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TMI Blog2000 (1) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... DETO had collected tax at 15 per cent on the cost price of country liquor only and not on the purchase price of Nirgam Mulay. Accordingly, show-cause notices were issued to the DETO asking him to explain the reasons for short-collection of tax. He was also required to submit the information pertaining to bid money, basic license fee, etc. for the financial years 1990-91 to 1995-96. The proceedings were attended to and adjournment was sought on the ground that necessary information was in the process of being collected. As the DETO had failed to give the reasons for not collecting the tax on the entire purchase amount, the AO created the demand as under: Financial year Short collection of TDS includin interest under s. 206C(7) 1991-92 1,54,72,058 1992-93 8,32,610 1994-95 11,36,348 1995-96 9,78,200 The assessee was required to pay the amount within a week of receipt of the order. Show-cause notice for imposition of penalty for failure to furnish half-yearly returns under s. 272A(2)(c) was also issued. Penalty notice under s. 271C for alleged failure to deduct tax at sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty. As held in the case of CIT vs. Khemchand Ramdas (1938) 6 ITR 414 (PC), the word 'assessment' is used in IT Act as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable, and sometimes the procedure laid down in the Act for imposing liability upon the taxpayer. "Thus, assessment is something which is linked with the denial of liability. So whenever the assessee denies his liability, the same would be covered under the expression 'assessment'. The expression 'denial of liability' on the other hand is comprehensive enough to take in not only the total denial of liability but also the liability to tax under peculiar circumstances. In either case, the denial is a denial of liability to be assessed under the provisions of the Act. This was as held by their Lordship of Supreme Court in the case of CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC). It is true that there is no express provision of appeal under the Act, nevertheless the same is covered under s. 246(1)(a) of the Act which is comprehensive in its scope. DETO is an assessee as it is a person by whom tax or sum of money has been held to be payable under the Act. Liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The responsibility cast on the DETO for collection of tax is in the peculiar circumstances. The decisions cited by the learned authorized representative are distinguishable. In the present, case, the DETO has not denied his total liability. Observations made in the order of Tribunal passed in ITA Nos. 3543 to 3546/Del/1997 for asst. yrs. 1991-92 to 1994-95 were highlighted in support of his contentions. The very fact that so far recourse has been taken to writs for redressal of grievances proves the stand of the Department that no right or appeal has been given to the party. 5. Responding to the arguments of the learned Departmental Representative it was submitted by the learned authorised representative that the writs cannot take place of the right of appeal. The decisions relied upon by the learned Departmental Representative were distinguished. 6. We have carefully considered the rival submissions. We have also gone through the decision cited before us. Sec. 246 of the Act as contained in Chapter xx of the Act is listed under the head 'appealable orders'. On going through the aforesaid section, we find that the same can be broadly divided in 3 segments, one relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery for enforcement thereof ......." "One of the peculiarities of most IT Acts is that the word 'assessment' is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and some times the whole procedure laid down in the Act for imposing liability upon the taxpayer." Order: "Order though not specifically defined normally connotes a decision having a sanction of authority. In the CPC, the word 'order' has been given a special meaning in order to distinguish it from the decree. However, as understood commonly, it is equivalent to decision of the authority. As held by their Lordships of Supreme Court in the case of Kalyan Kumar Ray vs. CIT (1992) 102 CTR (SC) 88 : (1991) 191 ITR 634 (SC), the expression has to be understood in a wider term. To quote "even the ITNS, 150 is also a form for determination of tax payable and when it is signed or initiated by the ITO it is certainly an order in writing .......' "Liability" as understood in its usual and ordinary sense means the state of being under obligation in law or in justice. Black's Law Dictionary defines it as "the state of being bound by legal responsibility" or oblige ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the party. Thus the DETO is an assessee in terms of s. 2(7) of the Act who has denied his liability to collect tax in the course of proceedings taken against him. 8. Seen it from another angle, we find that the provisions of s. 206C compare well with those of tax deduction at source which falls under the same chapter i.e., XVII of the Act. In both cases, it is the person other than the assessee who has been assigned the task of deducting/collecting tax at particular rates. Both are required to pay the same within a specified time to the credit of Central Government for which credit is to be given to the party on whose behalf payment is made. Both are required to furnish certificate that tax has been deducted/collected as also to submit the required statement in the prescribed manner before the prescribed authority. Both the