TMI Blog1996 (9) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... d by limitation under section 153 of the Act. The Appellate Assistant Commissioner dismissed the appeals in limine on the ground that no appeal lay under section 246 of the Act against an order passed under section 143(1). The assessee's plea was that, since she denied her liability to be assessed under the Act, the appeals were maintainable under section 246(1)(c) of the Act. The Income-tax Appellate Tribunal (for short, " the Tribunal ") in second appeals filed by the assessee upheld the view taken by the first appellate authority. Neither the Appellate Assistant Commissioner nor the Tribunal felt inclined to look into the various grounds raised by the assessee challenging the orders passed under section 143(1) of the Act. At the instance of the assessee, the following question of law has been referred to this court for opinion : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no appeal lay against an order of assessment passed under section 143(1) even though, according to the assessee, she was denying her liability to be assessed ? " Shri N. K. Sud, advocate, learned counsel for the assessee, has argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been specifically mentioned in the list of orders mentioned in sub-section (1) of section 246 of the Act. It is, at the same time, correct that, in clause (c), specific orders have been mentioned against which an assessee could file an appeal. One such order, as seen earlier, arises from a situation where the assessee denied his liability to be assessed under the Act. It is correct that the assessee had voluntarily filed returns for the three assessment years and thereupon orders under section 143(1) were passed, accepting the income declared in each year. So far, there was no denial of liability by the assessee. The stage of denial appeared thereafter. The assessee challenged the orders in appeals filed before the Appellate Assistant Commissioner on two grounds, namely, the invalidity of the returns and the expiry of the period of limitation. The question which arises is whether the assessee, who denied her liability to be assessed under the Act after she had voluntarily filed returns of income for the three years and the returns so filed had been accepted and income declared therein was charged to tax, could challenge the order subsequently. Before an order under section 143(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under (headnote) : " The words ' denying his liability to be assessed under this Act ' in section 30(1) are not confined to the denial of liability before the Income-tax Officer but include his denial in the appeal filed by him. There is nothing in the Indian Income-tax Act to justify the view that it is incumbent upon the assessee to deny his liability to assessment before the Income-tax Officer to invest him with a right of appeal under section 30 of the Act. The absence of a dispute by an assessee as to his liability of being assessed under the Act where he had an opportunity of raising it may be a ground for not entertaining it in appeal but would not take away the right of appeal that is granted to him in express terms by statute or for saying that in such a case there can be no proceedings in law under section 31 of the Indian Income-tax Act." The Allahabad High Court had also an occasion to examine the question regarding denial of liability in Mohan Lal Khemka v. CIT [1971] 81 ITR 89. R. S. Pathak J. (as his Lordship then was), took the view that a provision granting the right of appeal to the subject should be construed liberally. It is a valuable right. In that cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had no right to deny her liability to be assessed under the Act once she had voluntarily submitted the returns and was assessed accordingly. A question about the denial of liability to be assessed came up for examination before the Gujarat High Court also in Mandal Ginning and Pressing Co. Ltd. v. CIT [1973] 90 ITR 332. That was a case where an order of rectification was passed under section 35(1) of the Indian Income-tax Act, 1922. Assessment made under section 23 was rectified. It was held by Bhagwati C. J. (as his Lordship then was) that no appeal lay against an order of rectification. It was observed that when an assessee claims that he is not liable to be proceeded against under section 35(1), he is not denying his liability to be assessed under the Act. His objection is only against a proceeding for assessment under the particular provision of the Act. A right of appeal is given under section 30(1) of the Indian Income-tax Act, 1922, against various orders and each of the orders against which a right of appeal is conferred is described by reference to the source of power under which it is made. An appeal lies from an assessment made under section 23. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act. This would enable her to acquire a right to appeal under clause (c) of section 246(1) of the Act. How far the assessee would succeed in her plea, that the returns filed by her were invalid and non est in the eye of law and that the orders under section 143(1) were barred by limitation, is a matter which did require examination separately. These two grounds raised by the assessee in her appeal before the Appellate Assistant Commissioner were sufficient to give rise to a plea of denial of liability to be assessed under the Act. The assessee's pleas regarding the invalidity of the returns and about the orders being time-barred may or may not ultimately find favour with the appellate authority but these pleas did constitute a basis for denial of liability to be assessed. Since there is a specific and distinct provision for an appeal in a case of denial of liability in clause (c) of section 246(1), the answer to the question of law, referred to this court for opinion, is in the negative. Therefore, the question is answered in favour of the assessee and against the Revenue. The assessee's appeals were maintainable under clause (c) of section 246(1) of the Act and have to be h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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