PATHAK J. - This reference has been made at the instance of the assessee under section 66(1) of the Income-tax Act, 1922.
During the pendency of the reference, Sri V. P. Tewari entered appearance as counsel on this court. Notice was served upon the assessee accordingly, and an opportunity was given to engage another counsel to represent it in the case. The case has now come on the hearing, but the assessee is absent and nobody appears on behalf of the assessee.
At the outset the question arises whether in the absence of the assessee, or any counsel engaged to represent it, it is obligatory upon the court to consider the statement of the case submitted by the Tribunal and to express its opinion upon the question of law referred to it.
Sub-section (1) of section 66 provides for a reference to the High Court for its opinion upon the question or question of law referred to it. Sub-section (5) of section 66 provides.
'The High Court upon the hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon....'
At first blush it would appear that the High Court is bound to decide the questions of law and it cannot do otherwise. But on further examination we find it difficult to accept the position that, where a party at whose instance the reference has been made could have appeared when the case is called on for hearing but does not do so, the High Court is still obliged to decide the questions of law. A party dissatisfied with the appellate order of the Tribunal on a point of law is entitled to apply for a reference to the High Court for the decision of the question of law. It is at the instance of such a party that the proceeding moves on from the Tribunal to the High Court. But for the application of the party under sub-section (1) of section 66 the case would have ended with the decision of the Tribunal upon the appeal. When the reference comes on for hearing before the High Court, if the party decides not to be present, it is plain that it is not interested any more in the proceeding and does not desire a decision on the question of law by the High Court. It seems to us that in that event it is open to the High Court to decline to decide the question of law referred to it.
The position was considered by the Calcutta High Court in M. M. Ispahani Ltd. v. Commissioner of Excess Profits Tax, where upon similar reasoning the court declined to answer the question of law. The view taken in that case was followed by the Travancore-Cochin High Court in Commissioner of Income-tax v. Pothen Joseph and Sons. The Madras High Court in Tamarind Products, Vellore v. Commissioner of Income-tax, has held that there is a discretion in the court to decide the question of law if the party, two caused the reference to be made, is absent at the time of the hearing, and that view was adopted by the Andhra Pradesh High Court in Arisetty Butchanna v. Commissioner of Income-tax.
There is of course the observation of the Calcutta High Court in Commissioner of Income-tax v. Gourishankar Lal Singha :
'.... the basic principle is that once a case has been stated to the High Court it is bound to answer the question and the proceedings cannot be stopped simply because of the death or absence of one of the parties interested before it.'
But the matter for consideration in that case was whether the reference could proceed upon the death of the assessee. It was not a case where the assessee could have appeared but did not do so.
We may point out that in M. M. Ispahanis case the judgment proceeded also upon the view that sub-section (5) of the section 66 contemplates a hearing of the case by the High Court, that there can no hearing in the absence of the party who has caused the reference to be made, and therefore the High Court should not decide the question of law. The consideration that no hearing can take place in the absence of such party and that, therefore, the High Court should invariably refuse to decide the question is a point respecting which we refrain from expressing any opinion in this case.
Upon the view that we are taking that there is no obligation upon the High Court to decide the question of law if the party, at whose instance the reference has been made, is absent when the case is called on for hearing, we decline to return any answer to the question referred upon this statement of the case.
The reference shall be returned to the Income-tax Appellate Tribunal accordingly. There is no order as to costs.