Delhi High Court
District Excise Officer vs Income Tax Officer on 21 January, 2000
Equivalent citations: (2001)68TTJ(DEL)436
ORDER
Moksh Mahajan A.M. These four appeals filed by the assessee against the consolidated order of the learned Commissioner (Appeals) are taken up together as common issue is involved. These are disposed of by a single order for the sake of convenience .
2. The facts in brief as gathered from the order of the assessing officer are that the District Excise Officer, Muzaffarnagar (referred to hereinafter as DETO) was required to furnish half-yearly returns to the prescribed authority within the prescribed time. This was as per provisions of sub-section (7) of section 206C of the Income Tax Act. The assessee furnished the returns as under :
Period for which returns were furnished Period for which returns 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 On scrutiny of the aforesaid returns, the assessing officer found that the 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 assessing officer created the demand as under :
Financial year Short collection of TDS including interest under section 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 section 272A(2)(c) was also issued. Penalty notice under section 271C for alleged failure to deduct tax at source was also issued.
The assessee preferred an appeal against the consolidated order before the learned Commissioner (Appeals). The learned Commissioner (Appeals) for the reasons given in his order held that no appeal lies against the aforesaid order and dismissed the same in limine.
3. Shri O.S. Bajpai, who appeared on behalf of the assessee submitted that learned Commissioner (Appeals) fell in an error in holding that no appeal lies against the order passed under sections 206C(6) and 206C(7) of the Act. If fact, the assessee's case is covered under section 246 (1) (a) of the Act. The aforesaid sub-clause can be broadly divided in 3 parts. Where the assessee denies his liability to be assessed, where the objection is raised against an order of assessment under section 143 or 144 of the Act and where an objection is raised against the income assessed, tax determined or the status under which the same is assessed. The first segment is wider in its compass and jurisdiction. While the word "assessee" is defined in section 2(7) of the Act, there is no such definition in regard to the assessment which has to be understood in general and normal terms. In this respect, dictionary meaning can be present into service. Under the Black- Law Dictionary, 5th Edition, the expression 'assess' is given the meaning as under (in p. 39 of the paper book) "To ascertain,. fix the value of. To fix the amount of the damages or the value of the thing to be ascertained. To impose a pecuniary payment upon persons or property. To ascertain, adjust, and settle the respective shares to be contributed by several persons toward an object beneficial to them all, in proportion to the benefit. received. To tax ....---"
Similar meaning has also been assigned to the expression 'assess' in the New Shorter Oxford Dictionary.
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 v. Khemchand Ramdas (1938) 6 ITR 414 (PC), the word 'assessment' is used in Income Tax 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 v. 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 section 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. Liability has been imposed on the assessee not in regard to the amount recoverable but also interest and penalty. DETO has been treated as the assessee in default by the assessing officer himself. This is evident from the order of the assessing officer passed for assessment year 1991-92 to 1995-96. To similar effect are the observations in the assessment order passed for assessment year 1993-94. The learned Commissioner (Appeals) has not only admitted the appeal for the aforesaid assessment year, but has also passed the order on merit, Various decisions were cited in support of the contentions that where the assessee is aggrieved against any order passed by the authority he has a right to appeal.
4. The learned Departmental Representative on the other hand vehemently opposed the stand taken by the learned authorised representative. It was submitted that the DETO only holds a decree of the department to collect and deposit a part of purchase price. This is done on behalf of the department. Section 206C falls under the chapter 'collection' and not 'tax deduction at source'. The case is not covered under section 246(1)(a) of the Act as contended by the learned authorised representative. The assessee as contemplated in section 246(1)(a) is not District Excise Officer who is a person collecting the purchase price and then making part of the same towards tax. He cannot be equated to an assessee denying the liability to be assessed under the Act. The party has neither objected to the amount of income assessed nor to the amount of tax determined or the amount of loss computed or to the status under which he is assessed so as to come within the purview of section 246(1)(a) of the Act. On the other hand, there is no specific provision under section 246 of the Act making the aforesaid order as appeal able. The provision of section 201 against which appeal has been provided for, does not cover the case of the party, The provisions of section 206C were brought on the statute with a view to overcome the difficulty to collect the tax due from such persons. These provisions are not at peri materia with those of deduction at source. The definition of assessee, only include those persons who either do not deduct tax or pay the same under the Act. The inclusive definition given in clauses (b) and (c) of the Act does not cover the case of the party. On the other hand, the persons denying liability to deduct tax at source have a redressal by way of appeal an provided under section 248 of the Act. The responsibility cast on the DETO for collection of tax is in the peculiar circumstances. The decisions cited by the learned authorised 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 assessment years 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 of 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. Section 246 of the Act as contained in Chapter xx of the Act is listed under the head 'appeal able orders'. On going through the aforesaid section, we find that the same can be broadly divided in 3 segments, one relating to clause (a) of sub-section (1) of section 246 of the Act which is wide in its scope. Clauses (b) to clause (1) of sub-section (1) of section 246 refers to specific sections under which the appeals have been provided for. With the passage of time, there have been changes in these sections in as much as while certain sections have been omitted, the others have been brought in. Sub-section (2) of section 246 relates to certain specified orders. It is undisputed that the assessee's case does not fall under specific provisions listed in clauses (b) to (1) of sub-section (1) of section 246 of the Act. The opening line of clause (a) of sub-section (1) of section 246 on the other hand reads as under :
"an order against the assessee, where the assessee denies his liability to be assessed under this Act."
