TMI Blog1957 (9) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1951-52 and 1952-53. If these foreigners were not resident in India during the accounting years, Mr. Modi was under a liability to deduct income-tax at the maximum rate from the salary paid to these employees at the time of payment by reason of section 18, sub-section 3(A). Mr. Modi failed to do so. The Income-tax Officer was of opinion that these two employees were not resident in the taxable territories and directed Mr. Modi to pay income-tax and super-tax with appropriate surcharge in the case of both these foreigners. The demand was not paid; and Mr. Modi filed two appeals one in each case to the Appellate Assistant Commissioner. These two appeals were held to be not competent on the ground that the only right of appeal that Mr. Mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of this Act, shall, at the time of payment, unless he is himself liable to pay income-tax thereon as an agent, deduct income-tax at the maximum rate. Then sub-clause (6) states: All sums deducted in accordance with the provisions of this section shall be paid within the prescribed time by the person making the deduction to the credit of the Central Government or as the Central Board of Revenue directs. Sub-clause (7) provides: If any such person does not deduct or after deducting fails to pay the tax as required by or under this section, he, and in the cases specified in sub-sections (3D) and (3E) the company of which he is the principal officer shall, without prejudice to any other consequences which he or it ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government, and sub-section (5) of that section provides that this payment shall be treated as a payment of income-tax or super-tax on behalf of the person from whose income the deduction was made. Then, when we come to sub-section (7), it deals with two cases: (1) where an employer fails to deduct and (2) where after deducting he fails to pay the tax to the Central Government; and in either case the sub-section provides that he will be deemed to be an assessee in default in respect of the tax. Now, before a person can fall in the first category and it can be said of him that he has failed to deduct, it must necessarily be established that he was liable to deduct. In other words, it must be determined whether the employee from whos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 30(1A) whilst the contention on behalf of the applicant before us is that he has a right of appeal under section 30(1) as he denies his liability to be assessed. Now, section 30(1A) is in these terms: Any person having, in accordance with the provision of sub- section (3A), (3B) or (3C) of section 18, read with sub-section (6) of that section, deducted and paid tax in respect of any sum chargeable under this Act other than interest who denies his liability to make such deduction may appeal to the Appellate Assistant Commissioner to be declared not liable to make such deduction. This sub-section in terms refers to cases where a deduction has been made and the amount deducted has been paid by way of tax and cannot possibly h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with such tax, he has a right of appeal under section 30(1). Mr. Amin for the Department contends that the applicant before us is not assessed because he says--and this is the view that found favour with the Tribunal--that the applicant is deemed to be an assessee in default under section 18(7). Mr. Amin contends that an assessee and an assessee in default are two different concepts. What the applicant is deemed to be by virtue of section 18(7) is an assessee in default ; but he says that he is not deemed to be an assessee at all. Now, an assessee in default is referred to in section 45 of the Income-tax Act; and it is quite plain that one has to be an assessee before he can be an assessee in default, because an assessee in defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st of April, 1952, and at the relevant period or at any rate part of it, there was no obligation at all to deduct supertax; and yet the applicant cannot agitate the question of his liability to deduct super-tax at any place anywhere, if the interpretation that Mr. Amin wants us to put upon section 18(7) is the correct interpretation. Therefore, taking all these matters into account, it appears to us that the applicant before us is a person denying his liability to be assessed under the Act, and is, therefore, entitled to appeal against an order made under section 18(7). One of the grounds in such an appeal can be, as it was in this case, that there was no liability initially to deduct tax, because the employee was resident within juri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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