TMI Blog2005 (8) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... does not figure in the list of appeals as indicated in section 246 of the Income-tax Act, 1961. 2. On the facts and in the circumstances of the case the CIT(A) erred in holding that appeals lie against order under section 206C under the provisions of section 246(1)(a) of the Income-tax Act, 1961." Through these grounds, a technical question has been raised by the revenue that whether an order passed under section 206C is appealable under section 246 of Income-tax Act before the first appellate authority. According to the argument of the ld. D.R, the provisions of section 246 of Income-tax Act do not subscribe an appeal before CIT(A). According to him, no appeal lies against an order passed under section 206C before CIT(A). He has argued that the only option available to a tax payer under such circumstances is under section 264 of the Income-tax Act. 4. On behalf of the assessee, the learned A.R. has mentioned that this issue was dealt with in detail by the ld. CIT(A) after considering section 246(1)(a) of the Income-tax Act. He has also mentioned that though in the remand report the Assessing Officer himself has dropped this objection as is clear vide para 5 of the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is clear that that section 206C creates a liability on the seller being a tax payer and also create a charge if an assessee is held to be liable to pay the tax which he failed to collect in accordance with the provisions of section 206C. So a conjoint reading of sections 206C and 246(1)(a), it emerges that in case of denial of liability, an assessee has a right of appeal. It is also equally a well-settled proposition of law that if there is any provision conferring a right of appeal, it should be read in a reasonable, practical and liberal manner. No doubt, an order under section 206C does not figure-in the list of appealable orders referred in section 246 of the Income-tax Act, however, it must be borne in mind that clause (a) of sub-section (1) covers such circumstances under which an appeal lies where the liability to be assessed under the Act is being denied. So, it is obvious that mere non-mentioning of section 206C in section 246 by itself do not deprive an appellant a right of appeal, hence we are not in agreement with the argument of the ld. D.R. in this regard. An argument has also been raised that in the strict sense, the appellant is not an "assessee" as no assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Act is judicially exercised. We, therefore, hold that such an assessee has a right of appeal under section 30 of the Act against the order of the Income-tax Officer assessing the association of members instead of the members thereof individually unquote". The Hon'ble Court in the said order has further observed that the first appellate authority has plenary powers in disposing of an appeal, the scope of his powers is co-terminus with that of the ITO. He can do what the ITO can do and can also direct him to do what he has failed to do. These observations thus squarely support the view taken by the ld. CIT(A). Next, we have found that an interesting issue was raised before the Hon'ble Bombay High Court in respect of right of appeal against quantum of penal interest charged. A fine distinction has been made by the Hon'ble Court in the case of CIT v. Prakash Cotton Mills (P.) Ltd [1991] 188 ITR 713 (Bom.) as follows:- "An assessee has no right of appeal to the Appellate Assistant Commissioner merely against the quantum of penal interest charged, that it to say, merely for the purpose of raising a contention that the interest charged is excessive or should be reduced or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other mode whichever is earlier. It was found that the tax collector i.e., the assessee did not follow the proper method for collection of tax from the buyer. The explanation of the assessee was that the excise duties were paid by the buyers to the State Government directly, hence the assessee had not collected the income-tax on excise component. It was also explained that the excise duty did not figure in the purchase bills issued. According to the Assessing Officer, the excise duty payable by the buyer form part of the purchase price. So, he has held that there was short deduction. He has computed the short collection of tax at source plus interest thereon and the said tax liability was demanded. 7. The first appellate authority has examined factual as well as legal aspect in detail and after an elaborate discussion, arrived at the conclusion that the excise duty was paid directly by the buyers, hence it was not the subject-matter of collection under section 206C. Few letters of CBDT dated 28-6-1995 and 4-9-1995 have also been referred. He has arrived at a conclusion that the tax, if any collectible, has to be worked out with reference to the debit actually made by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erges from a letter issued by the Chief Commissioner of Income-tax, Pune dated 21-9-1995, it was clarified that wherever the excise duty is paid by the distributors in Maharashtra, they should specify in the certificate of collection of tax at source in Form No. 27D issued to the distributors and in their biannual return submitted to ITO (TDS) in Form No.27EA in respect of the sales made by them and directed to indicate in the said Form; 1. the excise duty has been paid by the distributors in Maharashtra and 2. the excise duty does not figure in the purchase bills issued by them. The said letter has further clarified that once the manufacturer makes the declaration as prescribed above, they will not be liable to collect under section 206C on the excise components. A certificate has also been issued in this regard by an Inspector, State Excise, dated 17-9-1997 certifying that C.L.-II licencee pays excise duty on country liquor directly in the treasury before taking delivery of country liquor from the manufacturer. He has certified that this procedure has been implemented since 25-10-1993. Before us, in the compilation, a few correspondence in this regard have also been placed. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 44AC and nothing is connected with the section under consideration. Few case laws have also been relied g upon namely, Bharat Prasad Chaudhary/Shambu Prasad v. Union of India [1998] 229 ITR 363 (Pat.), Ramjee Prasad Sahu v. Union of India [1993] 202 ITR 800 (Pat.) and Union of India v. A. Sanyasi Rao [1996] 219 ITR 330 (SC). In one of the decision, the observation of the Hon'ble Court was that quote "In the above view of the matter, since the sellers are entitled to receive only the cost price from the retail vendors therefore neither it is incumbent nor permissible on their part to collect any amount by way of income-tax with reference to the excise duty payable by the buyers to the Government as a measure of tax or consideration for parting with the exclusive privilege. They will be statutorily liable to collect an amount as income-tax with reference to the cost price only." From the aforesaid decision, it is evident that no tax is collectible at source in respect of excise duty paid by the buyer. It is worth mentioning at this juncture that various country liquor vendors holding C.L.-II Licence filed a writ petition before the Hon'ble Nagpur Bench of Bombay High Court chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in whose case the assessments have been finalized to the date of their assessment." In respect of this ground, we have perused the impugned orders and heard both the sides. The ld. CIT(A) has recorded that the assessee has provided assessment details such as GIR Nos. in respect of 22 buyers only. It has also been mentioned by the ld. CIT(A) that the Assessing Officer has verified those details and confirmed assessment position only in respect of 12 buyers/distributors. Considering this fact, the ld. CIT(A) has directed that wherever assessment have become final and the resulted liability of the buyers stand discharged, then there could not be any liability under section 206C(6) on the appellant. So, he has directed to take into account the assessee's sales in relation to which the assessments of the buyers have become final and restrict the levy of interest with reference to the actual liability as per the assessed income of the distributors. He has also directed to calculate interest payable from the date of which deduction should have been made and also to calculate the interest up to the date when the distributors have actually discharged from liabilities. For reference, para ..... X X X X Extracts X X X X X X X X Extracts X X X X
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