The above provides for the following prescription :
(a) there is an existence of order.,
(b) it is against the assessee.,
(c) assessee denies his liability to be assessed under the Act."
The aforesaid proposition uses various expressions namely 'order', 'assessee', `assessment', 'liability'. While the expression 'assessee' has been defined under section 2(7) of the Act, the others are to be understood from their usage in common parlance. Section 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."
The assessee as defined in section 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, assessing officer Personal, local authority and every artificial juridical person."
''Assessment : Assessment has not been defined in the sense as in the case of assessee", however, as observed in case of CIT v. Khemchand Ramdas (supra) in comprehensive sense it includes-whole procedure for ascertaining and imposing liability upon the taxpayer and machinery for enforcement thereof .........
"One of the peculiarities of most Income Tax 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 sometimes 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 v. CIT (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 Income Tax Officer 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 obliged in law or justice to do, pay or make good something."
Examining the issue in the light of above propositions and judicial pronouncements, we find that there has been an order against DETO requiring him to pay sum of money which has been equated to tax as per terms of sub-sections (1) and (4) of section 206C of the Act. DETO is also a person as defined in section 2(31) of the Act. Liability has also been fastened on him both in respect of amount collectable, interest and penalty. DETO has also denied liability in respect of collection of tax pertaining to Nirgam Mulay. The question which arises at this juncture is whether the proceedings taken against DETO would tantamount to assessment as understood in terms of various decisions cited on both sides. In this context, reference be made to decision of Privy Council in CIT v. Khemchand Ram Das (supra). To quote relevant observations, it is essential to bear in mind the method prescribed by the Act, making an assessment to tax, using the word assessment in its comprehensive sense as including the whole procedure for imposing liability upon the taxpayer.
(Emphasis here, italicised in print supplied)
7. A glance at the provisions of section 206C in this context would show that the same was brought in the statute by the Finance Act, 1988, w.e.f, 1-6-1988. Simultaneously, the provision of section 44AC were inserted though w.e.f. 1-4-1989. In section 206C as it was there then reference was made to section 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 thereon. As held by their Lordships in case of Union of India v. A. Sanyasi Rao (1996) 219 ITR 330 (SC), the new provisions enable the revenue to estimate the profits on a 'presumptive basis'. Thus, there was a procedure laid down for computation of income and tax thereon- It is subsequently that section 44AC was omitted and reference to the aforesaid section in 206C was omitted. Even the expression used in sub-section (1) as "an income comprised therein" was omitted. But the omission of words does not change the basis of levy of income-tax which intent was clearly specified in the unamended provisions that the income can accrue at the time of purchase of goods. Section 206C. It certainly relates to procedure laid down in the Act for imposing liability upon the party. Thus the DETO is an assessee in terms of section 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 section 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 section 272A of the Act under which for non-furnishing of certificate, under section 203 or section 206C of the Act, penalty becomes imposable. It would be relevant to point out that the insertion of section 206C in the provision of section 272A of the Act was made with effect from 1-10-1991 by the Finance (No. 2) Act, 1991. In the background, it is difficult to comprehend that the intent of the legislature to deny the right of the appeal to the assessee under section 206C was intentional. This is also clear form the circular of the Board cited in the case of Union of India v. A. Sanyasi Rao (supra) which reads as under :
"Further, with a view to facilitate collection of taxes from such assessees, it is proposed to introduce a new section 206C to provide that any person, being a seller, referred to in section 44AC, shall collect income tax of a sum equal to twenty per cent of the amount paid or payable by the buyer, as increased by a surcharge for purposes of the union calculated on the income-tax at the rates in force. Such sum is required to be collected either from the buyer at the time of debiting the said amount to the account of the buyer or at the time of the receipt of that amount from the buyer, whichever is earlier. This mode of recovery of tax shall be without prejudice to any other mode of recovery. The tax so collected by the seller shall be paid to the credit of the Central Government or as the Board directs, within seven days from the date of collection. It will be treated as tax paid on behalf of the person from whom the amount has been collected and credit shall be given for such amount in the assessment made under this Act on production of a certificate.
The new section also provides that if a seller does not collect or after collecting fails to pay the tax, he shall be deemed to be an assessee in default (underlined, italicised in print, by us) in respect of the tax and the amount of the tax together with the amount of simple interest calculated at the rate of two per cent per month of part thereof, shall be a charge upon all the assets, of the seller .......
These amendments will be made effective from 1-6-1988.
Thus, as per the intent of the legislature, as reflected in the circular the party is to be treated as the assessee in default- expression covered in section 2(7) of the Act. Otherwise too, the right of appeal is a substantive right and is not merely a matter of procedure. The same is to be viewed in the light of the effect its denial would have on the party. Serious consequences can result in absence of effective and adequate remedy. The assessee 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 v. Mahavir Prashad & Sons (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 Aditya v. CIT (1982) 134 ITR 601 (MP) as also in the case of CIT v. Chaturbhuj Radha Kishan (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 v. Syed Jaffer & Sons (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 v. Bengal Cardboard Industries & Printers (P) Ltd. (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 Act. Recourse to Article 226 is not meant to circumvent statutory procedures. The same has to be resorted to in case of extraordinary situation, for example, where the very vires of the statute is in question or to prevent public injury or to vindicate public justice. The High Court in its writ jurisdiction does not sit in appeal. It only interferes if the order challenged is without jurisdiction or patently wrong. This is as held by their Lordship of Bombay High Court in case of Ritz Ltd. v. D. D. Vyas (1990) 185 ITR 311 (Bom).
