M/s R. Subbarao (former MD as aggrieved person), Hyderabad V. ITO., Ward-3(4), Hyderabad

ITA 1475/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87314 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-01-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 11-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: S RAMA RAO
• Keywords: Right to appeal; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI D.MANMOHAN, HONBLE VICE PRESIDENT AND SHRI P.M.JAGTAP, ACCOUNTANT MEMBER ITA NO.1475/HYD/2014 : ASSESSMENT YEAR 2003 - 04 SHRI R.SUBBA RAO , FORMER M ANAGING DIRECTOR O F M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD (PAN ACGPR 6994 J) V/S. INCOME TAX OFFICER, WARD 3(4), HYDERABAD ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RE SPONDENT BY : SHRI RAJAT MITRA DR DATE OF HEARING 23 . 1 .201 5 DATE OF PRONOUNCEMENT 13.02.2015 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IV, HYDERABAD DATED 30.11.2007 PASSED IN THE CA S E OF M/S. SUVISTA SOFTW A RE PRIVATE LIMI TE D ( COMPANY ) IS FILED BEFORE TH IS TRIBUNAL BY SHRI R.SUBBA RAO, ITS FORMER MAN A GING DIRECTOR ( APPELLANT ) , AND THE P RE LIMIN A RY ISSUE THAT ARISES OUT OF THE SAME FOR OUR CON S I DE RATION IS WH E TH E R THE SAME IS MAINTA I NABLE AS PER THE P R O VI SION S OF S.253. 2. THE M ATERIAL FACTS OF THE CA S E RELEVANT TO THIS PRELIMINARY ISSUE ARE AS FOLLO W S: THE COMPANY IN THE PRESENT CASE WAS IN C ORPORATED ON 24 TH MAY, 2000 AND TH E APPELLANT WAS IN D U C TED THEREIN AS AN ADDITIONAL D IRECTOR ON 14 TH AUGUST, 2000. TH E R E AFTER ON 10 TH J ULY, 2001, THE APPELLANT WAS APPO I N TE D AS M AN A GIN G DIR E CTOR AND HE CONTINUED TO HOL D THAT PO S ITION TILL HIS RESIGN A TION I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 2 WAS AC C EPTED BY THE BOARD ON 23 RD D E CEMBER, 2002. HE ALSO RESIGN E D AS A DI R ECTOR OF TH E COMPANY SUBSEQUENTLY ON 2 ND JUNE, 2005. ME A NWHILE, TH E RETURN OF INCOME OF TH E COMPANY, FILED FOR ASSESSMENT YEAR 2003 - 04 ON 1.12.2003 , WAS SIGNED BY THE APPELLANT IN HIS CAPACITY AS A DI RE CTOR. TH E ASSESSMENT OF THE COMPANY FOR ASSE SSMENT YEAR 2003 - 04 WAS COMPLE T ED BY THE ASSESSING OFFICER ON 20 TH FEBRUARY, 2006 AND AN ORDER IMPOSING PENALTY UN D ER S .271 ( 1 )( C ) AMOUNTING TO RS.2, 3 7,039 WAS ALSO PASSE D BY HIM ON 30 TH AUGU S T, 2006. ALTHOUGH NO APPEAL APPARENTLY WAS FILED BY THE COMPANY AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UN D ER S.143(3), AN APPEAL AGAIN S T THE ORD E R IMPO S IN G P E N A LTY UN D ER S.271(1)(C) WAS FILED BY IT B E FORE THE LEARNED CIT(A) ON 29 TH S E P T EMBER, 20 0 6. TH E LEARNED CIT(A) VIDE HIS AP P ELL A TE ORDER DATED 30 TH N OVEMB E R, 2007 DISMI S S ED THE SAID APPEAL AND CON F IRM E D THE PENALTY IMPOSED BY THE ASSESSING OFFICER UN D ER S.271(1)(C). THE COMPANY DID NO T FIL E ANY APPEAL AGAINST THE SAID ORDER O F THE LEARNED CIT(A) BEFORE THE TRIBUNAL . 3. SUBSEQUENTLY , ON 30 TH MARCH , 2009, A SHOW - CAUSE NOTICE WAS ISSUED BY THE ASSESSING OFFICER , PROPOSING TO L AUN C H PROSECUTION PROCEEDINGS AGAINST THE APPELLANT UN D ER S.276 C OF THE ACT. WHEN THE APPELLANT APPROACHED THE C ONCERNED CHIEF COMMISSIONER OF INCOME - TAX TO COMPOUND THE OFFENCE AS PER THE PROVISION S OF S.279(2) OF THE ACT, HE WAS INFORMED THAT HIS REQUEST COULD BE CON S ID ERE D ONLY AFTER THE PAYM E N T OF TAX AS WELL AS THE INTEREST AND PENALTY PAYABLE BY THE COMPANY RELATING TO ASSESSMENT YEAR 2003 - 04. THE APPELLANT , THEREFORE, WAS REQUESTED TO P AY THE SE OUTSTANDING AMOUNTS AND P R O D U C E THE CHALLANS. 