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Mr. R. Subba Rao Versus The Income Tax Officer,

2015 (4) TMI 434 - ITAT HYDERABAD

Penalty u/s 271(1)(c) - application filed in the case of M/s. Suvistas Software Pvt. Ltd. (company) seeking rectification of the appellate order dismissed - maintainability as per the provisions of section 253 of the I.T. Act, 1961 - Held that:- The term ‘assessee aggrieved’ used in S.253(1), being a person competent to file an appeal before the Tribunal, is only the person who is an aggrieved party liable to pay tax in terms of the order against which the appeal is to be preferred. As already d .....

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to be dismissed in limine. We accordingly dismiss this appeal holding the same to be not maintainable. - Decided 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 o .....

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ate 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 the maintainability of the appeal has already been decided by the Tribunal vide its order dated 13.02.2015 passed in ITA.No.1475/Hyd/2014 holding that the appellant was not entitled to file appeal against the impugned order passed by th .....

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limited company, confirming the penalty of ₹ 2,37,039 imposed by the Assessing Officer under S.271(1)(c) is impugned in the present appeal filed by Shri R.Subba Rao, former Managing Director of the said company, in his individual capacity, and the issue that arises for our consideration is whether the said appeal is maintainable or not. 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 Tribunal against .....

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under this Act has been taken for the assessment 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 definitio .....

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e 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 p .....

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ediately and file the chalans. If the amounts were already paid, please produce the chalans. Yours faithfully, ........ 12. A perusal of the above letter dated 4.8.2011 issued by the Assessing Officer clearly shows that there is nothing in the said letter to show that the amount of penalty in question payable by the company is sought to be recovered by the Assessing Officer from the appellant. The said letter is issued by the Assessing Officer in response to the request made by the appellant to .....

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in question outstanding in the name of the company is payable by the appellant. 13. Relying on the aforesaid letter dated 4.8.2011 issued by the Assessing Officer, the learned counsel for the appellant has also contended that prosecution proceedings under S.276C of the Act having been initiated against the appellant as a consequence of imposition of penalty under S.271(1)(c), the appellant has to be treated as an assessee within the meaning of clause (a) of S.2(7) being a person in respect of w .....

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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 r .....

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upport 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 private company of which the assessee was director was already in liquidation and the issue involved bef .....

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of a private company are liable for tax due of the company in respect of assessment years commencing from 1st April, 1962. Although it was also held by the Hon'ble High Court that the Directors are also liable for penalty, interest and recovery charges, this proposition is subsequently held to be not a good law by the Hon'ble Bombay High Court in the case of Dinesh T. Tailor V/s.TRO (326 ITR 85), wherein it was held that S.179 imposes joint and several liability upon a Director of a priv .....

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on'ble Gujarat High Court in the case of Dinesh T. Tailor V/s. TRO (supra) relied on the definition of the term tax given in S.2(43) which reads as under- S.2 in this Act, unless the 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-ta .....

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nd 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 com .....

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assessee within the meaning of S.2(7), it follows that the question of treating the appellant as an assessee aggrieved , as envisaged under S.253, does not arise. However, since the learned counsel for the appellant has cited certain judicial pronouncements to support his contentions raised relying on the provisions of S.253, and there are also other judicial pronouncements explaining the scope and meaning of the term assessee aggrieved , we consider it necessary to discuss and deal with the sam .....

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a person who has become liable to pay penalty, the imposition of which is confirmed by the learned CIT(A) by his impugned order and therefore, he cannot exercise the right of appeal to the Tribunal. 19. In the case of Gokuldas V/s. Kikabhai Abdulali &Ors (33 ITR 94) and Maersk B.V. V/s. Deputy Director of Income-tax International Taxation (264 CTR (Bom) 26), the issue relating to maintainability of appeal filed before the Tribunal was involved in the context of partnership firms and their pa .....

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ther 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. A .....

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ch 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-à-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 assess .....

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