Case Law Details
CIT, Meerut Vs The District Excise Office (Allahabad High Court) – Right to file an appeal is statutory right. Unless a right of appeal is provided for specifically, no appeal can be filed. It is also equally true that while interpreting the provision dealing with the right of appeal, it should be interpreted liberally in such a manner to advance cause of justice. Take the case as it is herein, the assessee is State Government employee being the District Excise Officer.
In discharge of his official duty he collected the tax at source, though according to the Income Tax Department there is a shortfall. Heavy demand running into crores has been raised. In such a situation it does not appeal to reason to deny such a person even a right of appeal. In Suran Mall Mohta & Co. Vs. A.V. Viswanatha Sastri, (1954) 26 ITR 1 the Apex Court has held absence of a provision for appeal in taxing statute may be a vitiating factor. The same principle has been reiterated in Kunnathat Thathunni Moopil Nair Vs. State of Kerala, AIR 1961 SC 552. It is equally true that absence of corrective machinery by way of appeal or revision, per se will not make a provision invalid. It will depend upon the scheme of the Act, the nature of powers vested in the authority, the effect and consequence of the order passed under the Act on the person concerned.
The argument of the learned senior standing counsel that Section 206C does not find place in any of its clauses of sub section (1) and therefore, the appeal is not maintainable ignores the clause referred to above in Sections 246 and/or 246A of the Act. The clause referred to above does not relate to any particular section of the Act. It will be attracted subject to fulfillment of its ingredients. It is in the nature of a residuary clause and gives a right to an assessee to challenge an order by way of appeal if he is so aggrieved subject to the condition that he denies his liability to be assessed under the Act.
HIGH COURT OF JUDICATURE AT ALLAHABAD
1. Case :- INCOME TAX APPEAL No. – 299 of 2000
Petitioner :- The Commissioner Of Income Tex, Meerut And Another
Respondent :- The District Excise Officer
Petitioner Counsel :- A.N. Mahajan,A.Kumar,B.J.Agarwal,D. Awasthi,G. Krishna,R.K. Upadhyay,S.Chopra
Respondent Counsel :- S.P.Kesarwani
2. Case :- INCOME TAX APPEAL No. – 269 of 2000
Petitioner :- Commissioner Of Income Tax & Another
Respondent :- District Excise Officer
Petitioner Counsel :- A.N.Mahajan,A.Kumar,B.J.Agarwal,D. Awasthi,G. Krishna,R.K. Upadhyay,S.Chopra
3. Case :- INCOME TAX APPEAL No. – 270 of 2000
Petitioner :- Commissioner Of Income Tax & Another
Respondent :- District Excise Officer
Petitioner Counsel :- A.N.Mahajan,A.Kumar,B.J.Agarwal,D. Awasthi,G. Krishna,R.K. Upadhyay,S.Chopra
4. Case :- INCOME TAX APPEAL No. – 301 of 2000
Petitioner :- The Commissioner Of Income Tax Meerut And Another
Respondent :- The District Excise Officer Muzaffarnagar.
Petitioner Counsel :- A.N.Mahajan,A.Kumar,B.J.Agarwal,D. Awasthi,G. Krishna,R.K. Upadhyay,S.Chopra
Respondent Counsel :- S.P.Kesarwani
5. Case :- INCOME TAX APPEAL No. – 302 of 2000
Petitioner :- The Commissioner Of Income Tax, Meerut And Another
Respondent :- The District Excise Officer
Petitioner Counsel :- A.N. Mahajan
Respondent Counsel :- S.P.Kesarwani
6. Case :- INCOME TAX APPEAL No. – 303 of 2000
Petitioner :- The Commissioner Of Income Tax, Meerut And Another
Respondent :- The District Excise Officer
Petitioner Counsel :- A.N. Mahajan
Respondent Counsel :- S.P.Kesarwani
7.Case :- INCOME TAX APPEAL No. – 38 of 2001
Petitioner :- Commissioner Of Income Tax Meerut & Another
Respondent :- The Distt.Excise Officer
Petitioner Counsel :- A.N.Mahajan,B.K.Pandey
8. Case :- INCOME TAX APPEAL No. – 41 of 2001
Petitioner :- Commissioner Of Income Tax Meerut & Another
Respondent :- The Distt. Excise Officer
Petitioner Counsel :- A.N.Mahajan
9. Case :- INCOME TAX APPEAL No. – 45 of 2001
Petitioner :- Commissioner Of Income Tax Saharanpur & Another
Respondent :- The Distt. Excise Officer
Petitioner Counsel :- A.N.Mahajan
10.Case :- INCOME TAX APPEAL No. – 48 of 2001
Petitioner :- Commissioner Of Income Tax Meerut & Another
Respondent :- The Distt. Excise Officer
Petitioner Counsel :- A.N.Mahajan
11.Case :- INCOME TAX APPEAL No. – 49 of 2001
Petitioner :- Commissioner Of Income Tax Meerut & Another
Respondent :- The Distt. Excise Officer
Petitioner Counsel :- A.N.Mahajan