4. THE APPELLANT CLAIMED TO HAVE OBTAINED THER E AFTER COP Y OF THE O R DER PASSED BY THE ASSESSING OFFICER IMPO SI N G PENALTY UN DE R I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 3 S.271(1)(C) AS WELL AS THE O R DER OF THE LEARNED CIT(A) CONFIRMIN G TH E SAID PENALTY AND FOUND THAT TH E L E VY OF PENALTY UN D ER S.271(1)(C) ITSELF WAS NO T JU S TIFIABLE. HE THEREFORE, FIL E D AN APPEAL ON BEHALF O F THE COMPANY BEFORE THE TRIBUNAL AGAINST THE O R DER OF THE LEARNED CIT(A) CON F IRMIN G THE L EVY OF PE N AL T Y UN D ER S.271(1 ) (C). THE S AID APPEAL, HO W EVER, WAS DISMISSED BY THE T RI BU NAL HOL D IN G TH E SAME TO BE NO T MAINTAINABLE ON TH E GROUN D TH A T THE APPELL A N T WAS NO T AUTHO R ISED TO FIL E THE APPEAL IN THE NAME OF THE COMPANY . IT WAS O B S ERVED BY THE TRIBUNAL TH A T IF AT ALL THE APPELLANT IS AGGRIEVED IN HIS IN D IVIDUAL CAPACITY, HE COULD EXERCISE THE RIGHT TO FILE THE APPEAL BEFORE THE TRIBUNAL IN HIS INDIVIDUAL C APACITY IN ACCORDANCE WITH LAW. TH E REAFTER, THE APPELLANT HAS FIL E D THE PRESENT APPEAL IN HIS INDIVIDUAL CAP ACITY B E FORE T H E TRIBUNAL AGAINST THE ORD E R OF THE LEARNED CIT(A) PASSED IN THE CA S E/NAME OF THE COMPANY , AND THE QUESTION THAT NOW ARI S ES IS WHE T H E R THE SAME IS MAINTAINABLE. 5. THE L EARNED COUNSEL FOR THE ASSESSEE SU BM I T TED T HAT AS PER THE PROVIS I ONS OF S.253, ANY ASSESSEE AGGRI E VED INTER ALIA BY THE ORDER OF THE LEARNED CIT(A) PASSED UNDER S.250 CAN APPEAL TO THE APPELLATE TRIBUNAL AGAINST SUCH ORDER. HE INVITED OUR ATTENTION TO THE DEFINITION OF THE ASSESSEE GIVEN IN S.2(7) OF THE A C T AND CONTEN DED THAT ANY PERSON IN RESPECT OF WHOM ANY PROCEEDINGS UN D ER THE ACT HAVE BEEN TAKEN COULD B E CALLED AS AN ASSESSEE. HE SUBMI T TED THAT T H E ASSESSING OFFICER IN THE PR E SEN T CA S E HAS IN I TIATED PROSECU T ION PROCEED IN GS UN DE R S.276C OF THE AC T IN RESPE C T OF THE APPELLANT , I.E. SHRI R. SUBB A R A O BY ISSUANCE OF A SHOW CAU S E NOTICE VIDE LETTER DATE 30 TH MAR C H,2009 AND THE SAID PROCE E DIN G S ARE PRESENTLY PENDING. HE SUBMI TT ED T HAT WHEN THE APPE L LA N T SOUGHT FOR COMPOUNDING O F THE OFFENCE, BY FILIN G A LETTER DATED 15.3.2010, THE ASSESSING OFFICER VI D E LETTER D ATED 4.8.2011 I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 4 R E QUIRED THE ASSESSEE TO MAKE THE PAYMENT OF PENALTY IMPOSED UN D ER S.271(1)(C) AMOUNTING TO RS .2,37,039. HE CONTEND E D THAT THE PROCE E DIN G S F OR COLLECTION OF PENALTY AND THE PROC EEDINGS IN CONSEQUENCE TO FILING OF THE COMPOUNDING APPLI C A T ION THUS ARE ALSO PENDING AND THE APPELLANT TH E R EF ORE IS REQUIRED TO BE CONSIDERED AS AN ASSESSEE WITHIN THE MEANING OF S.2(7) OF THE AC T. 6. THE LEARNED COUNSEL FOR THE A PPELLANT FURTHER CONT ENDED THAT THE APPELLANT WAS A DIRECTOR OF THE ASSESSEE COMPANY AT THE RELEVANT TIME AND THE SAID COMPANY BEING A PRIVATE LIMI T ED C OMPANY , HE W OULD BE LIABLE JOINTLY AND SEVERALLY FOR THE PAYM E N T O F TAX DUE BY THE COM PA NY AS P E R THE P R OVIS I ONS OF S.179 . HE CONTENDED THAT THE APPELLANT IS TH E R E FORE, REQUIRED TO BE TREATED AS AN ASSESSEE AS PER CLAUSE (C) OF S.2(7), B E IN G A PERSON WHO I S DEEM E D TO BE AN ASSESSEE IN D EF AULT. IN SUPPO R T OF THIS CONTENTION, HE RELI E D ON TH E DECISION OF TH E HON'BLE BOMBAY H IGH COURT IN THE CASE OF UNION OF I NDIA AND O THERS V/S. MANIK DATTATREYA LOTLIKAR ( 172 ITR 1 ) . 