Law:

Section:

Section 246 of the Income-tax Act, 1961 - Appellate Assistant Commissioner/Commissioner (Appeals) - Appealable orders - Assessment years 1962-63 and 1963-64 - During relevant previous years one S was partner in assessee-firm - Since tax payable by S for assessment years in question was outstanding, ITO issued notices under section 182(4) to assessee for its recovery - Assessee denied its liability to tax - Whether an appeal was maintainable against demand of ITO for payment of tax - Held, yes Section 182(4) of the Income-tax Act, 1961 - Firm - Assessment of registered firm - Whether in view of facts stated under head 'Appellate Assistant Commissioner/Commissioner (Appeals) - Appealable orders' and further in view of fact that it had not been found by ITO that tax was not recoverable from S, orders issued by ITO under section 182(4) were bad in law - Held, yes FACTS During the previous years relevant to the assessment years 1962-63 and 1963-64, one S was partner in the assessee-firm. Since the tax payable by S for the aforesaid assessment years was outstanding, the ITO issued notice to the assesseeto pay the amount that should have been retained under section 182(4) against the income-tax payable by the partner S. The assessee denied the liability. However, the ITO issued demand notices under section 156 to the assessee. On appeal, the AAC held that the appeal was maintainable and further held that as it had not been found by the ITO that the tax was not recoverable from the partner S, one of the essential conditions for invoking section 182(4) had not been satisfied and, therefore, the order passed by the ITO under section 182(4) was bad in law. On appeal by the revenue, the Tribunal upheld the order of the AAC. On reference: HELD In the instant case, the attempt of the assessee by preferring the appeals was to establish that the liability of it to tax was not there because of the non-fulfilment of one of the essential ingredients for the application of section 182(4) and that in turn would lead to a total denial of liability on its part by the assessee. The Tribunal was, therefore, justified in holding that the appeals preferred by the assessee against the…

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