1984 (9) TMI 116 - AT - Income Tax

Summary

Issues Involved:
1. Maintainability of the appeal filed by Pan American World Airways (Panam) against the order of the Income Tax Officer (ITO) under section 230(2) of the Income-tax Act, 1961.
2. Interpretation of section 246(1)(c) of the Income-tax Act, 1961.
3. Nature of the order passed under section 230(2) - whether it constitutes an assessment or an executive order.
4. The right of appeal and its statutory limitations.

Issue-Wise Detailed Analysis:

1. Maintainability of the Appeal:
The primary issue was whether the appeal filed by Panam against the ITO's order under section 230(2) was maintainable. The Commissioner (Appeals) had concluded that no appeal lay against the ITO's order for tax recovery under section 230(2), as it was not covered under the provisions of section 246.

2. Interpretation of Section 246(1)(c):
The appellant's counsel argued that the appeal should be maintainable under section 246(1)(c) as Panam, being an assessee, was denying its liability to be assessed under the Act, particularly under section 230(2). The counsel cited several cases, including CIT v. Kanpur Coal Syndicate, Gopi Lal v. CIT, and Mohan Lal Khemka v. CIT, to support the argument that "denial of liability" should be interpreted broadly to include specific circumstances of tax liability.

3. Nature of the Order Under Section 230(2):
The departmental representative contended that the order under section 230(2) was an executive order, not an assessment order. The ITO's direction to Panam to recover taxes due from Dr. Jayanti Dharma Teja was a measure of tax recovery, not an assessment. The representative cited the decision in Kalinga Air Lines (P.) Ltd. v. ITO, which held that matters regarding tax clearance certificates are executive in nature and not appealable under section 246(1)(c).

4. Right of Appeal and Statutory Limitations:
The Tribunal examined the statutory provisions and judicial precedents to determine the scope of the right of appeal. It was acknowledged that a liberal interpretation should be applied to provisions regarding appeals. However, it was emphasized that the right of appeal is a statutory right and must be explicitly provided by the statute. The Tribunal found that the provisions of section 246(1)(c) did not cover the order under section 230(2) as it was not an assessment order but an executive direction for tax recovery.

Conclusion:
The Tribunal concluded that the appeal filed by Panam was not maintainable as the order under section 230(2) was an executive order and did not fall within the purview of section 246(1)(c). The Tribunal agreed with the Commissioner (Appeals) that the provisions of section 246 did not permit an appeal against such an order. The appeal was therefore dismissed.