Appeal rights for assessee in default extend to denial of tax liability; residence issues go to merits, not competency.

An employer treated as an assessee in default for failure to deduct tax could still invoke the general appeal provision when denying liability to be assessed; the appeal right was not confined to cases where tax had actually been deducted and paid. The residence of foreign employees concerned the substantive liability to deduct tax, not the preliminary question of appellate competency, so it was unnecessary to decide that issue at the maintainability stage. The Tribunal could examine residence only after holding the appeal maintainable. The legal principle stated is that a denial of liability to assess attracts the general right of appeal, while the special appeal provision applies only where tax has already been deducted and paid.

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Issues: (i) Whether an employer who failed to deduct tax under section 18(3A) of the Income-tax Act, 1922, and was treated as an assessee in default under section 18(7), could appeal under section 30(1) against the demand. (ii) Whether, for deciding the competency of such appeals, the Tribunal was bound to determine whether the foreign employees were resident in the taxable territories.

Issue (i): Whether an employer who failed to deduct tax under section 18(3A) of the Income-tax Act, 1922, and was treated as an assessee in default under section 18(7), could appeal under section 30(1) against the demand.

Analysis: Section 30(1A) applied only where tax had in fact been deducted and paid, and therefore had no application to a case of failure to deduct. A person proceeded against under section 18(7) for non-deduction is nonetheless a person charged with tax under the Act, and denial of liability to be assessed falls within section 30(1). The right of appeal under section 30(1) therefore extends to a challenge that the employee was resident and that no liability to deduct ever arose.

Conclusion: The appeal lay under section 30(1), and the assessee was entitled to challenge the demand.

Issue (ii): Whether, for deciding the competency of such appeals, the Tribunal was bound to determine whether the foreign employees were resident in the taxable territories.

Analysis: The question of residence went to the merits of liability to deduct tax, not to the preliminary issue of whether an appeal was competent. Once the appeal was held maintainable, the Tribunal could then examine residence and related liability questions; for the limited purpose of competency, that inquiry was unnecessary.

Conclusion: The Tribunal was not obliged to decide the residence question at the stage of determining competency.

Final Conclusion: The reference was answered by holding that the assessee had a maintainable appeal under section 30(1), while the Tribunal was not required to decide the residence issue for the preliminary question of competency.

Ratio Decidendi: A person proceeded against as an assessee in default for failure to deduct tax may appeal under section 30(1) if he denies his liability to be assessed, and section 30(1A) is confined to cases where tax has actually been deducted and paid.

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