persons are liable to pay interest as well as the penalty. In both the cases, the tax along with the interest would be a charge upon the assets of the aforesaid person. Another common feature is applicability of the provisions of s. 272A of the Act under which for non-furnishing of certificate, under s. 203 or s. 206C of the Act, penalty becomes imposabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has therefore, a right to remedy and measures in the form of appeal unless expressly taken away. 9. We further find that in case of CIT vs. Mahavir Prashad Sons (1980) 17 CTR (Del) 161 : (1980) 125 ITR 165 (Del) it has been held that a right of appeal should be liberally construed. This has also been so held in the case of Durga Prasad Rajaram Adithya vs. CIT (1981) 21 CTR (MP) 4 : (1982) 134 ITR 601 (MP) as also in the case of CIT vs. Chaturbuj Radha Kishan (1987) 61 CTR (Raj) 161 : (1985) 156 ITR 257 (Raj). In any case, the same has to be read in a reasonable practical manner as held by their Lordship of Supreme Court in case of CIT vs. Syed Jaffer Sons (1993) 109 CTR (SC) 491 : (1992) 194 ITR 645 (SC). It should not be restricted or denied unless such a construction is unavoidable as held by their Lordship of Calcutta High Court in case of CIT vs. Bengal Cardboard Industries Printers (P) Ltd. (1989) 76 CTR (Cal) 171 : (1989) 176 ITR 193 (Cal). Even viewed from this angle, the assessee cannot be denied right of appeal. 10. The fact that recourse can be had to other remedies will not debar the party from the right of appeal as available under the provisions of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which returns were Period for which returns furnished were not furnished 31-3-1993 30-9-1991 30-9-1994 31-3-1992 30-9-1995 30-9-1992 31-3-1996 31-3-1993 4. On scrutiny of the aforesaid returns the AO found the DEO had collected tax at 15 per cent on the cost price of country liquor only and not on the purchase price of Nirgam Mulay. Accordingly, show-cause notices were issued to the DEO asking him to explain the reasons for short collection of tax. He was also required to submit the information pertaining to bid money, basic licence-fee, etc. for the financial years 1990-91 to 1995-96. The proceedings were attended to by the DEO and adjournment was sought on the ground that necessary information was in the process of being collected. Time was allowed to DEO but he has failed to file the returns despite specific opportunities were given by the AO. On scrutiny of half yearly returns submitted by the assessee as above it was noticed that assessee has collected tax at source at the rate of 15 per cent only on the cost price o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for non-levy of interest under s. 206C(7) of the IT Act. Such denial of liability gave rise to right of appeal under s. 246(1)(a) of the Act and as such right of appeal should have been accepted and entertained. (2) That the order under s. 206C(6)/(7) creating liability of tax representing alleged short collection of TDS on basic licence-fee under s. 206C(6) and interest under s. 206C(7) constituted an appealable order under s. 246(1) of the IT Act and the appeals filed by the appellant being competent in law ought to have been entertained and adjudicated upon on merits. (3) That the learned CIT(A), on facts and in law and on the grounds taken and basis adopted, went wrong to hold that an appeal could be filed only against the orders listed under s. 246 of the IT Act and as the order under s. 206C(6)/(7) did not find place in such appealable orders, the appeal filed by the appellant was not maintainable. The adverse findings resulting in dismissal of the appeals, being erroneous, illegal and untenable on facts and in law, deserves to be quashed. (4) That the order of the learned CIT(A) being based on wrong interpretation and misunderstanding of the ratio laid down in many Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Estimate officially the value of (property, income, etc.,) for taxation, E19 4 gen. Estimate the worth or extent of; evaluate-M20." 8. Thus, the expression, "assessment" would connote to fix, to ascertain, or fix the value of the thing or to impose a pecuniary payment upon persons or property. As held in the case of CIT vs. Khemchand Ramdas (1938) 6 ITR 414 (PC), the word 'assessment' is used in IT Act as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable, and sometimes the procedure laid down in the Act for imposing liability upon the taxpayer." Thus, assessment is something which is linked with the denial of liability. So whenever the assessee denies his liability, the same would be covered under the expression 'assessment'. The expression 'denial of liability' on the other hand is comprehensive enough to take in not only the total denial of liability but also the liability to tax under peculiar circumstances. In either case, the denial is a denial of liability to be assessed under the provisions of the Act. This was as held by their Lordship of Supreme Court in the case of CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct tax or pay the same under the Act. The inclusive definition given in cls. (b) and (c) of s. 2(7) of the Act do not cover the case of the party. On the other hand, the persons denying liability to deduct tax at source have also no redressal by way of appeal as provided under s. 248 of the Act. The responsibility cast on the DEO for collection of tax is in the peculiar circumstances. The decisions cited by the learned authorised representative are distinguishable. In the present case, the DEO has not denied his total liability. The learned Departmental Representative highlighted the Tribunal