UMAMAHESWARAM J. - Both these references are made under section 66(2) of the Indian Income-tax Act at the instance of the assessee, who is the same in both the cases. A notice under rule 6 of the Madras High Court Rules was issued to the assessee. The assessee is absent at the hearing of the case today. The question that arises for decision is whether under the provisions of section 66(5) of the Indian Income-tax Act it is mandatory for his court to answer the reference even though the assessee at whose instance the reference was made is absent at the hearing.
Section 66(5) of the Income-tax Act is in the following terms :
'The High Court upon the hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded......'
We are inclined to hold that the terms of section 66(5) are not mandatory and that the High Court is not bound to answer the reference irrespective of the fact whether the assessee at whose instance the reference was made is absent. The nature of the jurisdiction exercised by the High Court under section 66 of the Income-tax Act is neatly summed up by Venkatarama Ayyar J. in a recent decision of the Supreme Court in Commissioner of Income-tax v. Scindia steam Navigation Co. Ltd. At page 606 the learned judge states as follows :
'It will be seen from the foregoing review of the decisions that all the High Courts are agreed that section 66 creates a special jurisdiction, that the power of the Tribunal to make a reference and the right of the litigant to require it, must be sought within the four corners of section 66(1), that the Jurisdiction of the High Court to hear references is limited to questions which are properly referred to it under section 66(1), and that such jurisdiction is purely advisory and extends only to deciding questions referred to it.'
In Rajendra Narayan Bhanja Deo v. Commissioner of Income-tax, a question arose whether even if the question referred is of academic interest the High Court is bound to answer the reference having regard to the mandatory terms of section 66(5). Luxmoore, Lord Justice, expressed the view that the High Court was not bound to answer the reference when the question is one of academic importance only. In Surpat Singh Dugar v. Commissioner of Income-tax the same view is expressed by the Calcutta High Court. The Madras High Court also expressed the same view in Commissioner of Income-tax v. Sevugan. The contention that was put forward by Mr. Rama Rao Saheb on behalf of the Income-tax Commissioner that in every case the High Court 'has no province other than to express its opinion and to give its answer to the question' was negatived. In Madanlal Dharnidharka v. Commissioner of Income-tax Chagla J. extended the above principle to cases where the questions referred to are irrelevant or unnecessary. The same view is expressed by the Assam High Court in Jesraj Jivanram v. Commissioner of Income-tax. The learned Acting Chief Justice, Ram Labhaya, observe at page 258 in the following terms :
'But the court at the hearing, even though it has ordered the Tribunal to state a case on any question, retains the jurisdiction to decline to answer the question which is purely academic, or where the question is unnecessary or irrelevant.'
We are inclined to follow these decisions and hold that in the excise of our advisory jurisdiction we are entitled to decline to answer the reference when the assessee is absent at the hearing.
We shall now refer to the decisions which considered the cope of section 66(5) when the assessee, at whose instance the reference was made, was absent at the hearing. The earliest decision to which our attention was drawn is M.M. Ispahani Ltd. v. Commissioner of Excess Profits Tax. The learned judges of the Calcutta High Court held that if the parties are not present at the hearing, it can only mean that they are not desirous of having the question considered further by the High Court. The learned judges at page 191 added that 'if the party, who felt doubt about the correctness of the decision of the Tribunal and was not satisfied with it, fails to appear at the hearing of the reference, it must be either for the reason that he no longer feels any doubt or that he is not wiling to proceed further in the matter whatever the cause may be.' At page 192 the learned judges observed as follows :
'I cannot imagine that the section purports to impose upon the court any such obligation. It seems to me that before the duty contemplated by the section to decide the questions of law referred can arise, a hearing of the case must take place, because the section pens with the words the High Court upon the hearing of any such case, etc. Where the party, who has caused the reference to be made and who is in the position of a plaintiff, fails to appear, no hearing of the case can take place and, in my view, since the preliminary condition of the sub-section is not satisfied in such a case, the consequent obligation of deciding the questions of law and delivering a judgment does not also arise.'
We are inclined to agree with this decision that it is not mandatory for the High Court to hear the reference when the assessee, at whose instance the reference was made, is absent. But we are not inclined to agree with the observations at page 191 that the court should not at all answer the reference. This identical question arose for decision in Tamarind Products, Vellore v. Commissioner of Income-tax. The learned judges explained the decision in M.M. Ispahani Ltd. v. Commissioner of Excess Profits Tax and observed as follows :
'In view of the final conclusion recorded by the learned Chief Justice, we do not understand him to have laid down as an inflexible rule even of practice that where the assessee defaults appearance before the court, it has no option but to refuse to answer the question referred to it. The jurisdiction to refuse to answer is there. But its exercise in any given case is a question of discretion.'
The decision of the Calcutta High Court was followed by the Travancore-Cochin High Court in Commissioner of Income-tax v. Pothan Joseph & Sons.
Having given our best consideration to the terms of section 66(5) and the decision referred to supra we are inclined to take the view that this court is not bound to answer the reference, but may refuse to do so.
In the result, in the circumstances of the case, we refrain from answering the questions concerned - it is entirely in our discretion as provided in section 66(5) of the Act. As both the references are made at the instance of the same assessee, we award costs in the first R.C., viz., R.C. No. 45 of 1960. There will be no order as to costs in R.C. No. 46 of 1960. Advocates fee is fixed at Rs. 250.