7. THE LEARNED C OUN S EL FOR TH E APPELLANT FUR T HER SU B MI T TED THAT THE PROCEE D INGS UN D ER S.276C OF THE AC T ARE ALREADY INITIATED BY THE ASSESSING OFFICER AS A RESULT OF CONFI R MATION BY THE LEARNED CIT(A) OF THE P E NALTY IMPOSED BY THE ASSESSING OFFICER UN D ER S.271(1)(C), AND AS PER THE PROVI S ION S OF S.278B OF THE ACT, THE APPELL A N T WOULD B E TRE A TED AS RESPONSIBLE AND WOULD B E PROCEEDED AGAINST FOR THE OFFENCE CO M M I T TED BY T H E COMPANY, AS HE HAS SIGNED THE RETURN OF INCOM E O F TH E COMPANY FILED FOR ASSESSMENT YEAR 2003 - 04. HE CONTENDED T H A T T H E APP E LL A NT THUS IS CLEARLY AGGRIEVED BY THE O R DER OF THE LEARNED CIT(A), CONFIRMING THE PENALTY I MPO S ED BY THE ASSESSING OFFICER UN D ER S.271(1)(C) MAKING HIM ENTITLED TO FIL E AN APPEAL BEFORE THE TRIBUNAL AGAINST THE I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 5 SAID ORDER AS PER THE PROV I SION S OF S.253 OF THE ACT. IN SUPPORT OF TH E SE CON T ENTIONS, H E RELIED ON THE FOLLO W IN G JU D I C I A L PRONOUNCEMENTS - ( A ) BENOY KURIEN V/S. AGRICULTURAL INCOM E TAX OF F ICER AND OTH E RS ( 234 ITR 617) KER. ( B ) KIKABHAI ABDULALI V/S. ITAT, BOMBAY932 ITR 762) - BOM. ( C ) GOKULDAS V/S. KIKABHAI ABDULALI AND OTHERS (33 ITR 94) - BOM. ( D ) MAERSK BV V/S. DY. DIRECTOR OF INCOME - TAX(INTERNATIONAL TAXATION) (264 C TR 26) - BOM. ( E ) CIT V/S. N.CH.R.ROW & CO (144 ITR 557) - CAL. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON TH E OTHER HAND, SU B MI T T E D THAT AS PER THE PROVI SI ON S OF S.2(7) OF TH E ACT, THE ASSESSEE IS DEFINED TO MEAN A PERSON BY WHOM ANY TAX OR ANY OTHER SU M OF MONEY IS PAYABLE UN D ER THIS ACT, AND INCLUDES INTER ALIA EVERY PERSON IN RESPECT OF WHOM ANY PROCEEDINGS UN D ER THIS ACT HAS BEEN TAKEN FOR THE ASSESSMENT OF HIS INCOME OR OF TH E INCOME O F ANY OTHER PERSON IN RESPE C T OF WHICH HE IS ASSESSABLE. HE CONT ENDED THAT T H E P R OVI SI ON S OF S.179 RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS REGARD DEAL WITH THE LIABILITY OF D I REC TORS OF PRIVATE C OMPANY IN LIQUIDATION AND SIN C E TH E ASSESSEE - C OMPANY IN THE PRESENT CA S E IS NOT IN LIQUIDATION, THE APP E L LA N T CANNOT B E SAID TO BE JOINTLY AND SEVERALLY LIABL E FOR T HE PAYMENT OF TAX DUE F R OM THE COMPANY F O R THE Y E AR UN D ER CONSIDERATION . HE ALSO CONTENDED T H A T NO PRO C EE D ING S UN D ER THE ACT HAVE BEEN TAKEN IN RESPECT OF THE APP E LL A N T FOR THE ASSESSMENT OF HIS INCOME OR OF THE INCOME O F ANY OTHER PERSON IN RESPE C T OF WHICH HE IS AS S ESSABLE, AND TH E R EF ORE, H E CANNO T B E TREATED AS AN ASSESSEE, E VEN AS PER CLAUSE ( A ) OF S.2(7) OF THE ACT. I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 6 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE INVI TED OU R A TTENTION TO THE LETTER DATED 4.8.2011 ISSUED BY THE ASSESSING OFFICER ( COPY AT P A GE 4 OF THE PAPER - BOOK ) AND POIN TE D OUT THAT THE ASSESSEE I S REQUES T ED TO