order passed in ITA Nos. 3543 to 3546 (Del) 97 for the asst. yr. 1991-92 to 1994-95, dt.31st Dec, 1997and observations made therein were relied upon in support of his contentions. The very fact that so far recourse has been taken to writs for redressal of grievances proves the stand of the Department that no right of appeal has been given to the party. It was submitted that right of appeal is statutory right and until and unless it is provided in the statute itself expressly the same cannot be deemed to have been there. Since there is no inherent right of appeal the same has to be conferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or collect taxes and it has no relevance in the present context where the liability for non-collection is being fastened on the person responsible to collect the taxes. Assessee's counsel further relied upon CIT vs. Ashoka Engineering Co. and it was pleaded that this judgment has been relied upon by the assessee and it supports his case despite the fact that no appeal is provided. In this case it is held that there is no inherent right of appeal. It has to be spelt from the words of statute. But it is equally well settled that, if there is a provision conferring right of appeal, it should be read in a reasonable practical and liberal manner. It was held that there was nothing artificial or strained in the interpretation placed by the High Court that cases where registration is refused for the reasons set out in s. 184(4) or (7) are related cases where there is an order refusing registration to the firm by rejecting its application within the meaning of s. 185(2) or (3). It was also submitted that the Supreme Court affirmed the decision of Hon'ble Delhi High Court in Grafik India vs. CIT (1986) 50 CTR (Del) 57 : (1986) 159 ITR 528 (Del) and also approved certain other decisions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression "assessee" has been defined under s. 2(7) of the Act. others are to be understood from their user in the common parlance. Sec. 2(7) of the Act reads as under: Assessee : "Assessee means a person by whom (any tax) of or any other sum of money is payable under this Act, and includes : (a) every person in respect of whom any proceedings under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; (b) every person who is deemed to be an assessee under any provision of this Act; (c) every person who is deemed to be an assessee in default under any provision of this Act." 13. The assessee as defined in s. 2(7) of the Act is thus a person by whom any tax or any other sum of money is payable under the Act. Person: "The expression 'person' as defined in section covers individual HUF, company, a firm, AOP, local authority and every artificial juridical person." Assessment : "Assessment has not been defined in the sense as the case of 'assessee', however, as observed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen, reference was made to s. 44AC which in turn related to 'special provisions for computing profits and gains from the business of trading in certain goods'. Read together they related to computation of income in respect of certain trade and levy of tax thereof. As held by their Lordships in case of Union of India vs. A Sanyasi Rao (1996) 132 CTR (SC) 81 : (1996) 219 ITR 330 (SC), it was emphasised that DEO is an assessee in terms of s. 2(7) of the Act who has denied his liability to collect tax with reference to Nirgam Mulay in the course of proceedings taken against him. It was also explained that s. 206C compares well with those of tax deduction at source which falls under the same Chapter i.e. XVII of the Act. In both cases, it is the person other than the assessee who has been assigned the task of deducting/collecting tax at particular rates. Both are required to pay the same within a specified time to the credit of Central Government for which credit is to be given to the party on whose behalf payment is made. Both are required to furnish certificate that tax has been deducted/collected as also to submit the required statement in the prescribed manner before the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal regarding a particular matter no appeal shall lie. In such a case no one can stretch the language of a provision nor spell out a right of appeal if none is provided by the statute. It follows as corollary that the right of appeal is limited to the extent permitted by the statute granting it. The right of appeal is not merely a matter of procedure. It is a matter of substantive right. It is most valuable right and no doubt that deprivation of that right is not to be lightly assumed. Sec. 246 of IT Act, 1961 specifically enumerates in great detail the orders which are appealable to the first appellate authority but the said authority, therefore, cannot have jurisdiction to entertain appeals which fall outside the specific grounds and the orders mentioned in the section. It is undisputed fact that there is no express right of appeal enumerated in either of the clauses as listed in cls. (a) to (1) of sub-s. (1) of s. 246. In this case, DEO cannot be held to be assessee as well, nor is liable to be assessed and in view of facts and circumstances he cannot be held even to be assessee in default as in the case of tax deduction at source and also is not liable for action under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 of the Act or not?" 2. The facts giving rise to the above controversy are not disputed. The District Excise Officer, Muzaffarnagar (hereinafter referred to as 'DEO') was required to furnish half-yearly returns to the prescribed authority within the prescribed time. This was as per provisions of sub-s. (7) of