1. This appeal by the assessee is directed against the order of the Commissioner (Appeals)-IX, New Delhi, dated 26-2-1985 relating to the assessment year 1981-82. In the first ground the grievance projected by the assessee is that the learned Commissioner (Appeals) erred in law and on facts in dismissing the appeal in limine. This grievance is based upon very interesting set of facts, which must be recorded in order to get full appreciation of the case of the assessee.
2. One, Mr. David Jude., Shrieves was an employee of Redifon Simulation Ltd., United Kingdom. The said employer deputed him as resident site engineer to work at Indian Naval Dockyard at Bombay from 11-5-1980 to 31-3-1981. The contract of this service of the foreign technician was approved by the Government of India, Ministry of Finance, New Delhi vide their letter dated 3-3-1981 in terms of Section 10(6)(viia) of the Income-tax Act, 1961 ('the Act'). He performed stipulated services and received the recompense therefor. While leaving India he needed a tax clearance certificate under Section 230 of the Act. Greaves Cotton & Co. Ltd. guaranteed unconditionally and irrevocably due payment to the President of India through the Commissioner, Bombay and the ITO, Foreign Section, Bombay, of all taxes which are or which may become due and payable by said Mr. Shrieves under the Direct Taxes Acts. This guarantee was executed on 20-12-1980. It appears Mr. Shrieves left India thereafter after leaving a return of income signed with Greaves Cotton & Co. Ltd. 3. The ITO issued a notice under Section 163(2) of the Act. Greaves Cotton & Co. Ltd. in respect of tax liability of Mr. D.J. Shrieves and proposed to treat them as an agent of the said nonresident individual.
This notice was in a way to show cause why they need not be treated as the agents of the non-resident under Section 163. On receipt of this notice, Greaves Cotton & Co. Ltd. filed on 12-4-1982 the return that they had got signed from Mr. D.J. Shrieves earlier, showing net taxable income of Rs. 1,13,630. On receipt of this return, the ITO issued notice under Section 143(2) of the Act, dated 25-2-1984 in the name of the Secretary, Greaves Cotton & Co. Ltd., for and on behalf of Mr.
David J. Shrieves. In response to this notice, the representatives of Greaves Cotton & Co. Ltd., along with their counsel attended before the ITO all the proceedings till the assessment was framed on 26-9-1984 on a total income of Rs. 10,38,120. The assessee filed an appeal before the Commissioner (Appeals), Delhi because the assessment was framed by the ITO, Private Salary Circle-IX, Mayur Bhawan, New Delhi.
4. The learned Commissioner (Appeals) found that the appeal documents were signed by one Shri G. Mathrani, managing director for Greaves Cotton & Co. Ltd. In the assessment order, the name of the assessee was shown as : He noted that the assessment was on an individual but the appeal documents were signed by the managing director of the company. He, therefore, asked the company to show the authority under which the appeal documents were signed by the managing-director or in the alternative to show cause why appeal need not be dismissed. Before the learned Commissioner (Appeals) submissions were made to indicate that appeal had been tendered in accordance with law. However, he was not convinced about the maintainability of the appeal. He, therefore, dismissed it in limine. Hence, the present proceedings.
5. We consider that the learned Commissioner (Appeals) on the facts and in the circumstances of the case came to an erroneous decision in dismissing the appeal of the assessee in limine. It is now well settled principle of law that the right of appeal should be liberally construed. A reference, in this connection, may be made to the decision of the Supreme Court in the case of Mela Ram & Sons v. CIT [1956] 29 ITR 607 and the two judgments of the Rajasthan High Court in the cases of Asst. CIT v. Chaturbhuj Radhakishan [1985] 156 ITR 257 and Beharilal Ishwardas v. CIT [1987] 164 ITR 274. The Hon'ble Gujarat High Court in the case of Billimora Engg. Mart v. CIT [1985] 156 ITR 153 has held that procedural law is always to be construed and applied in a manner so as to make it a hand-maid to the cause of justice, and it cannot be treated as a substantive provision so as to defeat the rights of the parties. In this case, the Hon'ble High Court was dealing with the issue of registration and appeal related thereto. However, the law pronounced by the Hon'ble Court is very relevant and important insofar as the issue in appeal before us is concerned.
6. Section 249 of the Act provides form of appeal and limitation.
Sub-section (1) ibid, requires that every appeal under this Chapter shall be in the prescribed form and verified in the prescribed manner.
Rules 45 and 46 of the Income-tax Rules, 1962 have been framed for this purpose. Sub-rule (1) of Rule 45 requires the appeal to be made in Form No. 35. Sub-rule (2) prescribes that the form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed : (a) in the case of an individual, by the individual himself ; where the individual is absent from India, by the individual concerned or by some person duly authorised by him in this behalf ; and where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf.
Clauses (b), (c), (d) and (e) of Sub-rule (2) relate to other taxable entities. Clause (1) is a residuary clause of Sub-rule (2) and provides that in the case of any other person such signatures may be made, by that person or by some person competent to act on his behalf.
7. It was in the interpretation of these provisions that the learned Commissioner (Appeals) came to the conclusion that the form of appeal having not been signed by Mr. David J. Shrieves, the appeal before him was incompetent and as such, deserved dismissal in limine.
8. We have set out supra, the entire background of the case as to how Greaves Cotton & Co. Ltd. came to be associated with these assessment proceedings. The first basis, which gives them the right of appeal is, that the ITO has treated them as agents of Mr. David under Section 163 by issuing a notice to them. Even if he had not done so, it is to be appreciated that when this company gave guarantee to the Government of India for the payment of all taxes due under the Direct Taxes Acts and the Government allowed the non-resident to leave, the company stepped into his shoes to meet any liability accruing and arising to the Government of India on behalf of the said non-resident. They were, therefore, very much within the meaning and the ambit of the word 'assessee' defined in Section 2(7) of the Act. They were, therefore, competent to sign and file an appeal before the Commissioner (Appeals) against the impugned assessment made in the name of David J. Shrieves.
9. It is not denied that the recovery of the taxes on the basis of the impugned assessment is to be made from Greaves Cotton & Co. Ltd. The notice of demand and the assessment has been served upon them and they are liable to pay tax yet that tax has to be levied and determined in accordance with the provisions of law. In this case, law applicable will be as contained in the statute. This statute itself provides in Section 246(1)(c) of the Act that any asses see aggrieved by orders of an ITO may appeal to the AAC/Commissioner (Appeals), "where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed." We have held above that in the context of very peculiar facts of this case, Greaves Cotton & Co. Ltd. is an assessee. Since they are entitled straightway to file an appeal under Section 246(1)(c) because they are questioning the computation of total income and the tax determined by the ITO.10. On each of the above grounds, we are fully satisfied, keeping in view that the appellate provisions are to be construed, liberally that the appeal before the learned Commissioner (Appeals) signed by the managing director of Greaves Cotton & Co. Ltd. was maintainable and fully competent. It should have been disposed of on merits by the learned Commissioner (Appeals). Since, he failed to do so his order is set aside with the directions to dispose of the appeal on merits after affording reasonable opportunity of being heard to the parties. For statistics appeal allowed.