PAY THE OUTSTANDING DEMAND PENDING IN THE NAME OF THE COMPANY , IN ORDER TO CON S I DE R HIS REQUEST FOR CO M POUNDING THE OFFENCE AS PER THE P R O V I SI ON S OF S.279(2) OF THE ACT A ND IT CA N NOT BE SAID ON TH E BASIS O F THE SAID LETTER THAT THE DEMAND PAYABLE BY THE COMPANY FOR THE Y E AR UN DE R CONSIDERATION IS PA YA B L E BY THE APPE LL ANT. H E CON T E N DED THAT THERE IS IN FACT NO PROVIS I ON IN THE AC T, WHEREBY THE OUTS T ANDING DEMAND OF THE COMPANY CAN BE RECOVERED FROM THE APP E L LANT AND THE ONLY PROVISION OF S.179 RELIED UPON BY THE LEARNED COUN S EL FOR TH E APPELLANT I S APPLICABLE ONLY IN THE CA S E OF P R IVATE COMP ANY IN LIQUIDATION. AS REGA R DS THE CASE LAW S CITED BY THE LEARNED COUNSEL FOR THE APPELLANT, HE SUBMI T TED THAT NON E O F THE SAME IS APPLI C ABLE IN THE FACT SITUATION OF THE PRESENT CA S E OF THE APPELLANT . HE CON T EN D ED THAT THE APPELLANT THUS CANNOT B E CONSIDERED AS ASSESSEE AGGRIEVED BY THE O R DER OF THE LEARNED CIT(A) CONFIRMIN G T H E PENALTY IMPO S ED BY THE ASSESSING OFFICER UNDER S.271(1)(C) AND THE PR E SEN T APPEAL FIL E D BY HIM IS NOT MAINTAINABLE. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD DATED 30.11.2007 PASSED IN TH E CA S E OF M/S. SUVISTAS SOFTWARE PVT. LTD., A PRIVATE LIMITED COMPANY, CONFIRMING THE PENALTY OF R S . 2,37,039 IMPOSED BY THE ASSESSING OFFICER UN D ER S.271(1)(C) IS IMPUGNED IN TH E PR E SEN T APPEAL FILED BY SHRI R.SUBBA RAO, FORMER M ANAGING DIRECTOR OF THE SAID COMPANY, IN HIS IN D IVI D UAL CAPAC I TY, AND THE ISSUE THAT ARI S ES F OR OUR CONSIDERATION IS WH E TH E R T HE SAID APPEAL IS MAINTAINABLE OR NO T . AS PER THE PROVIS I ONS OF S.253 , ANY I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 7 ASSESSEE AGGRIEVED INTER ALIA BY THE O R DER OF THE LEARNED CIT(A) PASSED UN D ER S.250 C AN APPEAL TO THE TRIBUNAL AGAINST SUCH ORDER, AND THE QUESTION IS WH E TH E R THE APPELLANT IN THE PR E SEN T CA S E CAN BE SAID TO BE AN ASSESSEE AGGRIEVED BY THE O R DER OF THE LEARNED CIT(A) PASSED IN THE CA S E OF PRIVATE LIMITED COMPANY, M/S. SUVISTAS SOFTW A RE PVT. LTD. THE TERM ASSESSEE USED IN THE INCOME TAX ACT, 1961 IS DEFINED IN SUB - SEC T ION (7) OF S. 2 AS UN D ER - SECTION 2 (7) ASSESSEE MEANS A PERSON BY WHOM ANY TAX OR ANY OTHER SUM OF MONEY IS PAYABLE UN D ER THIS ACT, AND INCLUDES - ( A ) E VERY PERSON IN RESPECT OF WHOM ANY PROCEEDING UN D ER THIS ACT HAS BEEN TAKEN FOR THE ASSESSMENT OF HIS IN C OM E OR ASSESSMENT OF FRINGE BENEFITS OR OF THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE, OR O F THE LO S S SUSTAINED BY HIM OR BY SUCH OTHER PERSON, OR OF TH E AMOUNT O F REFUND DUE TO HIM OR TO SUCH OTHER PERSON; ( B ) E VERY PERSON WHO I S DEEME D TO BE AN ASSESSEE UN D ER ANY PROVISION OF THIS ACT; ( C ) EVERY PERSON WHO IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER ANY PROVISION OF THI S A C T; 11. RELYING ON THE ABOVE DEFINITION, THE LEARNED COUNSEL FOR THE APPELLANT HAS CONTENDED THAT THE APPELLA NT IN THE PRESENT CASE IS TO BE CONSIDERED AS AN ASSESSEE, BEIN G A PERSON BY WHOM ANY TAX OR ANY OTHER SUM OF MONEY I S PAYABLE UN D ER THE ACT. ACCOR D ING TO HIM, THE PENALTY AMOUNT IN QUESTION IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CI T(A) BY THE IMPUGNED ORD E R 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 I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 8 AT PAGE NO. 4 OF TH E PAPER - BOOK 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. ******** PL EASE 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 RS . 