11. In view of the above, in our considered opinion, the assessee has a right of appeal under section 246(1)(a) of the Act. Incidentally, it may be mentioned that for assessment year 1993-94 the learned Commissioner (Appeals) has not only admitted the appeal but has also adjudicated on merits, in case of the assessee, itself. Accordingly, the appeals on the issue are allowed.
12. In the result, all the appeals are allowed.
U.B.S. BEDI J.M. :24-3-1999 I have gone through the proposed order of learned Accountant Member but despite my best persuasion I have not been able to convince myself to concur with her findings and conclusions and my reasons for the same are given hereunder.
2. These are 4 appeals filed by the District Excise Officer, Muzaffarnagar against the order of the learned Commissioner (Appeals) passed on 26-12-1997 under section 206C(1)/206 C(7) of the Income Tax Act, out of consolidated order in respect of 8 appeals, 4 having been passed under 205C(1)/206C(7) for assessment years 1991-92, 1992-93, 1994-95 & 1995-96 and 4 against order under section 201/201(1A) of the Income Tax Act for assessment year 1991-92, 1992-93, 1993-94 and 1994-95. Now we are dealing with appeals relating to order passed under sections 206C(1) and 206C(7) of the Income Tax Act. Since these appeals involve common issues, they are being taken up together and disposed of by a single order for the sake of convenience.
3. The brief facts as gathered from the record are that the District Excise Officer, Muzaffarnagar (hereinafter referred to as the DEO), was required to furnish half-yearly returns to the prescribed authority within the prescribed time. This was as per provisions of sub-section (7) of section 206C of the Income Tax Act. The assessee did not furnish all the returns as required under law but filed few of these returns and failed to file few and detail of the same with period is given as under :
Period for which returns were furnished Period for which returns 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 assessing officer 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 assessing officer. 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 of country liquor under section 206C(1). No tax was collected on the purchase price on Nirgam Mulay/excise duty/basic license-fee/issue price of by whatever name it was called for being part of the purchase price. Since as per Explanation given below sub-section (8) of section 206C "seller" means the Central Government, State Government, or any local authority or corporation or authority established by under a Central/State or Provincial Act or any company or firm or co-operative society. In view of the Explanation, DEO, the seller, is liable to deduct the tax at source on purchase price of Nirgam Mulay/excise duty/basic licence fee/issue price in view of Board's Circular No. 585 dated 27-11-1990. Therefore, the so-called letter dated 6-2-1997, in detail was served upon the District Excise Officer where short collection of tax on purchase price of above-noted items were appraised and he was asked to show cause as to why the necessary short- collection of tax with interest on account of basic licence-fee/Nirgam Mulay/excise duty/issue price, for the financial years, 1991-92, 1992-93 and 1994-95 and 1995-96 be not charged. Short collection of tax with interest under section 206C(7) of the Act on this account was worked out in the said letter as under:
Financial year Short collection of TDS including interest under section 206C(7) Rs.
1991-92 1,54,72,058 1992-93 8,32,610 1994-95 11,36,348 1995-96 9,78,200
5. The DEO was required to pay the amounts mentioned above within a week's time on receipt of the order. Show-cause notice for imposition of penalty for failure to furnish half-yearly returns under section 272A(2)(c) was also issued. Penalty notice under section 271C for alleged failure to tax collection at source was also issued. The DEO preferred appeal against the consolidated order before the learned Commissioner (Appeals), who, for the reasons given in his order, held that no appeal lies against the aforesaid order and dismissed the same in limine. Further appeal was preferred and following common grounds were raised in all the four appeals.
"GROUNDS OF APPEAL (1) That the appellant denied liability to be assessed under the provisions of Income Tax Act in respect of deduction of tax at source on the basic licence fee based on various factual and legal grounds and also for non-levy of interest under section 206C(7) of the Income Tax Act. Such denial of liability gave rise to right of appeal under section 246(1)(a) of the Act and as such right of appeal should have been accepted and entertained.
(2) That the order under section 206C(6)/(7) creating liability of tax representing alleged short collection of TDS on basic licence-fee under section 206C(6) and interest under section 206C(7) constituted an appeal able order under section 246(1) of the Income Tax 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 Commissioner (Appeals), 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 section 246 of the Income Tax Act and as the order under section 206C(6)/(7) did not find place in such appeal able 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 Commissioner (Appeals) being based on wrong interpretation and misunderstanding of the ratio laid down in many courts cited in the course of appellate proceedings deserves to be quashed and annulled.
(5) That on facts and in law it deserves to be held that there was no liability for deduction of tax at source on basic licence-fee and the liability so created by the learned assessing officer deserves to be quashed.
