Broad appellate remedy under income tax law covers liability orders for short tax collection and interest when liability is denied.

An order imposing liability for short collection of tax at source and interest under Section 206C(6) and Section 206C(7) of the Income-tax Act, 1961 was treated as part of the assessment process where the assessee was proceeded against as a person in default. The appellate expression denying liability to be assessed was read broadly and practically, so the appeal provision was not confined to orders expressly referring to Section 206C. On that construction, the challenge to the demand and interest order was maintainable before the first appellate authority under the residuary appellate clause.

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Issues: Whether an order passed under sub-sections (6) and (7) of Section 206C of the Income-tax Act, 1961, fastening liability for short collection of tax at source and interest, is appealable under Section 246 or Section 246A(1)(a) of the Income-tax Act, 1961.

Analysis: The liability created under Section 206C was treated as part of the assessment process because the assessee was proceeded against as a person in default and was called upon to pay the tax and interest. The expression "denies his liability to be assessed under this Act" was read in a wide and practical manner, in line with earlier authority holding that assessment includes not only computation of income but also the procedure for imposing liability. The provision conferring appeal rights was treated as a residuary appellate clause, not limited to orders specifically mentioning Section 206C, and was construed liberally to preserve an effective remedy where the assessee wholly denied liability.

Conclusion: The order under Section 206C(6) and Section 206C(7) was held to be appealable under Section 246 and, after substitution, under Section 246A(1)(a) of the Income-tax Act, 1961.

Final Conclusion: The appeals failed because the Tribunal was right in holding that the assessee's challenge to the demand and interest order was maintainable before the first appellate authority.

Ratio Decidendi: An order imposing liability under Section 206C(6) and Section 206C(7) is appealable where the assessee wholly denies liability, because such proceedings amount to assessment within the broad meaning of the appellate clause permitting an appeal against an order denying liability to be assessed.

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