TMI Blog2015 (4) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of assessee. - ITA.No.1299/Hyd/2014 - - - Dated:- 27-3-2015 - Shri P.M. Jagtap And Smt. Asha Vijayaraghavan JJ. For the Appellant : Mr. P. Raviseshagiri Rao For the Respondent : Mr. Ramakrishna Bandi ORDER Per P.M. Jagtap, A.M. This appeal, which is directed against the Order of the Ld. CIT(A)-IV, Hyderabad dated 19.06.2014 whereby he rejected the application filed in the case of M/s. Suvistas Software Pvt. Ltd. (company) seeking rectification of the appellate order dated 30.11.2007, is filed before this Tribunal by Mr. R. Subba Rao, its Managing Director (appellant) and a preliminary issue that arises out of the same for our consideration is whether the same is maintainable as per the provisions of section 253 of the I.T. Act, 1961. 2. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that against the appellate order passed by the Ld. CIT(A)-IV, Hyderabad dated 30.11.2007 in the case of M/s. Suvistas Software Pvt. Ltd. (Company), appeal was preferred by Mr. R. Subba Rao, its Managing Director (appellant) and the similar preliminary issue involved therein relating to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson 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 paperbook 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 15.03.2010 filed in the office of the Chief Commissioner of Income Tax-3,Hyderabad on 19.03.2010. ******** Please refer to the above. Vide the letter cited in the reference, you have requested the Chief Commissioner of Income Tax -3, Hyderabad to compound the offence as per the provisions of section 279(2) of the Income Tax Act 1961 . In order to consider your request for compounding of offences, the tax as well as interest and penalty relating to the assessment year 2003-04 should be paid. It is verified from this office record, the tax demand of ₹ 2,32,554/- raised under section 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is a private company, the same not being in liquidation, the appellant, as a Director, cannot be said to be jointly and severally liable for the payment of any tax in relation to the said company. 15. In support of his contention raised in support of the appellant s case relying on the provision of S.179, the learned counsel for the assessee has relied on the decision of the Hon'ble Bombay High Court in the case of Union of India V/s. Manik Dattratreya Lotlikar (supra). A perusal of the decision rendered by the Hon'ble Bombay High Court in the said case however shows that the concerned priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'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 liquidation. In the present case, such situation, however, is not obtained in as much as the private company of which the appellant was a Director, is not in liquidation and the amount payable by the said company is on account of penalty which, in any case, cannot be recovered from the appellant as a director of the said company. We therefore, hold that the appellant in the present case cannot be said to be an assessee within the meaning of S.2(7) as he is not a person by whom any tax or any other sum of money is payable under the Act. 18. Having held that the appellant cannot be considered as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 right which might be exercised by any person who is liable to pay tax by any other order against which the appeal was preferred. In the case of MICO Employees Association V/s. ACIT (292 ITR 567) before the Hon'ble Karnataka High Court, there was a dispute between the MICO Employees Association and the Department regarding TDS vis- -vis service of employees and the appeal filed by the Employees Association was held to be not maintainable by the Hon'ble High Court holding that only an assessee whose liability is to pay tax in terms of an order, is provided with the right of appeal under S.253. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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