12.Case :- INCOME TAX APPEAL DEFECTIVE No. – 26 of 2001
Petitioner :- Commissioner Of Income Tax Meerut & Another
Respondent :- The Distt. Officer (Tds)
Petitioner Counsel :- A.N.Mahajan,A.Kumar,B.J.Agarwal,D. Awasthi,G. Krishna,R.K. Upadhyay,S.Chopra
13. Case :- INCOME TAX APPEAL DEFECTIVE No. – 28 of 2001
Petitioner :- The Commissioner Of Income Tax Meerut And Another
Respondent :- The District Excise Officer
Petitioner Counsel :- A.N. Mahajan,A.Kumar,B.J.Agarwal,D. Awasthi,G. Krishna,R.K. Upadhyay,S.Chopra
Respondent Counsel :- S.P.Kesarwani
Hon’ble Ferdino Inacio Rebello,Chief Justice
Hon’ble Prakash Krishna,J.
1. Raising a common question of law , the Commissioner of Income Tax has challenged the various orders passed by the Income Tax Appellate Tribunal on different dates by filing the present appeals under Section 260A of the Income Tax Act (hereinafter referred to as the Act).
2. The question involved is ―
“Whether on the facts and circumstances of the case the ITAT is legally justified in holding that an order passed under sub sections (6) and (7) of Section 206C of the Income Tax Act is appeal able under Section 246 of the Act.
3. The following Assessment Years are involved in all the appeals:
| Income Tax Appeals | Assessment Years |
| 299 of 2000 | 1992-1993 |
| 269 of 2000 | 1997-1998 |
| 270 of 2000 | 1998-1999 |
| 301 of 2000 | 1994-1995 |
| 302 of 2000 | 1995-1996 |
| 303 of 2000 | 1991-1992 |
| 38 of 2001 | 1993-1994 |
| 41 of 2001 | 1996-1997 |
| 45 of 2001 | 1994-1995 |
| 48 of 2001 | 1995-1996 |
| 49 of 2001 | 1989-1990 |
| 26 of 2001 (Defective) | 1990-1991 |
| 28 of 2001 (Defective) | 1997-1998 |
4. The District Excise Officer is the assessee in all these appeals. He was under an obligation to collect the tax at source on the sale of alcoholic liquor for human consumption from the buyer under Section 206C. The District Excise Officer did collect the tax at source from the buyers but according to the department it was short. The stand of the department is that the District Excise Officer has collected the tax at source only on the cost of the country liquor but was required to collect the tax at source on basic license fee and excise duty also. Thus, there was short collection of tax.
5. The assessee filed the returns from time to time disclosing the tax collected at source and deposited by it. The case of the assessee is that it was not responsible or obliged to collect the tax on license fee or excise duty. The words ‘buyer’ and ‘seller’ as statutorily defined in the aforesaid Section relate to sale of goods only. Therefore, he has collected the tax on the sale price of liquor only rightly. The Assessing Officer after calling upon the assessee by serving a show cause notice by orders of different dates ultimately rejected the aforesaid contention of the assessee that it was liable to collect the tax at source only on the price of the country liquor and raised the demands under sub sections (6) and (7) of Section 206C. Just to complete the narration of facts it is sufficient to state that for the assessment years 1991-1992 to 1995-1996 an exparte common order was passed on 20.2.1997 creating a demand of Rs.81,73,630.00 and interest Rs.1,02,88,586.00 total Rs.1,84,90,216.00 towards the short collection of tax at source on the basic license fee/Nirgam Mulya/excise duty/issue price. This order was rectified and demand was cancelled under Section 154 of the Act. The rectification order was subject matter of revision before the Commissioner of Income Tax under Section 263 of the Act and was set aside, by restoring the matter to the Assessing Officer. After remand the liability was again fastened by the Assessing Officer by the order dated 5th of September, 1997. The matter was carried in appeal before the Commissioner of Income Tax (A) who dismissed the appeal being not maintainable. The matter was carried further in second appeal before the Income Tax Appellate Tribunal. There was a difference of opinion between the two members of the Tribunal and the matter was referred to the third member i.e. President of the Tribunal who agreed with the Accountant member holding that the appeal under Section 246(1) before the First Appellate Authority was maintainable. It may not be out of place to mention here that the Tribunal by majority has held that the appeal is maintainable under Section 246(1) (a) of the Act. The said order is under challenge in these appeals.