(6) That on facts and in law it deserves to be held that there was no liability for interest under section 206C(7) of the Income Tax Act. The liability created under section 206C(7) being illegal and without jurisdiction deserves to be quashed and annulled. "
6. Learned counsel on behalf of DEO submitted that the learned Commissioner (Appeals) fell in error in holding that no appeal lies against the order passed under sections 206C(6) and 206C(7) of the Act. It was submitted that DEO's case is covered under section 246(1)(a) of the Act. The aforesaid sub-clause can be broadly divided in 3 parts. Where the assessee denies his liability to be assessed, where the objection is raised against an order of assessment under section 143 or 144 of the Act and where an objection is raised against the income assessed, tax determined or the status under which the same is assessed. It was submitted that the first segment is wider in its compass and jurisdiction. While the word 'assessee' is defined in section 2(7) of the Act, there is no such definition in regard to the assessment which has to be understood in general and normal terms. In this respect, dictionary meaning can be pressed into service, Under the Black Law Dictionary 5th Edition, the expression assess' is given the meaning as under (in p. 39 of the paper book).
"To ascertain., fix the value of. To fix the amount of the damages or the value of the thing to be ascertained. To impose a pecuniary payment upon persons or property. To ascertain, adjust and settle the respective shares to be contributed by several persons toward an object beneficial to them all, in proportion to the benefit received. To tax ...............
8. Similar meaning has been assigned to the expression "assess" in the New Shorter Oxford Dictionary (p. 40 of the paper book) as under :
"Assessee (Ofr. assesser, f.L. assess-pa.pp) stem of acrider sit by (in med. L) levy tax, f. ad As- 1 + seder it, Cf. As size n. Aphet, to cess v. 1, sess v. J A v.. t. 1 Fix the amount of (a tax, fine, etc.)., impose (a specified tax etc.) (up) on a person or community. LME. 2 Impose a fine or tax on (a person or community).
(Foll. By creating the amount, or foll. By second obj.) LME. 3 Estimate officially the value of (property, income, etc.,) for taxation, E19 4 gen. Estimate the worth or extent of, evaluate-M20."
7. 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 v. Khemchand Ramdas (1938) 6 ITR 414 (PC), the word 'assessment' is used in Income Tax 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 v. 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 section 246(1)(a) of the Act which is comprehensive in its scope. DEO is an assessee as it is a person by whom tax or sum of money has been held to be payable under the Act. Liability has been imposed on the DEO not in regard to the amount recoverable but also interest and penalty. DEO has been treated as the assessee in default by the assessing officer himself. This is evident from the order of the assessing officer passed for assessment years 1991-92 to 1995-96. To similar effect are the observations in the assessment order passed for assessment year 1993-94. The learned Commissioner (Appeals) has not only admitted the appeal for the aforesaid assessment year but has also passed the order on merit. Various decisions were cited in support of the contentions that where the assessee is aggrieved against any order passed by the authority he has a right to appeal.
8. The learned Departmental Representative, on the other hand, vehemently opposed the move of the learned authorised representative and it was submitted that the DEO only held a decree of the department to collect and deposit a part of purchase price. This is done on behalf of the department. Sec. 206C fails under chapter "collection" and not under "tax deducted at source". The case is not covered under section 246(1)(a) of the Income Tax Act as contended by representatives of the DEO. Assessee as contemplated in section 246(1)(a) is not District Excise Officer who is a person collecting the purchase price and then making a part of the same towards tax. He cannot be equated to an assessee denying the liability to be assessed under the Act. The party has neither objected to the amount of income assessed nor to the amount of tax determined or the amount of loss computed or to the status under which he is assessed so as to come within the purview of section 246(1)(a) of the Act. On the other hand, there is no specific provision under section 246 of the Act making the aforesaid order as appeal able. The provision of section 201 against which appeal has been provided for does not cover the case of the party. The provisions of section 206C were brought on the statute with a view to overcome the difficulty to collect the tax due from such persons. These provisions are not at pari materia with those of deduction at source. The definition of assessee, only includes those persons who either do not deduct tax or pay the same under the Act. The inclusive definition given in clauses (b) and (c) of section 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 section 248 of the Act. The responsibility cast on the DEC 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 assessment years 1991-92 to 1994-95, dated 31-12-1997 and 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 conferred by the statute. Reliance was placed on Gordhan Das T. Mangal Das v. CIT (1943) 11 ITR 183 (Bom), CIT v. Raghubir Singh & Sons (1980) 125 ITR 256 (P&H), CIT v. Bengal Cardboard Industries & Printing (I) Ltd. (1989) 176 ITR 193 (Cal), CIT v. Garware Nylons Ltd. (1995) 212 ITR 242 (Bom) and CIT v. Ashok Engg. Co. (1992) 194 ITR 645 (SC). Relying upon the ratios of decisions as contained in the above noted case law it was submitted that the DEO have no right of appeal and Commissioner (Appeals) was fully justified in not entertaining the appeal of DEO so his action needs to be confirmed.
9. To counter with the arguments of learned Departmental Representative it was submitted by the learned counsel for the assessee that writs cannot take the place of right of appeal. The decisions relied upon by the learned Departmental Representative are distinguishable. It was also submitted that it is held as a general principle in the cases referred to by the authorised representative that there is no right of appeal and that the right of appeal must be conferred by the statute. Though there can be no dispute as per the general principle of law laid down in the appeals of these cases yet DEO's case rest on the ground that the right of appeal is provided by the statute itself viz. by section 246 itself. It is also held in one of these cases that the right of appeal is statutory right and should be liberally construed. It was held that the present case is covered under section 246 as the words "who denies the liability to make such deduction "used in section 248 are akin to the words "where the assessee denies his liability to be assessed" used in section 246. This signifies the fact that while all other kinds of deductions are liable to challenge under section 246 even without the precondition of actual deduction and payment being made, it is essential that under section 248, the challenge can be made only after the aforesaid precondition is satisfied. It is already submitted that the word "assess" has a wider ramification and will cover this kind of liability as well, particularly when the recovery can be made from the employer and the person responsible to deduct or collect.