2,32,554/ - RAISED UNDER SECTION 143(3) ON 20.02.2006 AND PENALTY DEMAND OF RS.2,37,039/ - RAISED UNDER SECTION 271(1)(C) ON 31.08 . 2006 WERE NOT PAID FULLY . IN THIS CONTEXT. YOU ARE REQUESTED . TO PAY THE AMOUNTS IMMEDIATELY A N D FILE THE CHALANS. IF THE AMOUNTS WERE ALREADY PAID , PLEASE PRODUCE T HE CHALANS . YOURS FAITHFULLY , ........ 12. A PERUSAL OF THE ABOVE LETTER DATED 4.8.2011 ISSUED BY THE ASSESSING OFFICER CL E ARLY SHOWS THAT THERE IS NOTHING IN THE SAID LETTER TO SHOW THAT THE AMOUNT OF PENALTY IN QU E STION PAYABLE BY THE COMPANY IS SOUGHT TO BE RECOVERED BY THE ASSESSING OFFICER FROM TH E A PPELLANT . THE SAID LET T ER IS ISSUED BY THE ASSESSING OFFICER IN RESPONSE TO THE REQUEST MADE BY THE APPELLANT TO THE CHIEF COMMISSION E R FOR COMPOUNDING THE OFFENCE AS P E R THE PROVIS I ON S OF I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 9 S.279(2) OF TH E ACT, AND SIN C E IT WAS NECESSARY FOR TH E PU R PO S ES OF CONSIDERIN G THE SAID REQUEST THAT THE CORRESPONDING DUES ON ACCOUNT OF PENALTY ETC. P AYABLE BY THE COMPANY SHOULD BE PAID, A REQUEST HAS BEEN MADE TO THE APPELLANT TO ARRANGE FOR THE SAID PAYMENT. AS RIGHTLY CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE , THERE IS THUS NOTHING IN THE L E TT E R DATED 4.8.2011 EVEN TO IN D I C ATE THAT THE AMOUNT OF PENALTY IN QUESTION OU TS TANDING IN THE NAME OF THE COMPANY IS PAYABL E 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 UN D ER S.276C OF THE ACT HAVING BEEN INITIATED AGAINST THE APPELL ANT AS A CONSEQUENCE OF IMPOSITION OF PENALTY UN D ER S.271(1)(C) , THE APPELLA N T H AS TO B E TR E ATED AS AN ASSESSEE WITHIN THE MEANING OF CLAUSE (A) OF S.2(7) BEIN G A PERSON IN RESPECT OF WHOM ANY PROCE E DING U N D ER THE AC T HAS BEEN TAKEN. WE ARE UNABLE TO ACCEP T THIS CONTENTION OF THE LEARNED COUN S E L FOR THE APP E LL A N T AS WELL. AS PER CLAUSE (A ) OF S.2(7), AN ASSESSEE IS DEFINED TO MEAN A PERSON IN RESPECT OF WHOM ANY PROCE E DING UN D ER TH E ACT HAS BEEN T A KEN FOR THE ASSESSMENT OF HIS INCOME OR OF THE ASSESSMENT OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE AND THE PROCEEDINGS IN I TIATED AGAINST THE APPELLANT FOR PROSECU T ION UN D ER S.276C OF THE A C T, NOT BEING THE PROCEEDINGS 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 TRE A TED AS AN ASSESSEE, EVEN AS PER CLAU S E (A) OF SUBS - S ECTION (7) OF S.2 OF THE ACT. 14. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON TH E PROVIS I ONS OF S.179 TO CON TE N D THAT THE APPELLANT BEIN G A PERSON, WHO W AS THE DIRECTOR OF A PRIVATE COMPANY DURING THE RELEVANT I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 10 PRE V IOUS Y E AR , IS JOINTLY AND SEVERALLY LIABLE F O R T HE PAYM E N T O F TAX RELATIN G TO TH E SAID COMPANY. AS RIGHTLY CONTENDED BY THE LEARNED DEPARTMENTAL REPRESE NTATIVE, 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 L IQUIDATION, 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 HI S CONTENTION RAISED IN SUPPO R T O F THE APPELLANT S CASE RELYING ON THE P R O VI SION OF