TMI Blog2006 (7) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... him. The certificate in question is issued by a chartered accountant under CBDT Circular No. 759 as modified by CBDT Circular No. 10/2002. 3. We have heard the rival contentions on this issue. We have also perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 4. In view of the provisions of section 195, it is obligatory for a person making any payments to any non-residents that income tax thereon in connection with the same is deducted at source. It was with a view to ensure compliance with this requirement that the Reserve Bank of India requirement was to obtain a 'No Objection Certificate' from the Assessing Officer for each such remittance, so as to ensure that all remittances were examined by the Assessing Officers. This procedure resulted in inordinate delays in making the remittances because on many occasions the process of determining tax deductions by the Assessing Officer took long time. It was in this backdrop and in the light of, to our mind, commercial realities, as also increased measure of faith in taxpayers and professionals, that the system was simplified ir 1997. The Central Board of Direct Taxes ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the no tax deduction at source is warranted or tax is required to be deducted at a certain rate, he can approach an independent chartered accountant. for certifying, in the prescribed format, the rate at which tax is to be deducted or that tax is not to be deducted, and make the remittance on the basis of such a certificate. Even this remittance on the basis of the chartered accountant's certificate is at assessee's own risk of consequences which follow the short deduction or non-deduction of tax at source. The assessee has to give an undertaking to that effect. However, as long as assessee's stand is at least supported by a chartered accountant's certificate, the assessee is at least allowed to make the remittance on that basis. Contrast this with the old procedure of prior certification of withholding tax requirement by the Assessing Officer, in which, the assessee has to first pay the tax and then make the remittance. Under the revised scheme, the assessee can, subject to the support of a chartered accountant's certificate and furnishing of an undertaking extracted earlier in this order, first make the remittance and the finalization of withholding tax liability follows. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of sections 195 and 200, 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 Commissioner (Appeals) to be declared not liable to make such deduction", but to deny a legal liability, there has to be a legal liability first. The legal remedies cannot be sought in vacuum or on the basis of an opinion held by a person other than the authority concerned. If X is someone's Assessing Officer (TDS), it is X's opinion about that person's withholding tax liability, which alone can give rise to a cause of action for appeal. What an independent professional may have to say on that issue mayor may not be relevant for determining the withholding tax liability, but it is certainly not decisive for the purpose of giving rise to cause of action for appeal. The certificates issued by the chartered accountants have no role to play so far as determination of withholding tax liability is concerned. These certificate cannot, and do not, impose any tax deduction liability on the assessee-tax deductors. The only role these certificates play is that when an assessee has to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) dismissed the appeals filed by the assessee on the ground that these appeals are infructuous since the Assessing Officer has not passed any order against which the assessee can be said to be aggrieved. Not satisfied with the stand of the Commissioner (Appeals), the assessee carried the matter in further appeal before this Tribunal. As noted by the Tribunal itself, it was a case in which "the assessee deducted tax at source at the normal rate which is agreeable to the Assessing Officer and raised a dispute in the letter addressed to the Assessing Officer seeking no objection certificate". On these facts, a co-ordinate Bench of this Tribunal was of the considered view that "a plain reading of sections 248, 249(2)(a) and 251(1)(c) of the Act shows that the right of filing an appeal before the CIT(A) is not saddled with a pre-condition of obtaining an order from the Assessing Officer rejecting the claim of the assessee". "In other words", observed the co-ordinate Bench, "a formal order of an Assessing Officer is not required to present an appeal under section 248/249 of the Income-tax Act". We quite agree with the co-ordinate Bench but then we are also alive to the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act in admitting an appeal against certificate issued by a firm of chartered accountants. In our considered view, he should have rejected the appeals as non-maintainable and should have given the liberty to the assessee to approach the Assessing Officer (TDS) for seeking determination of withholding tax liability of the assessee and to follow the grievance redressal mechanism in case he is aggrieved of the stand of the Assessing Officer. That is the proper course of action. It is, in our considered, also necessary because appeal to the Commissioner (Appeals) is only one of the courses of grievance redressal mechanism under the Act. An assessee may also approach the Administrative Commissioner, if so advise, under section 264, but then such a course of action can only be followed when there is an 'order' by any authority subordinate to the Commissioner. Keeping all these things in mind, as also entirety of the case, we consider it fit and proper to hold that no appeal to Commissioner (Appeals) is maintainable against the certificate issued by a chartered accountant under CBDT Circular No.759. The Commissioner (Appeals) should have dismissed the appeals on this ground alone. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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