10. Besides, the determination of proportion under section 80K was different from and anterior to the liability to deduct 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 v. Ashoka Engineering Co. (supra) 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 section 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 section 185(2) or (3). It was also submitted that the Supreme Court affirmed the decision of Hon'ble Delhi High Court in Grafik India v. CIT (1986) 159 ITR 528 (Del) and also approved certain other decisions as detailed below :
(i) CIT v. Angadi Bros. (1986) 157 ITR 426 (Karn),.
(ii) CIT v. Assam Cold Storage Co. (1989) 178 ITR 396 (Gau),.
(iii) Assistant Commissioner v. Chaturbhuj Radhakrishan (1985) 156 ITR 257 (Raj),
(iv) Addl. CIT v. Chekka Ayyana (1977) 106 ITR 313 (AP).
(v) CIT v. Devilal Shankar dayal (1983) 140 ITR 413 (MP).
(vi) CIT v. Dinesh chandra Industries (1975) 100 ITR 600 (Guj);
(vii) CIT v. Jabalpur Transport Development Co. (1983) 143 ITR 964 (MP),
(viii) Dhanpat Pitamber lal Patni v. CIT (1983) 144 ITR 874 (MP);
(ix) Durgaprasad Rajaram Adatiya v. CIT (1982) 134 ITR 601 (MP),
(x) ITO v. Vinod Krishna Som Prakash (1979) 117 ITR 594 (All),.
(xi) Patel & Co. v. CIT (1986) 161 ITR 568 (Guj),.
(xii) CIT v. Satya Narain Suresh Kumar (1979) 120 ITR 840 (All), and
(xiii) CIT v. Nagarmal Bisheshar Lal (1991) 190 ITR 468 (All) approved. "
Whereas the judgment of Orissa High Court in B.J. Bhambhani v. CIT (1991) 190 ITR 480 (Ori) was not approved. So it was vehemently argued that in the present case appeal will lie in the first portion of section 246 itself and it would be highly unreasonable and unpractical approach denying the valuable right of appeal to the DEO and, therefore, contrary to the observations of Supreme Court.
11. I have heard the rival submissions gone through the record and also gone through the decisions cited before us by rival parties. Sec. 246 of the Act as contained in Chapter XX of the Act is listed under the head "appeal able orders". After going through the aforesaid section it is undisputed fact that there is no right of appeal specifically or expressly granted in either of the clauses (a) to (1) of sub-section (1) of section 246 of the Income Tax Act, so far as order under sub-sections (6) and (7) of section 206C of the Income Tax Act is concerned. The learned counsel for the assessee has tried to interpret clause (a) of sub-section (1) of section 246 to show that orders under sections 206C(6) and 206C(7) are covered by the said provisions and to support his view the words "order", "assessee", "assessment", and "liability" have been explained to justify the claim of DEO to file the appeal against the order of Income Tax Officer, TDS. As per assessee's counsel, the expression "assessee" has been defined under section 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."
12. The assessee as defined in section 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, assessing officer?, 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 case of CIT v. Khemchand Ramdas (1936) 6 ITR 414 (PC) in comprehensive sense it includes whole procedure for ascertaining and imposing liability upon the tax payer and machinery for enforcement thereof .........
"One of the peculiarities of most Income Tax 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 sometimes 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 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 v. CIT (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 to tax payable and when it is signed or initiated by the Income Tax Officer 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 obliged in law or justice to do, pay or make good something.."
13. Relying upon the above propositions and judicial pronouncements the learned counsel's main contention is that there has been an order against DEO requiring him to pay sum of money which has been equated to tax as per terms of sub-section (1) and (4).of section 206C of the Act. DEO is also a person as defined in section 2(31) of the Act. Liability has also been fastened on him both in respect of amount collectable, interest and penalty. DEO has also denied liability in respect of collection of tax pertaining to Nirgam Mulay. The question which arises at this juncture is whether the proceedings taken against DEO would tantamount to assessment as understood in terms of various decisions cited on both sides.
14. A glance at the provisions of section 206C in this context would show that the same has brought in the statute by the Finance Act, 1988 with effect from 1-6-1988. Simultaneously, the provisions of section 44AC were inserted though with effect from 1-4-1989. In section 206C as it was there then, reference was made to section 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 v. A Sanyasi Rao (1996) 219 ITR 330 (SC), it was emphasised that DEO is an assessee in terms of section 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 section 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 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 section 272A of the Act under which for non-furnishing of certificate under section 203 or section 206C of the Act, penalty becomes imposable. It should be relevant to point out that the insertion of section 206C in the provision of section 272A of the Act was made with effect from 1-10-1991 by the Finance (No. 2) Act, 1991. Therefore, in this background it is difficult to comprehend that the intent of the legislature to deny the right of appeal to the assessee under section 206C was intentional and stress was laid to bring home the point that DEO is to be treated as assessee in default -expression covered in section 2(7) of the Act. It was also submitted that otherwise right of appeal is a substantive right and is not merely a matter of procedure. The same is to be viewed in the light of the effect of its denial would have on the party. Serious consequences can result in absence of effective and adequate remedy. The assessee has, therefore, a right to remedy and measures in the form of appeal unless expressly taken away.
