TMI Blog2015 (3) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be not maintainable. - Decided against assessee. - ITA No.1475/Hyd/2014 - - - Dated:- 13-2-2015 - Shri D.Manmohan And Shri P.M.Jagtap JJ For the Appellant : Shri S.Rama Rao For the Respondent : Shri Rajat Mitra DR ORDER Per P.M.Jagtap, Accountant Member : This appeal against the order of the learned Commissioner of Income-tax (Appeals) IV, Hyderabad dated 30.11.2007 passed in the case of M/s. Suvista Software Private Limited (Company) is filed before this Tribunal by Shri R.Subba Rao, its former Managing Director (Appellant), and the preliminary issue that arises out of the same for our consideration is whether the same is maintainable as per the provisions of S.253. 2. The material facts of the case relevant to this preliminary issue are as follows: The Company in the present case was incorporated on 24th May, 2000 and the Appellant was inducted therein as an Additional Director on 14th August, 2000. Thereafter on 10th July, 2001, the Appellant was appointed as Managing Director and he continued to hold that position till his resignation was accepted by the Board on 23rd December, 2002. He also resigned as a Director of the Company subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity in accordance with law. Thereafter, the Appellant has filed the present appeal in his individual capacity before the Tribunal against the order of the learned CIT(A) passed in the case/name of the Company, and the question that now arises is whether the same is maintainable. 5. The learned counsel for the assessee submitted that as per the provisions of S.253, any assessee aggrieved inter alia by the order of the learned CIT(A) passed under S.250 can appeal to the Appellate Tribunal against such order. He invited our attention to the definition of the assessee given in S.2(7) of the Act and contended that any person in respect of whom any proceedings under the Act have been taken could be called as an assessee. He submitted that the Assessing Officer in the present case has initiated prosecution proceedings under S.276C of the Act in respect of the Appellant, i.e. Shri R. Subba Rao by issuance of a show cause notice vide letter date 30th March,2009 and the said proceedings are presently pending. He submitted that when the appellant sought for compounding of the offence, by filing a letter dated 15.3.2010, the Assessing Officer vide letter dated 4.8.2011 required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) of the Act, the assessee is defined to mean a person by whom any tax or any other sum of money is payable under this Act, and includes inter alia 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. He contended that the provisions of S.179 relied upon by the learned counsel for the assessee in this regard deal with the liability of Directors of private company in liquidation and since the assesseecompany in the present case is not in liquidation, the appellant cannot be said to be jointly and severally liable for the payment of tax due from the Company for the year under consideration. He also contended that no proceedings under the Act have been taken in respect of the appellant for the assessment of his income or of the income of any other person in respect of which he is assessable, and therefore, he cannot be treated as an assessee, even as per clause (a) of S.2(7) of the Act. 9. The Learned Departmental Representative invited our attention to the letter dated 4.8.2011 issued by the Assessing Officer (copy at page 4 of the paper-book) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment of his income or assessment of fringe benefits 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; 11. Relying on the above definition, the learned counsel for the appellant has contended that the appellant in the present case is to be considered as an assessee, being a person by whom any tax or any other sum of money is payable under the Act. According to him, the penalty amount in question imposed by the Assessing Officer and confirmed by the learned CIT(A) by the impugned order is payable by the assessee as per the letter dated 4.8.2011 issued by the Assessing Officer. A copy of the said letter is placed at page No.4 of the paper-book and the contents thereof are extracted below- ...... Sir, Sub: Prosecution under section 276C in the case of M/s. Suvistas Software Pvt Ltd- assessment year -2003- 04- Compounding -Reg. Ref: Your letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the appellant as well. As per clause (a) of S.2(7), an assessee is defined to mean a person in respect of whom any proceeding under the Act has been taken for the assessment of his income or of the assessment of any other person in respect of which he is assessable and the proceedings initiated against the appellant for prosecution under S.276C of the Act, not being the proceedings taken for the assessment of his income or of the income of any other person in respect of which he is assessable, the appellant, in our opinion, cannot be treated as an assessee, even as per clause (a) of subs-section (7) of S.2 of the Act. 14. The learned counsel for the assessee has relied on the provisions of S.179 to contend that the appellant being a person, who was the director of a private company during the relevant previous year, is jointly and severally liable for the payment of tax relating to the said company. As rightly contended by the Learned Departmental Representative, the caption of the S.179 however, clearly indicates that the provisions of S.179 deal with the liability of directors of a private company in liquidation and in the present case, although the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he context otherwise requires- . (43) tax in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date and in relation to the assessment year commencing on the 1st day of April, 2006, and any subsequent year includes the fringe benefit tax payable under s.115WA. A reference was also made by the Hon'ble Bombay High Court and the Hon'ble Gujarat High Court to other provisions of the Act such as S.170, S.177, S.188A, S.189, S.221(1) and S.226,wherein a distinction has been clearly made by the Parliament between a tax and a penalty. It was held that the expression tax due used in S.179, thus, cannot comprehend within the meaning of that expression liability to pay penalty that might have been imposed on the company. 17. It is thus clear that by virtue of S.179(1), a Director of a private company can be jointly and severally liable for the payment of tax only and that too, only in case that company goes into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Bombay High Court that the partner(s) are entitled to file appeals before the Tribunal against the orders passed in the case of firm, as they are liable or at least potentially liable to pay taxes and other sums payable by the firm. As already discussed by us, there is no provision in the Act by virtue of which the appellant, as a Director, can be held liable for any amount, especially, the amount of penalty payable by the company and he, therefore, cannot be treated as an assessee aggrieved by the order of the learned CIT(A) confirming the penalty imposed by the Assessing Officer under S.271(1)(c) on the company, making him entitled to file an appeal under S.253. 20. In the case of CIT V/s. Ambala Flour Mills (78 ITR 256), it was held by the Hon'ble Supreme Court that if a person is fastened with the liability to tax, he has a right of appeal so as to challenge the liability with which he is sought to be fastened. In the case of CITV/s. N.Ch.R.Row and Co. (44 ITR 557), Hon'ble Calcutta High Court held that the right to appeal before the Tribunal from an order passed by the AAC is not confined technically to the party who is a party to the appeal but is a much wider r ..... 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