The Tribunal in a case clarified that ‘assessee aggrieved’ shall be the person who is an aggrieved party liable to pay tax in terms of the order against which the appeal is to be preferred. Hence, no appeal to be filed by director for order against company if no tax payable by director.   

Facts:

Assessee being an individual was appointed as a director in a company. The income tax return of the company was filed for the assessment year 2003-04. The assessee signed the return in his capacity as a director.

After the completion of assessment, AO passed an Order imposing penalty on the company under section 271 (1) (c). The company did not file any appeal against the said order. However, assessee appealed before CIT (A). The said appeal was dismissed by the CIT (A), confirming the penalty imposed by AO.

The company again did not file any appeal against the said order of the Commissioner (Appeals). Thus, show cause notice was issued by AO regarding prosecution proceedings against the assessee. On this assessee approached the concerned Chief Commissioner to compound the offence as per the provisions of section 279(2). For compounding of offence, assessee needs to pay all taxes along with interest and penalty payable by the company.

Subsequently, assessee claimed that penalty under section 271(1) (c) as well as the order of the Commissioner (Appeals) confirming the said penalty was not justified. Hence, assessee filed an appeal before the Tribunal.

Held:

The appealed was dismissed on the ground that assessee was not authorised to file the appeal in the name of the company. It was concluded that if assessee was aggrieved in his individual capacity, then appeal shall be filed in his individual capacity only. Thereafter, the assessee filed the instant appeal in his individual capacity.

The tribunal clarified that director of a private company can be jointly and severally liable for the payment of tax only and that too, only if that company goes into liquidation. Whereas, in the instant case, the amount payable by the company was on account of penalty and the company was also not in liquidation. The assessee was not a person by whom any tax or any other sum of money was payable.

The tribunal highlighted that as per section 253 (1), ‘assessee aggrieved’ is 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 order against which the appeal is to be preferred. In the present case, assessee shall not be treated as ‘assessee aggrieved’ and thus, shall not be entitled to file the present appeal against order of CIT(A) confirming the penalty imposed by the AO under section 271(1)(c) on the company. Hence, appeal not maintainable, got dismissed.

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