Income Tax Officer, Etawah Versus Dharam Narain 2018 (2) TMI 1474 - SUPREME COURT OF INDIA – a reconsideration after proper presentation of parties is required

[CA DEV KUMAR KOTHARI]

Related judgments of lower courts:

Dharam Narain Versus Income Tax Officer, Etawah - 2012 (12) TMI 1148 - ALLAHABAD HIGH COURT

Tribunal/ CIT(A) orders: not applicable as the dispute was raised by way of Writ Petition before the High Court challenging notice u/s 143.2 as not served on assesse within statutory limitation and High Court allowed WP.

Judgments relied on by High Court, which have also not been referred, discussed by the Supreme Court in case of Dharam Narian (supra):

Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon - 2010 (2) TMI 1 - SUPREME COURT OF INDIA

CIT Versus M/s. Sahara India Savings & Investment Corporation Ltd. - 2009 (11) TMI 25 - SUPREME COURT OF INDIA

Citations: in 2010 (2) (Hotel Blue Moon) TMI 1 - SUPREME COURT OF INDIA

1. MAGANLAL Versus JAISWAL INDUSTRIES NEEMACH - 1989 (8) TMI 341 - SUPREME COURT OF INDIA
2. Dr. Partap Singh And Another Versus Director of Enforcement And Others - 1985 (4) TMI 1 - SUPREME Court

Citations: in 1989 (8) (Maganlal)  TMI 341 - SUPREME COURT OF INDIA

1. Commissioner of Income-Tax, Gujarat Versus Vadilal Soda Ice Factory and Sakarlal Balabhai - 1972 (8) TMI 1 - SUPREME Court
2. Commissioner of Income-tax Versus Amarchand N. Shroff - 1962 (10) TMI 51 - SUPREME COURT
3. The Bengal Immunity Company Limited Versus The State of Bihar and Others - 1955 (9) TMI 37 - SUPREME COURT OF INDIA
4. National Sewing Thread Co. Ltd. Versus James Chadwick & Bros. Ltd. (J. & P. Coats Ltd. Assignee) - 1953 (5) TMI 13 - SUPREME COURT

Any argument not recorded:

On careful reading and reading again, author could not find any words in the judgment about hearing of counsels from any side- not even words like ‘heard counsels of petitioner and / or respondent’, are not found.

 Only list of advocates, under headings “ For The Petitioner” and “AOR For The Respondent”, have been given.

As per those lists we find that although many senior Advocates have appeared from both sides, however, from reading of the judgment, we find no voice at all in form of any contentions or arguments raised from any of them – not a single word is found.

 On reading of the judgment, author could not find a single word having been said by any counsel. It appears, as if, the honourable Supreme Court has decided the matter at its own and without hearing any counsel or the counsels, though named did not speak at all.- a surprising feature in the reported judgment.

 It is true that technically, the Supreme Court can pass order even in few words like, dismissed/ allowed; appeal is allowed / appeal is dismissed ; or heard, appeal allowed / heard appeal dismissed etc.

However, now-a-days when even judgements of the Supreme Court have more probability of being dissented by another bench, then  reviewed and reconsidered, it is desirable that the order / judgment of the Supreme Court  be elaborately speaking, particularly all contentions raised by both sides must be mentioned. This will help in understanding the law declared and also in reconsideration of judgment in case need arise. An elaborate judgment will also provide more comfort to any person, having some knowledge on the subject, who read the judgment besides to the party who had lost the case.

In case reasons are not given, the party losing the case will have grievance and cannot be satisfied with the judgment and will be left with feeling of justice denied.

About representation of respondent/ assesse:

Heading/ the preamble states:

For The Petitioner : Mr. K. Radhakrishnan, Sr. Adv. Ms. Rekha Pandey, Adv. Mr. Sarad Kumar Singhania, Adv. Ms. Gargi Khanna, Adv. Mrs. Anil Katiyar,

AOR (meaning Advocate on record)  For The Respondent : Mr. Imtiaz Ahmed, Adv. Mrs. Naghma Imtiaz, Adv. Mr. Ahmed Zargham, Adv. Ms. Amra Moosavi, Adv. for M/S. Equity Lex Associates, AOR.

From this noting it is not clear, whether any advocate was present or not before the Supreme Court. What is stated appears to be just the list of advocates who are Advocates / Advocates on Record for the Petitioner and Respondent respectively.

In absence of words like ‘heard counsels of both sides’ and in absence of  a single argument made by advocates, having been recorded in the judgment, one can have feeling that any advocate did not actually appear before the court or appeared but did not argue the case (or that their lordships did not allow them to argue the case).

Earlier judgments:

As a matter of practice followed and as per guidelines, for each case a statement of case and past history of similar cases etc. is prepared. In this case, it appears that any such history was not put before their lordships. It is surprising that the counsels of assesse/ respondent could not even insist upon consideration of at least  two  judgments of the Supreme Court which were followed by the High Court while allowing WP of assessee.

General discussions on related aspects:

Before discussion of judgment some of relevant issues as per general practice and ground realities are discussed:

a. Authorised Representative (A/R) for scrutiny assessment:

A person can be considered as A/R before any Court or Authority, only when a written authorisation, duly executed in writing and duly stamped, and for particular case, in his favour has been delivered to the concerned authority or court. Unless such written authority is in record of the Court or Officer, any person cannot be considered as A/R.

b. Each year is separate year:

Each year is separate year, and it usual practice that for each year separate authorization is executed and filed. Particularly when case is represented through outsider professional like   Advocate , CA or other tax professional.  For each year separate authorisation is filed. Even in case the person like tax executive, accountant, FM, Manager who are employed regularly and  who hold general power of authority, or is a constituted attorney,  a letter from the assesse with copy of power of attorney is submitted confirming that such power of attorney is continuing and the  holder of such power  is authorised to represent the case for that year or particular appeal or other proceeding.

