TaxTMI 
TaxTMI 
2000 (1) TMI 151
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.... 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 AO 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 proceedi....
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....s. 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: "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 been assigned to the expression 'assess' in the New Shorter Oxford Dictionary as under: "Assess (Ofr, assesser, f.L. assess pa. pp) stem of assidere sit by, (in med. L) levy tax, f. ad As 1 + sedere sit; 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 at, in the amount, or foll, by second obj.) LME. 3 Estimate officially the value of (property, income, etc.) for taxation, E194 gen. Estimate the worth or extent of; evaluate M. 20. Thus, the expression, 'assessment' would c....
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....y the learned authorized representative. The assessee as contemplated in s. 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 s. 246(1)(a) of the Act. On the other hand, there is no specific provision under s. 246 of the Act making the aforesaid order as appealable. The provision of s. 201 against which appeal has been provided for, does not cover the case of the party. The provisions of s 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 cls. (b) and (c) of the Act does not cover the case of the party. On the other hand, th....
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....has been defined under s. 2(7) of the Act, the others are to be understood from their usage in 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." 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 in the case of assessee", however, as observed in case of CIT vs. Khemc....
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....ability upon the taxpayer. 7. A glance at the provisions of s. 206C in this context would show that the same was brought in the statute by the Finance Act, 1988, w.e.f.1st June, 1988. Simultaneously, the provision of s. 44AC were inserted though w.e.f.1st April, 1989. In s. 206C as it was there then 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 thereon. 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), 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 s. 44AC was omitted and reference to the aforesaid section in 206C was omitted. Even the expression used in sub-s. (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....
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....is 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 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 from1st June, 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 s. 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....
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....nt Member but despite my best pursuasion 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 CIT(A) passed on 26th Dec, 1997 under s. 206C(1)/206C(7) of the IT Act, out of consolidated order in respect of 8 appeals, 4 having been passed under 205C(1)/206C(7) for asst. yrs. 1991-92, 1992-93, 1994-95 & 1995-96 and 4 against order under s. 201/201(1A) of the IT Act for asst. yr. 1991-92, 1992-93, 1993-94 and 1994-95. Now we are dealing with appeals relating to order passed under s. 206C(1) and 206C(7) of the IT Art. 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 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....
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....y 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 dt.27th Nov., 1990. Therefore, the so-called letter dt. 6th Feb., 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 s. 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 s. 206C(7) Rs. 1991....
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....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 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 AO deserves to be quashed. (6) That on facts and in law it deserves to be held that there was no liability for interest under s. 206C(7) of the IT Act. The liability created under s. 206C(7) being illegal and without jurisdiction deserves to be quashed and annulled." 6. Learned counsel on behalf of DEO submitted that the learned CIT(A) fell in error in holding that no appeal lies against the order passed under s. 206C(6) and 206C(7) of the Act. It was submitted that DEO's case is covered under s 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....
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....x 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. 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 AO himself. This is evident from the order of the AO passed for asst. yrs. 1991-92 to 1995-96. To similar effect are the observations in the assessment order passed for asst. yr. 1993-94. The learned CIT(A) 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. 9. The learned Departm....
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....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 vs. CIT (1943) 11 ITR 183 (Bom), CIT vs. Raghubir Singh & Sons (1980) 19 CTR (P&H) 107 : (1980) 125 ITR 256 (P&H), 262 ITR 375 (sic), CIT vs. Bengal Cardboard Industries & Printing (I) Ltd. (1989) 76 CTR (Cal) 171 : (1989) 176 ITR 193 (Cal), CIT vs. Garware Nylons Ltd. (1995) 124 CTR (Bom) 389 : (1995) 212 ITR 242 (Bom) and CIT vs. Ashok Engg.Co.(1993) 109 CTR (SC) 491 : (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 CIT(A) was fully justified in not entertaining the appeal of DEO so his action needs to be confirmed. 10. 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 Repr....
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.... 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 detailed below: (i) CIT vs. Angadi Bros. (1985) 48 CTR (Kar) 283 : (1986) 157 ITR 426 (Kai); (ii) CIT vs. Assam Cold Storage Co. (1989) 78 CTR (Gau) 158 : (1989) 178 ITR 396 (Gau); (iii) Asstt. CIT vs. Chaturbhuj Radhakrishan (1987) 61 CTR (Raj) 161 : (1985) 156 ITR 257 (Raj); (iv) Addl. CIT vs. Chekka Ayyana (1977) 106 ITR 313 (AP); (v) CIT vs. Devilal Shankardayal (1983) 33 CTR (MP) 253 : (1983) 140 ITR 413 (MP); (vi) CIT vs. Dineshchandra Industries (1975) 100 ITR 600 (Guj); (vii) CIT vs. Jabalpur Transport Development Co. (1983) 143 ITR 964 (MP); (viii) Dhanpat Pitamberlal Patni vs. CIT (1982) 28 CTR (MP) 286 : (1983) 144 ITR 874 (MP); (ix) Durgaprasad Rajaram Adatiya vs. CIT (1981) 21 CTR (MP) 4 : (1982) 134 ITR 601 (MP); (x) ITO vs. Vinod Krishna Som Prakash (1979) 117 ITR 594 (All); (xi) Patel & Co. vs. CIT (1986) 51 CTR (Guj) 52 : (1986) 161 ITR 568 (Guj); (xii) CIT vs. Satya Narain....
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....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 case of CIT vs. 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 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 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 vs. CIT (1992) 102 CTR (SC) 188 : (1991) 191 ITR 634....
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.... 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 imposable. It should be relevant to point out that the insertion of s. 206C in the provision of s. 272A of the Act was made w.e.f.1st Oct., 1991by 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 s. 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 s. 2(7) of the Act. It was also submitted that otherwise right of appeal is a substan....
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....(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. 201 or 221 of the IT 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 vs. R. Kanakasabai & Ors. 1973 CTR (SC) 227 : (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 vs. 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 s. 246 to the IT Act is against various ....
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....p; 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 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....
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....sp; 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 s. 272A(2)(c) was also issued. Penalty notice under s. 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 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 ....
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.... 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 CIT(A) 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 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....
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....O that "if you intend to appeal against the assessment, etc. you may present an appeal under Part-A of Chapter XX of the IT Act, 1961 to the CIT(A), Muzaffarnagar," After such direction the Revenue cannot plead that it is not an appealable 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 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 in....
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....rce and deposit the same with the respondent under s. 194A r/w s. 201 of the Act. Sub-s. (1) of s. 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 s. 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 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 ....