15. I, after having considered all the points as urged by the representatives of DEO and department, case law as cited and relevant provisions of law, I am of the view that the right of appeal inheres in no one and, therefore, an appeal for its maintainability must have the clear authority of law and that explains why the right of appeal is described as a creature of statute. To put it differently, a person has no inherent right of appeal. As it is not an inherent right, the right can exist only if it is given by statute. It cannot be assumed that there is a right of appeal in every matter which comes under consideration until and unless such right is given by statute. It is open to legislature to given or not to give right of appeal against decisions made by the authorities under the Act and the enactment on that account, in the absence of anything more, cannot be commended. Just as appeal being a creature of a statute would not lie unless it is provided by the statute. The right of appeal is a statutory right or in a way can be said that a creature of statute. Therefore, in case there is no provision provided in the statute for filing 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 Income Tax Act, 1961 specifically enumerates in great detail the orders which are appeal able 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 clauses (a) to (1) of sub-section (1) of section 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 section 201 or 221 of the Income Tax Act, 1961. Here, in this case, DEO has not denied his total liability of collecting tax on transactions referred to in earlier paragraphs. It is a settled law that in a taxing Act, one has to look merely at what is clearly said. There is no room for intendment. There is no equity about tax. The court cannot read into a taxing provision any words which are not there or exclude words which are there as held in the case CED v. R. Kanakasabai & Ors. (1973) 89 ITR 251 (SC). Since the right of appeal is a statutory right, its existence depends upon the terms of the statute as held by Hon'ble Delhi High Court in the case of R.B. Jodha Mal Kuthiala v. CIT (1967) 66 ITR 319 (Del). If the statute does not give the right of appeal in a category of cases, the same cannot be created by implication. The right of appeal given under section 246 to the Income Tax Act is against various orders expressly enumerated in clause (a) to (1) of sub-section (1) thereof. Clearly, no appeal lies from orders passed adversely to the assessee which are not so enumerated. Therefore, in my considered view, orders as passed in the case of DEO under section 206C(6)/206C(7) are not appeal able orders and action of learned first appellate authority in not entertaining the appeals filed for the assessment years 1991-92, 1992-93, 1994-95 and 1995-96, in the absence of specific and express provision contained in any of the clauses enumerated in sub-section (1) of section 246 of the Income Tax Act, is valid and appropriate order which calls for no interference at the level of the Tribunal and his action, as such, is confirmed. All the appeals in this case are dismissed.
REFERENCE UNDER S. 255(4) OF THE INCOME TAX ACT, 1961 26-3-1999 Since in the above captioned appeals we have difference of opinion on the following point, the matter is submitted to the Hon'ble President for reference to the Third Member :
'Whether, on the facts and in the circumstances of the case, the order passed under section 206C(I) read with section 206C(7) of the Income Tax Act, 1961, is appeal able under section 246 of the Act or not ?' V. DONGZATHANG, PRESIDENT (AS THIRD MEMBER) The following point of difference was referred to me by the Hon'ble President under section 255(4) of the Income Tax Act, 1961 :
"Whether, on the facts and in the circumstances of the case, the order passed under section 206C(1) read with section 206C(7) of the Income Tax Act, 1961 is appeal able under section 246 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-section (7) of section 206C of the Income Tax 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 furnished Period for which returns 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 assessing officer 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 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 given by the assessing officer. 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 of country liquor under section 206C(1). No tax was collected on the purchase price of Nirgam Mulay/excise duty/basic licence fee/issue price or by whatever name it was called for being part of the purchase price. As per Explanation given below sub-section (8) of section 206C "seller" means the Central Government, State Government or any local authority or corporation or authority established by under a Central/State or Provincial Act or any company or firm or co-operative society. In view of the Explanation, DEO, the seller, is liable to deduct the tax at source on purchase price of Nirgam Mulay/excise Duty/basic licence fee/issue price in view of Board (s) Circular No. 585 dated 27-11-1990. Therefore, the co-called letter dated 6-2-1997 in detail was served upon the District Excise Officer where short- collection of tax on purchase price of abovenoted items were appraised and he was asked to show cause as to why the necessary short-collection of tax with interest on account of basic licence-fee/Nirgam Mulay/excise duty/issue price for the financial years 1991-92, 1992-93, 1994-95 and 1995-96 be not charged. Short- collection of tax with interest under section 206C(7) of the Income Tax Act on this account was worked out in the said letter as under :
Financial year Short collection of TDS including interest under section 206C(7) Rs.
1991-92 1,54,72,058 1992-93 8,32,610 1994-95 11,36,348 1995-96 9,78,200
4. The DEO was required to pay the amounts mentioned above within a week time on receipt of the order. Show-cause notice for imposition of penalty for failure to furnish half-yearly returns under section 272A(2)(c) was also issued, Penalty notice under section 271C for alleged failure to tax collection at source was also issued.
5. Aggrieved by the said order, the assessee took up the matter in appeal before the Commissioner (Appeals) raising several issues. The learned Commissioner (Appeals) however, held that no appeal lies against the order of the assessing officer 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 appeal able.
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 section 246.
