High Court Of Karnataka
Mico Employees Association vs. Assistant Commissioner Of Income Tax
Section 2(7), 253(1)
R. Gururajan & Anand Byrareddy, JJ.
IT Appeal No. 1355 of 2006
3rd April, 2007
Counsel Appeared :
A. Shankar, for the Appellant : None, for the Respondent
JUDGMENT
R. Gururajan, J. :
MICO Employees Association is before us aggrieved by the order of the Tribunal dt. 26th May, 2006 passed in ITA No. 411/Bang/2001 and ITA No. 414/Bang/2001. The appellant is a registered trade union operating in MICO Industrial Establishment, Bangalore. The members of the MICO are hereinafter called as “the association”. The members of the association are the employees of MICO. The association has entered into an agreement with MICO. One of the terms of the agreement was to increase medical benefits from the level of Rs. 3,500 per annum to Rs. 9,000. The said increase was given in the light of increasing cost. The respondent conducted a survey in the premises of MICO in the various aspects of TDS. Respondent concluded that MICO has paid medical reimbursement to all its employees without fulfilling the conditions as laid down in s. 17(2)(v). The respondent treated MICO as a defaulter under s. 201 of the IT Act. Respondent asked them to pay the tax and interest in the matter. Aggrieved by the said order, MICO filed an appeal before the appellate authority. In the meanwhile, the appellant filed writ petitions in WP Nos. 5374/2000, 5375/2000 and 5376/2000 challenging the proceedings initiated by the Department. This Court disposed of the writ petitions by holding that the appellants are not aggrieved persons. However, a direction was given to the appellate authority to hear the appellant in the pending appeal filed by the MICO. The appellants entered appearance before the appellate authorities and put forth their case before the appellate authority in the appeal filed by MICO. An adverse order was passed. The same was challenged before the Tribunal by the appellant. The Tribunal rejected the appeal on the ground of want of locus standi in the matter. It is in these circumstances, the appellant is before us. The following questions of law are framed : Whether the Tribunal was justified in rejecting the appeal of the appellants as not maintainable on the facts and circumstances of the case ? Whether the Tribunal was justified in law in holding that the appellants were not aggrieved persons in spite of the fact that the burden of the TDS had to be borne by them by way of recovery from their salaries ? 3. Whether the Tribunal after having held that the employer had a strong case on merits ought to have entertained the appeal ?
Heard Sri Shankar, learned counsel appearing for the appellant. He essentially argues that the material on record would show that ultimately the appellants are the aggrieved persons in the matter of payment of tax. He therefore says that the rejection of the appeal on the ground of no locus standi to the appellant is unsustainable in law. Even otherwise, according to the appellant in the light of the order of the learned Single Judge, the appellant can maintain the appeal in the given circumstances. He would rely on a couple of judgments.
After hearing, we have carefully perused the material placed on record. Admitted facts would reveal of a dispute with regard to TDS in the matter between MICO and the Department. An adverse order was passed and in appeal, the appellants were heard in the light of the order of this Court. Thereafter, when a second appeal was filed before the Tribunal, the Tribunal has rejected the same on the ground of locus. Let us see as to whether, the Tribunal is justified in rejecting the appeal on the ground of no right in favour of the association.
The IT Act is a self-contained code. It provides for a hierarchy of authorities for the purpose of adjudication of a dispute between the assessee and the Department. Chapter XX deals with appeals and revision. Appeal remedy is provided to the CIT(A) at the instance of an aggrieved assessee in terms of s. 246A of the Act. A second appeal is provided to the Tribunal under s. 253 of the Indian IT Act. Sec. 253 would provide for an appeal at the instance of an aggrieved assessee. Assessee has been defined under s. 2(7) of the Act. Assessee would mean a person by whom any tax or any sum of money is payable under this Act. Therefore, what is clear to us is that in terms of the statute, only an assessee who is liable to pay tax in terms of the order alone is provided with a right of appeal in terms of the statute though to a certain extent the association may be an aggrieved party but the association is not an assessee in terms of the definition. Hence, no appeal could have been filed by the assessee in terms of the statute.
Learned counsel for the appellant places before us a few judgments for our consideration. CIT vs. Hindustan Steel Ltd. (1990) 82 CTR (Cal) 191 : (1989) 179 ITR 213 (Cal) is a judgment of the Calcutta High Court in the matter of appeal to the Asstt. CIT. We have carefully gone through the facts in the said case. A reading of the Act in that case would show that since HS had agreed to pay the taxes due by in the matter, it was in those circumstances that the Court ruled that he has right to maintain appeal. CIT vs. N.CH.R. Row & Co. (1983) 32 CTR (Cal) 73 : (1983) 144 ITR 557 (Cal) is again a Bench judgment of the Calcutta High Court. The Calcutta High Court ruled that B was directly interested in the assessment of the firm and was “an assessee aggrieved by the order of the AAC” within the meaning of s. 253 of the IT Act, 1961.
The 3rd case is one of the judgments of Andhra Pradesh High Court in P.V. Rajagopal vs. Union of India (1999) 151 CTR (AP) 442 : (1998) 233 ITR 678 (AP). That was a case of filing of writ petition as we see from the facts of the case.
6. None of the cases is available to the appellant in the light of the clear wordings of the aggrieved assessee for the purpose of filing an appeal. A statutory appeal stands on a different footing than that of a constitutional remedy in terms of Art. 226 of the Constitution of India. A union may under certain circumstances file a writ petition as an aggrieved party under Art. 226 of the Constitution of India. But, however, the said union cannot maintain a statutory appeal in the absence of a label of an assessee for the purpose of an appeal in terms of the Act. Since, in the case on hand, the appellant is not an assessee and hence, the appellant cannot maintain the appeal as rightly ruled by the Tribunal. The Tribunal after noticing the case law has chosen rightly, in our view, to reject the appeal on the ground of locus standi. We agree with the reasonings of the Tribunal.
7. Before concluding, we must notice the serious argument with regard to a right available to the appellant in the light of an order passed in the writ petition preferred by the appellant. It is no doubt true that the association filed a writ petition challenging the assessment order passed by the respondent-authorities. This Court noticed the liability on payment of tax in terms of s. 207 of the Act. This Court also ruled the impact of non-compliance of s. 210 of the Act. After noticing, this Court ruled that the association cannot be aggrieved person by the said order. In fact, the said order supports the view taken by the Tribunal. A mere direction to the association to be heard in the matter would not by itself provide a statutory right of filing an appeal in terms of the statute. At any rate, the order in WP No. 5378/2000 cannot be said to provide any statutory right of an appeal as argued by Sri Shankar. The questions of law are answered against the assessee. No grounds. Rejected.
[Citation : 292 ITR 567]