s. 206C of the IT Act. The assessee did not furnish all the returns as required under law but filed few of those returns and failed to file few and details of the same with period is given as under: Period for which returns were Period for which returns furnished were not furnished 31-3-1993 30-9-1991 30-9-1994 31-3-1992 30-9-1995 30-9-1992 31-3-1996 31-3-1993 3. On scrutiny of the aforesaid returns, the AO found that the DEO had collected tax at 15 per cent on the cost price of country liquor only and not on the purchase price of Nirgam Mulay. Accordingly, show-cause notice was issued to the DEO asking him to explain the reasons for short-collection of tax. He was also required to submit the information pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the said order, the assessee took up the matter in appeal before the CIT(A) raising several issues. The learned CIT(A) however, held that no appeal lies against the order of the AO an accordingly dismissed the same in limine on the reasoning that the denial of the liability to be assessed by the DEO is only partial denial and as such the order is not appealable. 6. Secondly, it was held by him that appeal can be filed against an order of the authority only if the right to appeal has been statutorily provided in the statute. There is, therefore, no statutory right as the law does not specifically provide for appeal of such order as per the provisions of s. 246. 7. The assessee is still aggrieved and has come up in appeal before the Tribunal challenging the order of the CIT(A) dismissing the appeal in limine on the reasoning that no appeal lies under s. 246 of the Act. The learned Judicial Member supported the view taken by the learned CIT(A) for the following reasons: (a) No express right of appeal is provided in s. 246(1)(a) to (e) (b) DEO cannot be held to be an "assessee". (c) DEO is not liable to be assessed. (d) The DEO also cannot be held to be an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stand taken by the Revenue cannot be upheld as such interpretation will make it impossible to carry out the relevant provisions of the IT Act, 1961. Sec. 206C provides for collection of tax at source from profit and gains from the business of trading in alcoholic liquor, forest produce and scrap, etc. The power to recover tax by collection at source was given to every person being a seller The DEO in this case exercised the said power and deducted tax at source from the buyers in terms of s. 206C of the Act. On security of the returns, the AO found that the DEO made short-collection of tax at source for the above assessment years. He accordingly passed order under s. 206C(1) r/w .s. 206C(7) of the IT Act, 1961. Demand notice under s. 156 of the IT Act, 1961 was issued, demanding payment of a sum of Rs. 1,68,64,538 for asst. yr. 1991-92, Rs. 9,07,544 for asst. yr. 1993-94, Rs. 12,38,615 for asst. yr. 1995-96 and Rs. 10,66,238 for asst. yr. 1996-97. These demands were raised under s. 201, interest under s. 201(1A) and interest under s. 220(2) of the Act. Sec. 156 of the IT Act, 1961 contemplates issue of notice of demand in the case where any tax, interest, penalty, fine or any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Act has to be placed so as to make the provisions of the Act workable. Accordingly, the order passed by the AO under s. 206C(1) r/w s. 206C(7) is a valid order. It is also to be held that the demand notice issued under s. 156 of the Act is a valid notice and the demand raised under s. 201, s. 201(1A) and s. 220(2) of the Act are in consequence of the order passed under the Act. On the basis of this, it has to be held that the DEO is an assessee and an assessee in default in terms of the alleged short-deduction of tax at source. Since the alleged short-deduction is a matter of dispute, denied by the DEO, it has to be held that the DEO has a right to file an appeal against such order. Any other interpretation will make the provisions unworkable. 17. The question whether the DEO is an assessee and whether the amount recovered from it can be said to have been in pursuance of any order of assessment is now fully set at rest by the Hon'ble Delhi High Court in the case of Delhi Development Authority vs. ITO (1998) 147 CTR (Del) 385 : (1998) 230 ITR 9 (Del). The Hon'ble Delhi High Court considered this issue in the light of the provisions of s. 194A r/w s. 201 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word 'assessment' is not defined under the Act. Clause (8) of s. 2 states merely that assessment includes reassessment. The definition is an inclusive one only. In A.N. Lakshman Shenoy vs. ITO (1958) 34 ITR 275 (SC), their Lordships have held that the three expressions 'levy', 'assessment' and 'collection' are of the; widest significance and embrace in their sweep all such proceedings for raising money by the exercise of the power of taxation. Their Lordships have quoted with approval from the speech of Lord Simon in Commissioners for General Purposes of Income-tax for the City of London vs. Gibbs (1942) AC 402, 406 pointing out that the word 'assessment' is used in the English Income-tax Code in more than one sense-one meaning is the fixing of the sum taken to represent the actual profit, and the other, the actual sum in tax which the taxpayer is liable to pay. In CIT vs. Khemchand Ramdas (1938) 6 ITR 414 (PC), their Lordships of the Privy Council have held that the word 'assessment' is used in the IT Acts as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable, and sometimes the procedure laid down in the Act for imposing liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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