7. The assessee is still aggrieved and has come up in appeal before the Tribunal challenging the order of the Commissioner (Appeals) dismissing the appeal in limine on the reasoning that no appeal lies under section 246 of the Act. The learned Judicial Member supported the view taken by the learned Commissioner (Appeals) for the following reasons :
(a) No express right of appeal is provided in section 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 in default for tax deduction at source. He is not liable for action under section 201 to section 221 of the Income Tax Act.
(e) DEO has not denied his liability for collecting tax.
(f) The right to appeal is a statutory right and depends on the terms of the statute.
8. On the other hand, the learned Accountant Member was of the view that there is a right of appeal available to the assessee under section 246(1)(a) of the Act. According to her, the assessee fulfills the following requirements of section 246(1)(a):
(1) There is an existence of an order.
(2) It is against the assessee.
(3) assessee denies his liability to be assessed under the Act.
9. The learned Accountant Member observed that the "assessee" appearing in section 246(1)(a) is defined in section 2(7) as a person by whom any tax or other sum is payable and includes every person in respect of whom any proceeding under the Act has been taken or every person who is deemed to be an assessee under any provisions of the Act or every person who is deemed to be in default under any provisions of this Act. Since the DEO was required to pay a sum of money in terms of sub-sections (1) and (4) of section 206C of the Act, the DEO is a person as defined in section 2(31) of the Act. It was, therefore, held by the learned Accountant Member that the DEO denied liability in respect of collection of tax pertaining to Nirgam Mulay. It was also held by her that the right to appeal is a substantive right and is not a matter of procedure. Relying on the decision of the Hon'ble Delhi High Court in the case of CIT v. Mahavir Prasad & Sons (1980) 125 ITR 165 (Del). It was held that the right of appeal should be liberally construed. Having regard to the above and various other decisions, it was held that the provisions of section 246(1)(a) is to be read in a reasonable practical manner and the right to appeal is to be allowed.
10. On the basis of above difference of opinion, the point of difference was formulated and referred to me as extracted earlier. At the hearing before me, Shri O.S. Bajpai and Shri H.G. Malik, learned Advocates appeared on behalf of the DEO and Shri Rajnish Kumar, learned Senior Departmental Representative appeared for the revenue . They were heard at length.
11. On careful consideration of the rival submissions in the light of the material on record, I am of the view that the view taken by the learned Commissioner (Appeals) and the stand taken by the revenue cannot be upheld as such interpretation will make it impossible to carry out the relevant provisions of the Income Tax Act, 1961. Section 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 section 206C of the Act. On security of the returns, the assessing officer found that the DEO, made short- collection of tax at source for the above assessment years. He accordingly passed order under section 206C(1) read with section 206C(7) of the Income Tax Act, 1961. Demand notice under section 156 of the Income Tax Act, 1961 was issued, demanding payment of a sum of Rs. 1,68,64,538 for assessment year 1991-92, Rs. 9,07,544 for assessment year 1993-94, Rs. 12,38,615 for assessment year 1995-96 and Rs. 10,66,238 for assessment year 1996-97. These demands were raised under section 201, interest under section 201(1A) and interest under section 220(2) of the Act. Section 156 of the Income Tax Act, 1961 contemplates issue of notice of demand in the case where any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act. The demand notice is to be served upon the assessee in the prescribed form specifying the sum so payable.
12. If the view taken by the learned Commissioner (Appeals) and the stand taken by the revenue and the learned Judicial Member is upheld, then the notice of demand issued by the assessing officer is to be held as invalid as the DEO is not an assessee and the tax payable was not in consequence of any order passed under this Act. The learned Judicial Member was of the view that the DEO cannot be held to be an assessee and was not liable to be assessed and in view of the facts and circumstances of the case, he cannot he held even to the assessee in default as in the case of tax deduction at source and is not liable for action under section 201 or 221 of the Income Tax Act, 1961.
13. The view taken by the learned Judicial Member if upheld, will render the notice of demand issued by the assessing officer for the above assessment years under section 156 of the Act invalid and cannot be maintained as such notice of demand can be issued only to the assessee.
14. Secondly, the assessing officer in his order treated the DEO as an assessee in default and raised the demand under section 201, 201(1A) and 220(2) of the Act by issue of demand notice under section 156 of the Act. If the DEO is not an assessee or an assessee in default, as alleged by the revenue , and the Hon'ble Judicial Member, it will be impossible to enforce the demand against the DEO, though valid order may be passed under sub-sections (7) and (8) of section 206C of the Act. Sec. 156 contemplates issue of demand notice only to the assessee where tax, interest etc. is payable by an assessee in consequence of any order passed under the Act. If the DEO is not an assessee then demand notice cannot be issued and the order passed under section 206C will remain inoperative and unenforceable.
15. Thirdly, the assessing officer himself in the notice of demand at Para 8 informed the DEO that "if you intend to appeal against the assessment, etc. you may present an appeal under Part-A of Chapter XX of the Income Tax Act, 1961 to the Commissioner (Appeals), Muzaffarnagar," After such direction the revenue cannot plead that it is not an appeal able order and contradict itself to resist the appeal filed by the DEO on the basis of the directions issued in the demand notice.
