Service Of Notice On The Chartered Accountant Of A Company Who Acts As Its Agent Is Due Service : SC [Read Judgment]

Holding that service of notice on the Chartered Accountant of a company who is acting as its agent is valid service of notice, the Supreme Court refused to recall a judgment which was passed ex-parte.

The order was passed by a bench comprising Justices U U Lalit and Indu Malhotra in the case Principal Commissioner of Income Tax (Central) - I vs NRA Iron and Steel Pvt Ltd.

The company filed an application to recall a judgment passed against it on March 5, 2019 in an appeal filed by the Income Tax Department. The company stated that the notice on the appeal was not served on it at its registered office. Rather, the notice was served on its Chartered Accountant one Mr. Sanjeev Narayanan. 

The company further said that it got to know about the judgment only from a news report in the Economic Times daily.

The department on the other hand submitted that the notice was duly served on Mr. Sanjeev Narayan at his office address, in his capacity as the authorized representative of the company. The CA was holding a Power of Attorney of the company for the Assessment Year 2009 – 10, pointed out the department.

The department further stated that the Chartered Accountant had represented the company in the proceedings before the department.

The CA filed an affidavit stating that he bona fide believed that the notice from the Supreme Court was some documents from the income tax department. He also stated that he had undergone cataract surgery recently.

The counsel for the company raised an argument that notice for the company can be served only on its "principal officer".

However, the Court noticed that the definition of "principal officer" as per Section 2(35) of the Companies Act 2013 included an 'agent'.

Referring to the decision in State of Rajasthan v Basant Nehata (2005) 12 SCC 77, the Court stated that the term 'agent' would certainly include a power of attorney holder.

"Mr. Sanjeev Narayan admittedly being the Power of Attorney holder of the Applicant – M/s. NRA Iron & Steel Pvt. Ltd. for the A.Y. 2009 – 10 was the agent of the Assesse – Company, and hence Notice could be served on him as the agent of the Assessee – Company in this case", observed the Court.

The Court added that it was difficult to accept the CA's contention that he mistook the notice from the SC to be documents from IT department.

The Court also noticed that the notice was served on him much prior to his cataract surgery.

"Keeping in view the above­mentioned facts and circumstances, 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 exparte. The grounds for Re­call of the Judgment are devoid of any merit whatsoever", said the Court dismissing the application.

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