S.179, THE LEARNED COUN S EL FOR THE ASSESSEE HAS RELI E D ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN TH E CA S E OF UNION OF I NDIA V/S. MANIK D AT TRATREYA LOTLIKAR (SUPRA). A PE R USAL OF THE D ECISION RENDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE SAID CA S E HOW E VER SHOWS THAT THE CONCERNED PRIVATE COMPANY OF WHICH THE ASSESSEE WAS DIRE C TOR WAS ALREADY IN LIQUIDATION AND THE ISSUE INVOLVED BEFORE TH E HON'BLE HIGH COURT WAS ENTIRELY DIFFERENT , I.E. W HETHER THE P R OVIS I ON S OF S.179 ARE APPLICABLE RE TROSPECTIVELY OR NO T . THE LEARNED SINGLE J UDGE HAD EARLIER HELD IN THIS CONTEXT THAT THE LIABILITY OF THE DI R ECTOR UN D ER S.179 IS ONLY IN RESPECT OF TAX DUE FROM THE PRIVATE COMPANY, AFTER 1 ST OCTOB E R, 1975 A ND NOT IN RESPECT OF EARLIER PERIOD, AND ON APPE A L PREFERR E D BY THE R E VENUE AGAINST THE SAID DECISION B E FORE THE D I VISION BENCH, HON'BLE BOMBAY HIGH COURT HELD T HAT THE DIR E CTORS OF A PRIVATE COMPANY ARE LIABLE FOR TAX DUE OF THE COMPANY IN RESP E CT OF ASSESSMENT YEARS COMMEN C IN G FROM 1 ST APRIL, 1962. A L T H OUGH IT WAS ALSO HELD BY THE HON'BLE HIGH COURT THAT THE DIRECTORS ARE ALSO LIABLE FOR PENALTY, INTEREST AND RE C O V ERY CHARGES, THIS PROPOSITION IS SU BSE QUENTLY H E LD T O BE NOT A GOOD LAW BY THE HON'BLE BOMBAY I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 11 HIGH COURT IN TH E CA S E OF DINESH T. TAILOR V/ S.TRO ( 326 ITR 85), WHEREIN IT WA S HELD THAT S.179 IMPOSES JOINT AND SEVERAL LIABILITY UPON A D IRECTOR OF A PRI VAT E COMPANY, ONLY IN RESPECT OF TA X DU E FROM TH E COMPANY WHICH CANNO T B E RE C O V ERED. A S IMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE G UJA RAT HIGH COURT IN TH E CASE OF KANTILAL S A KARLAL GANDHI V/S. ITO (215 TAXMAN 340), WHEREIN IT WAS HELD THAT A DI R ECTOR MAY B E CON S I D ERED AN ASSESSEE UN D ER S.2(7) BY VIRTUE OF S.179 ONLY QUA TAX OF THE COMPANY WHICH W AS DUE AND REMAINED UNPAID. 16. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF UNION OF INDIA V/S. MANIK DATTATREYA LOTLIKAR (SUPRA) AND THE HON'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 CONTE X T OTH E RWISE REQUIRES - . (43) TAX IN REL A TION TO THE ASSESSMENT YEAR COMMEN C IN G ON THE 1 ST DAY OF APRIL, 1965, AND ANY SUBSEQUENT ASSESSMENT YEAR MEANS INCOME - TAX CHARGEABLE UN D ER THE P R OVI S I O N S OF THIS AC T, AND IN REL A TION TO ANY OTHER ASSESSMENT YEAR INCOME TAX AND SUPER - TAX CHARGEABLE UNDER THE PROVIS I ONS OF THI S ACT PRIOR TO THE AFORESAID DATE AND IN REL A TION T O THE ASSESSMENT YEAR COMM E N C ING ON THE 1 ST DAY OF APRIL, 2006, AND ANY SUBSEQUENT Y E AR INCLUDES THE FRINGE BENE F IT TAX PAYABLE UN D ER S.115WA. A REFERENCE WAS ALSO MADE BY THE HON'BLE BOMBAY HIGH COURT AND THE HON'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 DISTINCT ION 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 CO MPANY. I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 12 17. IT IS THUS CLEAR THAT BY VIRTUE OF S.179(1) , A D IRECTOR O F A PRIVATE COMPA N Y CAN B E JOINTLY AND SEVERALLY LIABLE FOR THE PAY ME NT O F TAX ONLY AND THAT TOO, ONLY IN CA S E THAT COMPA N Y GO ES IN TO LIQUIDATION. IN THE PR E SEN T CA S E , SUC H SITUAT ION, HOW E VER , IS NO T OBTAINED IN AS MUCH A S THE PRIVATE COMPANY OF WHICH THE