16. Having regard to the above inconsistencies in the stand of the revenue , a harmonious construction of the provisions of the Act has to be placed so as to make the provisions of the Act workable. Accordingly, the order passed by the assessing officer under section 206C(1) read with section 206C(7) is a valid order. It is also to be held that the demand notice issued under section 156 of the Act is a valid notice and the demand raised under section 201, section 201(1A) and section 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 v. ITO (1998) 230 ITR 9 (Del). The Hon'ble Delhi High Court considered this issue in the light of the provisions of section 194A read with section 201 of the Act. In that case, the Delhi Development Authority (hereinafter referred to as the "DDA") undertook construction of flats and allotted the same to the buyers having entered into contract with each of them consistently with the scheme governing the allotment of flats. The DDA was liable to payment of interest to the flat buyers on the amounts paid by them if the flats were not constructed and possession made over to the allottees in accordance with the terms agreed upon between the two. The DDA had to pay interest to the flat buyers for the period of delay in construction and delivery of possession. The assessing officer was of the view that there was default on the part of the DDA in not deducting tax at source from the interest which was required to be done under section 194A of the Act. A demand of Rs. 3,95,97,194 relevant to assessment year 1988-89 to 1990-91 was raised vide order dated 31-1-1991. Notice of demand was issued followed by coercive process consequent to which recovery was made.
18. The Tribunal on appeal by the DDA held that the DDA was not obliged to deduct tax at source and hence the amount recovered from the DDA was liable to be refunded to it. As the amount was not refunded by the assessing officer as par the Tribunal's order, the DDA filed a writ petition seeking a direction to the assessing officer to refund the amount recovered along with the interest. Before the Hon'ble Delhi High Court, it was the plea of the revenue that the DDA was not an assessee and the amount recovered from it by way of collection of tax at source cannot be said to be in pursuance of any order of assessment. The Hon'ble Delhi High Court held as follows :
"The first question to be determined is whether the petitioner is an assessee and whether the amount recovered from it can be said to have been in pursuance of any order of assessment. It is not disputed that the respondent had determined the liability of the petitioner to deduct the tax at source and deposit the same with the respondent under section 194A read with section 201 of the Act. Sub-section (1) of section 201 clearly provides that failure on the part of the person who is required to deduct and pay the tax shall be deemed to be an assessee in default in respect of the tax. Clause (7) of section 2 of the Act defines an assessee to include, inter alia, such person who is deemed to be an "assessee in default" under any provision of the Act. The petitioner was, therefore, an assessee. The word 'assessment' is not defined under the Act. Clause (8) of section 2 states merely that assessment includes reassessment. The definition is an inclusive one only.
In A.N. Lakshman Shenoy v. Income Tax Officer (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 v. 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 v. Khemchand Ramdas (1938) 6 ITR 414 (PC), their Lordships of the Privy Council have held that the word 'assessment' is used in the Income Tax 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 liability upon the taxpayer.
We are, therefore, unhesitatingly of the opinion that the order dated 31-1-1991 (annexure '1-A'), which determined the liability of the petitioner to make payment and also the quantum thereof and whereunder recovery was made from the petitioner holding it to be an assessee in default, was an order of assessment and the petitioner was an 'assessee' thereunder. The order having been set aside in appeal, the applicability of sections 244 and 244A is clearly attracted.
It was submitted by learned counsel for the respondent that it is only Chapter XIV of the Act which speaks of 'procedure for assessment' wherein finds place section 143 entitled 'assessment', An assessment falling within Chapter XIV only would be an order of assessment and any order passed under section 194A read with section 201 of the Act would not be an order of assessment. The contention has been stated, only to be rejected. We cannot put such a narrow construction on the meaning of the term assessment."
19. The provisions of section 206C are similar and in pari materia with the provisions of section 194A. The ratio laid down by the Hon'ble Delhi High Court is fully applicable to the facts of the case. In this case also, the assessing officer determined the liability of the DEO to deduct the tax at source by the order under section 206C(1) read with section 206C(7) of the Act. He raised the demand for the various assessment years under section 201, 201(1A) and 220(2) of the Act by treating the DEO as an assessee in default. Since the assessing officer has already treated the DEO as an assessee in default, the DEO is an assessee as per the provisions of section 2(7) of the Act.
20. Similarly with regard to the word "assessment", it is seen that the determination of income-tax liability is required to be done not only in relation to the income assessed or assessable to tax in the hands of the taxpayer but also in respect of tax deducted at source and payment thereof to the credit of the Central Government by the person who made the deduction. The person responsible for such deduction under section 206C in this case is the DEO as in the case of DDA where the person responsible for such deduction under section 194A was the DDA. The assessments of quarterly or annual returns of tax deducted at source do also construe assessment in law and the levy of interest under section 201 for the delay, default or shortfall in tax deducted at source being paid to the credit of the Central Government is also effectively an assessment since a person who is treated as an assessee is default for non-compliance with the statutory obligation is required in law to be subjected to an appropriate order to ensure compliance. In this process the order passed under section 201 determined the liability of the assessee and takes the place of assessment order as held in the case of the DDA v. Income Tax Officer (supra). The order passed by the assessing officer under section 206C (1) and (7) of the Act and the demand notice issued under section 156 raising demands under section 201, 201(1A) and 220(2) of the Act also constitute assessment order.
21. In the light of the above it is to be held that the DEO is an assessee and the order seeking recovery of short-deduction of tax including interest has to be treated as an order of assessment and consequently the provisions of section 246(1)(a) are fully applicable. The assessee, therefore, cannot be denied the right of appeal under the above section.
22. In the light of the above, I concur with the view taken by the learned Accountant Member. The matter will now go back to the bench for order as per majority opinion.