company for representation in legal proceedings.

Issue 6: Recall of Judgment
The Applicant sought a recall of the Judgment and a de novo hearing due to the exparte nature of the original Judgment. The Court examined the grounds presented by both parties and evaluated the merit of the recall application based on the facts and circumstances of the case.

Issue 7: Definition of "principal officer"
The Court analyzed the definition of "principal officer" under Section 2(35) of the Act to determine the validity of service on the authorized representative. The Court held that the agent, including a power of attorney holder, could be served with the Notice on behalf of the Company.

Issue 8: Credibility of reasons for non-appearance
The Court scrutinized the reasons presented by the Chartered Accountant for not informing the Company about the service of Notice. The Court found the reasons lacking credibility, especially considering the sufficient time available before the surgery and the appearances made before the Tax Authorities.

Issue 9: Sufficiency of opportunities given
The Court reviewed the timeline of events leading to the exparte Judgment and assessed whether the Applicant was provided with adequate opportunities to appear before the Court. The Court noted the multiple dates on which the matter was listed for hearing, giving the Applicant chances to enter appearance.

Issue 10: Merit of Recall Application
After considering all the arguments and evidence presented by both parties, the Court concluded that the Applicant failed to establish any credible ground for the recall of the Judgment. The Court dismissed the Application for Recall, stating that the grounds presented were devoid of merit, and no costs were awarded.