APPELLANT WAS A D IRECTOR, I S NO T IN LIQUIDATION AND THE AMOUNT PAYABLE BY THE SAID COMPANY IS ON ACCOUNT O F PENALTY WHICH , IN ANY CASE , CANNO T B E RECOVERED FROM TH E APPELL A N T AS A DIRECTOR OF THE SAID COMPANY. WE THER EF ORE, HOL D TH A T THE APPELLANT IN THE PRESENT CASE CANNO T B E SAID TO B E AN ASSESSEE WITHIN THE MEANING OF S.2(7) AS HE IS NO T A PERSON BY WHOM ANY TAX OR ANY OTHER SUM OF MONEY I S PAYA B LE UN D ER THE ACT. 1 8 . HAV ING HELD THAT THE APP E LL A N T CANNO T B E CON S I D ERED AS AN ASSESSEE WITHIN TH E MEANING OF S.2(7), I T FOLLOWS THAT THE QUESTION OF TREATING THE A PPELLANT AS AN ASSESSEE AGGRI E VED , AS ENVISAGED UNDER S.253, DOES NO T ARISE. HOWE VE R, SIN C E THE LEARNED COUN S EL FO R THE A PPELLANT H AS CITED CERTAIN JUDICIAL PRONOUN C EMENTS TO SUPPO R T HI S CON T ENTION S RAISED RELYING ON THE P R OVI SI ONS OF S.253, AND THE R E ARE ALSO OTHER JUDICIAL PRONOUNCEMENTS EXPLAINING THE SCOPE AND MEANING OF THE TERM ASSESSEE AGGRIEVED, WE CON S I D E R IT NECESSARY TO DISCUSS AND DEAL WITH THE SAME. IN THE CASE OF KIKABHAI ABDULALI V/S. ITAT & ORS (32 ITR 762), IT WAS NO DOUBT HELD BY THE HON'BLE BOMBAY HIGH COURT THAT THE RIGHT OF APPEAL TO THE TRIBUNAL AND RIGHT TO APPLY FOR A REFERENCE IS NO T CONF IN E D TECHNICALLY TO THE PARTY W H O IS A PARTY TO THE APPE A L . I T WAS HO WE VER , CLARIFIED THAT SUCH RIGHT CAN B E EXE R CISED BY ANY PERSON, WHO BECOMES LIABLE TO PAY TAX BY ANY ORDER AGAINST WHICH THE APPEAL I S PREFERRED. AS ALREADY DISCUSSED BY US, THE APPEL LA N T IN THE PRESENT CA S E IS NOT A PERSON WHO HAS BECOME LIABLE TO PAY PENALTY, THE IMPO SI TION OF WHICH IS CONFIRMED BY THE LEARNED CIT(A) I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 13 BY HIS IMPUGNED ORDER AND TH E R EF O R E, HE CANNO T EXE R CISE THE RIGHT OF APP E AL TO THE TRIBUNAL. 1 9 . IN THE CA S E OF GOKULDAS V/S. K I KABHAI ABDULALI &ORS (33 ITR 94) AND M AERSK B .V. V/S. DEPUTY DIRECTOR O F INCOM E - TAX INTERNATIONAL TAXATION (264 CTR (BOM) 26), THE ISSUE REL A TING TO MAINTAINABILITY OF APPEAL FILED BEFORE THE TRIBUNAL WAS INVOLVED IN THE CONTEXT OF PARTNER SHIP FIRMS AND THEIR PARTNERS AND KEEPING IN VIEW THE SPECIFIC PROV I SION S OF S.188A MA K ING A P A RTNE R OF A FIRM AND THE L EGAL REPR E SEN TA TIVE OF SUCH PARTNERS WHO IS DECEASED, JOINTLY AN D SEVERALLY LIABLE ALONGWITH THE FIRM FOR THE AMOUNT O F TAXES, PENALTY OR OTHER SUM PA Y ABLE BY THE FIRM, IT WAS HELD BY THE HON'BLE BOMBAY HIGH COURT THAT THE PARTNER(S) ARE ENTITLED TO FILE APPEALS BEFO R E THE TRIBUNAL A G AIN S T T H E ORDERS PASSED IN TH E C AS E OF FIRM, AS THEY ARE LIABLE OR AT LEAST POTENTIALLY LIABLE TO PAY TAXE S A ND OTHER SUMS PAYABLE BY THE FIRM. AS AL R EADY DISCUSSED BY US, THERE IS NO PROVISION IN THE AC T BY VIRTUE OF WHI C H THE APP E LL A N T , AS A DIRECTOR, CAN B E HELD LIABLE FOR ANY AMOUNT, ESPECI A LLY, THE AMOUNT OF P E N A L T Y PAYABLE BY TH E COM P ANY AND HE , TH E R E FORE, CANNOT B E TREATED AS AN ASSESSEE AGGRIEVED BY THE ORDER O F THE LEARNED CIT(A) C ONFIRMIN G THE PENALTY IMPOSED BY THE ASSESSING OFFICER U N D ER S.271(1)(C) ON TH E C OMP A NY, MAKING HIM ENTITLED TO FILE AN APPEAL UN D ER S.253. 