6. Heard Sri A.N. Mahajan, learned senior standing counsel for the Department and Sri S.P. Kesarwani, learned standing counsel for the assessee.
7. The main thrust of the argument of the Department is that only those orders which are specified under Section 246 of the Act are appeal able. In none of the sub sections of Section 246, section 206C finds place. Therefore, an order passed under Section 206C either under sub section (6) or under sub section (7) is not maintainable.
8. It was further submitted that Section 246 has been replaced by Section 246 A w.e.f. 1st of April, 1998. At the relevant point of time Section 246A (1) had sub sections (a) to (r) and the orders mentioned in sub clause (a) to (r) could be appealed. As the sub sections (6) and (7) of Section 206C did not find any place in any of these sub sections (a) to (r), the order was not appeal able.
9. In reply, the learned counsel for the assessee contended that the Apex Court in the case of Union of India and another Vs. M/s. Omprakash and another, JT 2001 (3) SC 274, has held that the assessee was liable to collect the tax at source only on the cost of the liquor. It was not liable to collect the tax on the price of license fee. In other words, the assessee denied its liability to collect the tax on license fee or excise duty, and the case of the assessee falls under the clause “an order against the assessee where the assessee denies his liability to be assessed under this Act” as finds place in Section 246A (1) (a) of the Act. The said provision was also there in Section 246 (1) (a).
10. Elaborating the argument, it was submitted that the assessee has been found even by the Assessing Officer as “assessee in default” for not properly collecting the tax at source on basic license fee. On licenses issued by the Government permitting the licensee to carry on the trade in liquor, provisions of Section 206C are not attracted as the licensee does not fall within the concept of ‘buyer’ as defined in that Section. The ‘buyer’ has to be ‘buyer’ of goods and not merely a person who acquires a license/permission to carry on the business. The District Excise Officer is neither a ‘buyer’ nor a ‘seller’ within the meaning of Section 206C of the Act. The words ‘bid money’, ‘basic license fee’ and ‘license fee’ have been defined under Rule 3 (f), 3(g) and 3(m) of the U.P. Excise Licenses and Tender-cum-Auction’ of Rules 1991 framed under Section 41(c) of the U.P. Excise Act. These terms as defined there under would show that they denote different things. Basic license fee and license fee are two parts of the ‘bid money’ payable by the licensee. It is privilege of State Government to deal exclusively in liquor and it grants permission on charge of certain amount known as license fee or bid amount. These amounts are charged in lieu of grant of parting with State Government’s exclusive right, no element of sale is involved. Hence these two items fall outside the ambit and scope of Section 206C of the Act. To put it in plain words, there was no liability on the part of the assessee to collect and deposit the tax at source on these two items. The assessee had denied his liability to be assessed under the Act, therefore, the appeal is maintainable u/s 246 (1) (a) or 246A(1) (a) of the Act.
11. Considered the respective submissions of the counsel for the parties and perused the record.
12. The U.P. Excise Act, 1910 is the Statute which governs the allotment/settlement/grant of license to vend liquor country made and foreign made Indian liquor and Bhang by the State Government to the licensee. It is well settled that the State Government has exclusive privilege to carry on trade in the intoxicant liquor. It grants the license to persons to carry on trade therein subject to certain terms and conditions including that of realisation of licence fee for such grant in lieu of part of its privilege. The payment of money for parting the privilege or the licence fee for doing trade in liquor is neither a tax nor a fee. It is a simple levy for granting exclusive right of the State. Reference can be made to State of Punjab Vs. Devans Modern Breweries Limited, 2003 (1) JT SC (485).
13. Section 44B of U.P. Excise Act is titled as “Removal of Doubts”. It provides that the State has exclusive right or privilege to manufacture and sell liquor and license fee mentioned in Section 41(c) of the Excise Act is in substance rental consideration for grant of such right or privilege.