In case of assessment under direct tax laws, where scrutiny is not a regular feature, the AO insists for written authority for particular year or confirmation from assesse that the GP holder is still an authorised representative. The examination of such authority is an important preliminary step in proceeding. If the AO or any other authority, Tribunal or Court refuses to hear and refuses to grant leave to submit such authority, one should not feel bad. Because this is a preliminary step in initiating hearing.

c. Time of filing of authorisation:

Usually an authorisation, to represent any scrutiny case is filed by assesse after a notice for scrutiny is received by assesse from tax authority. Even if in earlier year authorisation was filed, it is required that for year in hand a separate authorisation is filed. In some circumstances, there can be filing of authorisation beforehand also, but that cannot be final because after a notice is served, it is up to assessee  to reconsider and appoint another person as A/R.

It can be said that an authorised representative can only be appointed after proceeding is initiated by properly served notice, as per mandate in the relevant law.

Therefore, in the case before the Supreme Court, it is not clear as to how notice u.s. 143.2 was served upon the Authorised Representative even before service of notice u/s 143.2. As per usual practice, even if the concerned person was authorised for any other year or any other proceeding, it is not necessary that he was authorised for concerned year also. Even authorities insist for separate authorisation / vakalatnama to be filed for each year.

As a good practice he should have received notice, and participated in assessment proceeding. He could have preferred appeal if he was aggrieved from assessment order.

From the judgment in case of Dharam Narian:	Observations of author
The materials on record indicate that on two occasions the notice sent by registered post could not be served on the respondent – Assessee as he was not available and that it was served on the authorized representative of the respondent – Assessee on 19th October, 2006.	As discussed earlier, as per usual practice followed, it is not very likely that any authority to receive notice was given by assesse before he received notice u/s 143.2. It is likely that revenue has produced authority for another year.  When assessee had denied existence of any A/R, it was important to examine the authority provided and its validity.
In the Rejoinder Affidavit filed by the petitioner it has been denied that Sri Safdar Husain Advocate was the authorized representative duly authorized by the petitioner to receive the notice.	There is no contention or argument on this issue as to how Sri Safdar Husain Advocate was authorised or  how was he  not authorised as contended by assessee. This was crucial aspect and there should have been debate on this issue. Why the assesse had denied, why such denial was considered by the High Court but has not been accepted by the Supreme Court. As discussed earlier, as per usual practice followed, it is not very likely that an authority to receive notice was given by assesse before he received notice u/s 143.2. A question also arise, whether an authority can be given when there is no case in process? There is no mention about authority – when it was given by assesse and delivered to the AO? Whether, such authority was in force or not when notice was served on A/R etc.
The question, therefore, that arises in the writ petition was whether in such circumstances the requirement under Section 143(2) of the Income Tax Act, 1961 was met by the Revenue. The High Court answered the question in the negative taking the view that what is required to be satisfied by the Revenue is service of notice and not mere issuance thereof.
It will not be necessary for us to decide the aforesaid question in the present case which is being kept open for decision in an appropriate case. We have taken the aforesaid view as the present case is capable of being resolved on its own peculiar facts.	The judgments of the Supreme Court in case of Blue Moon Hotel and Sahara (supra.) were followed by the High Court. That has not at all been mentioned and  considered which was necessary as it has been decided that service of notice on assesse is a necessary precondition to assume jurisdiction for making assessment u/s 143.3. The question was settled in case of Hotel Blue Moon, which has not been considered at all, as appears on reading of judgment.
The non-availability of the respondent – Assessee to receive the notice sent by registered post as many as on two occasions and service of notice on 19th October, 2006 on the authorized representative of the respondent Assessee whom the respondent Assessee now disowns, in our considered view, is sufficient to draw an inference of deemed service of notice on the respondent – Assessee and sufficient compliance of the requirement of Section 143(2) of the Income Tax Act, 1961.	Whether service of notice on A/R would meet legal requirement? Is an important issue. Why the notice was not served on assesse? is also an important issue. Why the notice could not be served on premises of assesse is also an important issue. Whether an inference of deemed service can be drawn? Whether deemed service is proper? When assesse had a permanent address, and another business address, why notice was not served on assesse on any of such addresses, is an important issue. This was necessary to be  looked into, particularly when assesse had, before the High Court, denied authority of A/R on whom notice has been claimed to be served by revenue.

From above discussion it appears that the judgment of the Supreme Court in case of Dharam Narain is not in accordance with earlier judgments. Furthermore, there seems no  representation by Advocates of any side. Therefore this is a fit case for review of the judgment.

Assessee should have adopted regular course of assessment and appeal:

It seems that assessee by adopting route of Writ Petition challenging the initiation of assessment proceedings on ground of time barred service of notice had to suffer by adverse judgment of the Supreme Court.

By not being available to receive service and without documentarily establishing unavailability..

When notice by Registered post was sent and it was presented at his address, then why he (or in his absence any family member) did not receive notice, appears to raise figure that he deliberately avoided service of notice.

These factors could raise some sort of doubts.

Why he disown the authority of alleged A/R should have been made clear with reasoning before High Court. If the authority was for any other matter or any other year, then he should have made it clear.

If authority to receive notice was not at all given or given but withdrawn, it should have been made clear at first stage.

In this case when notice was served on A/R within limitation, and served on assesse after limitation, these grounds could be raised during assessment and normal appeal proceedings.