20 . IN THE CASE OF CIT V/S. AMBALA FLOUR M ILLS ( 78 ITR 256 ) , IT W AS 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 CHALL E NGE 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 TH E RIGHT TO APPEAL B EFORE THE TRIBUNAL FROM AN ORD E R PASSED BY THE AAC I S NO T CONFINED TECHNICALLY TO TH E I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 14 PARTY WHO I S A P A RTY TO THE APPEAL BU T IS A MUCH WIDER RIGHT WHICH MIGHT BE EXER CISED BY ANY PERSON WHO I S LIABLE TO PAY TAX BY ANY OTHER ORD E R AGAINST WHICH THE APPEAL WAS PREFERRED. IN T HE CA S E OF M ICO EMPLOYEES A SSOCI A T I ON V/S. ACIT (292 I T R 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 ASS ESSEE WHOSE LIABILITY IS TO PAY TAX IN TERMS OF AN ORDER, IS PROVIDED WITH THE RIGHT OF APPEAL UNDER S.253. IT WAS HELD THAT THOUGH THE EMPLOYEES ASSOCIATION MIGHT BE AN AGGRIEVED PARTY TO CERTAIN EXTENT, IT WAS NOT AN ASSESSEE IN TERMS OF DEFINITION GIV EN IN S.2(7) OF THE ACT, WHICH WOULD MEAN A PERSON FR OM WHOM ANY TAX OR A SUM OF MONEY IS PAYABLE. IT WAS HELD T H A T IN TERMS OF THE STATUTE ONLY THE ASSESSEE WHO IS LIABLE TO PAY TAX IN TERMS OF THE ORD E R ALONE IS PRO V IDED WITH THE RIGHT TO APPEAL , THOUGH , TO A CERTAIN EXTENT , ASSOCIATION MAY B E AN AGGRI E VED PARTY, IT IS NO T AN ASSESSEE. IT WAS HELD T H A T NO APP E AL, TH E R E FORE, COULD H A VE BEEN FILED BY THE ASSOCI A T I ON IN TERMS OF THE A C T. 2 1. THE LEGAL POSITION CLEARLY EMANATING FROM THE JU D I C I A L PRONOU N C EM E NTS DISCUSSED ABOVE THUS IS THAT THE T E RM ASSESSEE AGGRIEVED USED IN S. 253(1) , BEIN G 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 O R DER AGAINST WHICH THE APPEAL IS TO BE PREFERRED. AS A L READY DISCUSSED BY US , THERE IS NO TAX PAYABLE BY THE A PPELLANT IN THE PR E SEN T CASE AS A RESULT OF THE I MPU G N E D ORD E R PASSED BY THE LEARNED CIT(A) , AND CONSEQUENTLY, HE CANNOT TREATED AS AN AGGRIEVED PARTY . WE, THEREFOR E, HOLD THAT THE APPELLANT IS NOT ENTITLED TO FILE THE PRESENT APPEAL AGAINST THE I TA NO. 14 75 /H YD/20 14 SHRI R.SUBBA RAO , F ORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., HYDERABAD 15 IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) CONFIRMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER S.271(1)(C) ON THE COMPANY AND CONSEQUENTLY THE PRESENT APPEAL, BEIN G NOT MAINTAINABLE, IS LIABLE TO BE DISMISSED IN LIMINE . WE ACCORDINGLY DISMISS TH IS APPEAL HOLDING THE SAME TO BE NOT MAINTAINABLE. 2 2 . KEEPING IN VIEW OUR DECISION RENDERED ABOVE DISMISSING THE PRESENT APPEAL AS NOT MAINTAINABLE, THE OTHER ISSUES INVOLVED THEREIN, INCLUDING THE PRELIMINARY ISSUE RELATING TO CONDONATION OF DELAY OF 2417 DAYS ON THE PART OF THE APPELLANT TO FILE THIS APPEAL HAVE BECOME INFRUCTUOUS. WE, THEREFORE, DO NOT CONSIDER IT NECESSARY TO ADJUDICATE UPON THE SAME. 2 3 . IN THE RESULT, THIS APPEAL IS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED IN THE COURT ON 13 TH FEBRUARY, 2015 SD / - SD/ - ( D.MANMOHAN ) ( P.M.JAGTAP ) VICE PRESIDENT ACCOUNTANT MEMBER D T/ - 13 TH FEBRUARY, 2015 COPY FORWARDED TO: 1. SHRI R.SUBBA RAO , FORMER MANAGING DIRECTOR OF M/S.SUVISTAS SOFTWARE PVT. LTD., C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 . INCOME TAX OFFICER WARD 3 ( 4 ), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD COMMISSIONER OF INCOME - TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S