14. Section 206C was inserted in the Income Tax Act w.e.f. 1st of April, 1989 with a view to collect the tax at source on the heads such as from liquor contractors, scrap dealers, dealers in forest products etc. as defined therein. Aims and objects of the enactment of the said provision discloses that it was introduced with a view to collect the tax at source from such persons as the revenue was feeling considerable difficulty in the past in making assessment of income of these persons.
15. In Union of India and another Vs. A. Sanyasi Rao and others, (1996) 219 ITR 330 the constitutional validity of Section 44AC and 206 C of the Act was up for consideration before the Apex Court. The Apex Court noticed various facets of these two Sections and also its object of enactment. After quoting Sections 44AC and 206C it has observed that these new provisions enable the Revenue to estimate the profits on “a presumptive basis.” It was contended on behalf of the Department therein that Section 44AC read with Section 206C are only machinery provisions and not charging Sections. The said plea was accepted. The charge for levy of income tax that accrued or arose is laid down by charging Sections 5 to 9.
16. Sub section (6) of Section 206C states that any persons responsible for collecting the tax who fails to collect the tax in accordance with the provisions of Section 206C shall, notwithstanding such failure, be liable to pay the tax to the credit of the Central Government.
17. Its sub section (7) provides that without prejudice to the provisions of sub section (6), if a seller does not collect the tax or after collecting the tax fails to pay it, he shall be liable to pay simple interest at the rate of two per cent.
18. The aforesaid two sub sections have been invoked by the Department against the assessee. The case of the assessee, as stated herein above is that it was not liable to collect the tax at source on license fee or on basic license under the aforesaid sub sections and that is the reason it did not collect the tax on basic license fee and the license fee. The assessee is ‘seller’ of liquor bottles and it has collected the tax on the cost price of those bottles from the purchasers and deposited them indisputably. It, thus, pleads that in respect of the license fee and license he is not a ‘seller’ and corresponding thereto there is no ‘buyer’ thereof. Sale and purchase are the two sides of the same coin. The license fee or the basic license fee received by the assessee is for parting with the right of the State Government to deal in intoxicant liquor. The assessee qua these amounts cannot be treated as a person responsible for collection of tax within the meaning of sub section (1) of Section 206C of the Act, as also laid down in the case of Om Prakash (supra).
19. The assessee submits that negation of its stand by the Department and calculation of the amount of short levy and interest under sub sections (6) and (7) of Section 206C amounts assessment and therefore the order is appeal able under section 246(1) (a) or under section 246A (1) of the Act.
20. In the above back drop the controversy whether such an order is appeal able under sub section (1) of Section 246A(mentioned as Section 246 in the question framed, before insertion of 246A) be considered. The relevant portion of the said Section 246A for the sake of convenience is reproduced below:
“1[246A. Appeal able orders before Commissioner (Appeals)
(1) Any assessee aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against–
(a) an order against the assessee where the assessee denies his liability to be assessed under this Act or an intimation under sub-section(1) or sub-section (1B) of Section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 or section 144, to the income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;
xx xx xx xx xx ………………………………”
On an analyses of the above provision the following orders under the above quoted provision are appeal able:
An order against the assessee where the assessee denies his liability to be assessed under this Act; or
An intimation under sub section (1) of sub section (1B), where the assessee objects to the making of adjustments; or
Any order of assessment under sub section (3) of Section 143 or 144;
to the income assessed or to the amount of tax determined, or to the amount of loss computed or under the status under which he is assessed.
21. The learned counsel for the assessee contended that its case falls under the very first clause of Section 246A (1) i.e. “where the assessee denies his liability to be assessed under the Act”. He has been held to be an assessee in default by the Assessing Authority who treated him as an assessee within the meaning of Section 2(7) of the Act. The assessee is denying his liability to be assessed in respect of basic licence fee as distinguished from the price of goods, under the Income Tax Act. We find that the Assessing Authority before passing the order had issued notices which were responded by denying the liability by the assessee. Ultimately, the orders creating huge demands were passed.
22. The Income Tax Officer (TDS), Muzaffarnagar, the Assessing Authority passed a composite order dated 20.2.1997 for the financial years 1991-1992 to 1995-1996 under section 206C (1)/206C (7) of the Act creating a demand of Rs.1,84,19,216/-. The relevant portion of the order is reproduced below:
“Keeping in view of the above facts and circumstances of the case I hold that the District Excise Officer as an assessee in default to deduct tax collection at source on the purchase price on account of basic licence fee (called Nirgam Mulya/Excise duty/Issue price etc.) for the financial year 1991-91, 92-93, 94-95 and 95-96. The short collection of tax at source on account of basic licence fee/Nirgam Mulya/Excise duty/Issue price with interest u/s206C(7) accordingly is worked out at Rs.1,84,19,216/- as per annexure III as under:-
1. Short collection of tax at source on the basic Rs. 81,37,630/-
license fee/nirgam Mulya/Excise duty/Issue price
2. Interest u/s 206C(7) Rs. 1,02,88,586/-
TOTAL Rs. 1,84,19,216/-
I, therefore, direct to issue necessary notice of demand and challan of Rs.1,84,19,216/- for payment within a week of receipt of this order, failing which, necessary action will be taken to recover the said demand. Penalty show cause notice for failure to furnish half yearly returns for the half year ending 30.9.91 to 30.9.92 under section 272A(2)(c) has been issued separately and also penalty show cause notice u/s271C for failure to deduct tax at source to the above extend has been issued seperately.”
23. In our considered view, in the proceedings so undetaken by the Department for fastening the liability on the assessee, the assessee is assessed under the Act and it is in the nature of assessment proceedings. It may be noted that Section 246A was inserted by Finance Act No.2 of 1998 w.e.f. 1st of April, 1998. Earlier, it was Section 246. The phrase relevant for our purposes namely “an order against the assessee where the assessee denies his liability to be assessed under this Act”, was also there in Section 246. The said phrase was subject matter of interpretation by various High Courts from time to time with regard to the question of appeal ability of an order passed against the levy of interest under Section 139 for late filing of the return or under Section 215 for not paying or short paying the advance tax or under Section 217 for not sending the estimate of advance tax. It would not be out of place to mention here that there is no provision for appeal against an order charging interest under the aforesaid provisions. A Full Bench decision of this Court has been relied upon by the assessee to buttress his argument that the orders passed under these Sections though are not made specifically appealable in any of the clauses of Section 246 but has been held to be appeal able under certain circumstances. The said decision is CIT Vs. Geeta Ramkali Ram (1980) 121 ITR 708 (Alld.). The full bench has interpreted the phraces “denies his liability to be assessed” and “under this Act”.
24. It has noted the celebrated judgment of the Privy Council in CIT Vs. Khemchand Ramdas, (1938) 6 ITR 414 which is being constantly followed by the Apex Court including in the case of Abraham (C.A.) Vs. ITO, (1961) 41 I
TR 425 and its subsequent decisions. The term “assessed” according to the full bench has various shades of meaning. As laid down by the Privy Council the term “assessed” means sometimes (i) the computation of income, (ii) determination of amount of tax payable, and (iii) the whole procedure laid down in the Act for imposing the liability upon the taxpayer.
25. Ultimately, it was concluded that in the aforesaid clause the term “assessed” has been used in its widest connotation.
26. Section 206C has already been referred herein above is a machinery section. It sets out the machinery for collection of tax in advance from the specified persons by a “seller”. It provides various consequences, such as:
(1) The seller of specified goods is required to collect the tax at source from the purchaser at the time of sale at the specified rate;
(2) The seller is required to deposit the tax so collected within the specified time and also file the return of collection of tax at source within the specified period;
(3) Non collection of tax at source or late deposit of tax so collected, will entail liability to pay tax notwithstanding the such failure and also to pay simple interest @ 2% per month on the amount of such tax from the date on which such tax was collectable to the date on which the tax was actually paid.
27. The expression “assessed” used in Section 206C evidently has not been used in the sense of computation of income but has been used in the sense of either determination of the amount of tax payable or the whole procedure laid down in the Act for imposing the liability upon the tax payer.
28. Reference can be made to a judgment of the Apex Court in Central Provinces Manganese Ore Co. Ltd. Vs. CIT (1986) 160 ITR 961 wherein also the above phrase was up for consideration with regard to the question of maintainability of an appeal in respect of an order passed under Sections 139 and 215 of the Act. The Apex Court has held as follows:-
“It is, therefore, clear that levy of penal interest under sections 139 and 215 is part of the assessment. When such penal interest is levied, the assessee is ‘assessed’, meaning thereby, he is subjected to the procedure for ascertaining and imposing liability on him. If the assessee denies his liability to be assessed under the Act, he has a right of appeal to the Appellate Assistant Commissioner against the order of assessment. Where penal interest is levied under section 215 by the order of assessment, the assessee may altogether deny his liability to pay such interest on the ground that he was not liable to pay advance tax at all or that the amount of advance tax determined by the Income-tax Officer as payable ought to be reduced. In either case, he denies his liability, wholly or partially, to be assessed. Similarly, where interest is levied under section 139 of the Act, the assessee may deny his liability to pay such interest on the ground that the return was not belated or that the penal provision was not attracted at all to his case. In such a case also, he denies his liability to be assessed to interest.”
29. In the above case, a distinction has been drawn where an assessee denies his liability to pay the interest at all and when the assessee prays for waiver of interest on one ground or the other. Where there is total denial of liability of interest and levy of interest is automatic it has been held that such an order is appealable as the assessee is “assessed” and has denied his liability to tax under the Act. Applying the principle of law as discussed herein above, an order passed under sub sections (6) (7) of section 206C asking a person (seller) to pay the tax or the interest for shortfall in deducting the tax at source or for late deposit of tax deducted at source the assessee is “assessed” and his denial amounts denial of liability to be assessed under this Act. Hence, such an order is appeal able under the aforesaid clause, notwithstanding that section 206C specifically does not find place in any of the clauses either of Section 246 or 246A of the Act.
30. More or less a similar controversy arose under the Act before the Apex Court with regard to the maintainability of the appeal against the order whereby an application for registration of Firm or declaration for continuance of registration is rejected by the Assessing Officer as time barred. There being no specific provision providing for an appeal. The different High Courts took divergent views. Various High Courts including Allahabad High Court in the case of CIT Vs. Nagarmal Bisheshar Lal (1991) 190 ITR 468 held that the order would be appeal able as it amounts the refusal of the registration of Firm. An appeal is maintainable from an order rejecting an application for registration or declaration for continuance of registration. The other view was that no such appeal is maintainable as that appeal will lie only in the cases where registration is refused for the reasons set out in Section 184 (4) or 184 (7) of the Act. The Apex Court noticed that the question is regarding ‘a right of appeal’. The view of the Allahabad High Court was upheld by the Apex Court in CIT Vs. Ashoka Engineering Co. (1992) 194 ITR 645. The Apex Court has made the following observation:
“………………….It is true that there is no inherent right of appeal to any assessee and that it has to be spelt from the words of the statute, if any, providing for an appeal. But it is an equally well-settled proposition of law that, if there is a provision conferring a right of appeal, it should be read in a reasonable, practical and liberal manner. Having considered the two alternatives which have been placed before us, we agree with the cases which have been taken the view that the cases before us can be treated as cases where the application or declaration is not in order and is consequently rejected. This construction does not place any undue strain on the language of section 185(2) or (3). ………….”
31. We are conscious of the fact that the right to file an appeal is statutory right. Unless a right of appeal is provided for specifically, no appeal can be filed. It is also equally true that while interpreting the provision dealing with the right of appeal, it should be interpreted liberally in such a manner to advance cause of justice. Take the case as it is herein, the assessee is State Government employee being the District Excise Officer. In discharge of his official duty he collected the tax at source, though according to the Income Tax Department there is a shortfall. Heavy demand running into crores has been raised. In such a situation it does not appeal to reason to deny such a person even a right of appeal. In Suran Mall Mohta & Co. Vs. A.V. Viswanatha Sastri, (1954) 26 ITR 1 the Apex Court has held absence of a provision for appeal in taxing statute may be a vitiating factor. The same principle has been reiterated in Kunnathat Thathunni Moopil Nair Vs. State of Kerala, AIR 1961 SC 552. It is equally true that absence of corrective machinery by way of appeal or revision, per se will not make a provision invalid. It will depend upon the scheme of the Act, the nature of powers vested in the authority, the effect and consequence of the order passed under the Act on the person concerned.
32. The above principle also fortifies our view.
33. The argument of the learned senior standing counsel that Section 206C does not find place in any of its clauses of sub section (1) and therefore, the appeal is not maintainable ignores the clause referred to above in Sections 246 and/or 246A of the Act. The clause referred to above does not relate to any particular section of the Act. It will be attracted subject to fulfillment of its ingredients. It is in the nature of a residuary clause and gives a right to an assessee to challenge an order by way of appeal if he is so aggrieved subject to the condition that he denies his liability to be assessed under the Act.
34. In view of the above, we do not find any error in the order of the Tribunal holding that the appeals are maintainable under Section 246 of the Income Tax Act [(now 246A (1) (a) of the Act)]. These appeals lack merit and are hereby dismissed. No order as to costs.
Order Date :- March 31 ,2011
(Prakash Krishna, J)
(F.I. Rebello, CJ)
