Director liability for company tax arrears survives resignation and pending revision absent a stay, High Court rules.

Recovery under section 179 of the Income-tax Act was upheld where notice was served, a reply was filed, and the director had clear knowledge of the proceedings; the natural justice challenge therefore failed. Liability was also sustained because section 179 applies to a person who was a director at any time during the relevant previous year, so later resignation did not defeat responsibility for the company's tax arrears after recovery from the company proved unsuccessful. Pendency of the company's revision petition did not bar recovery in the absence of a stay, and the salary attachment objection under section 60 CPC was rejected, subject to the exempted portion of salary.

---

---

Issues: (i) whether the recovery proceedings and consequential attachment were vitiated for want of notice and breach of natural justice under section 179(1) of the Income-tax Act, 1961; (ii) whether a director who resigned after the relevant previous year could still be proceeded against for the company's tax arrears; (iii) whether pendency of the company's revision petition barred recovery from the petitioner; and (iv) whether attachment of salary offended section 60 of the Code of Civil Procedure, 1908.

Issue (i): whether the recovery proceedings and consequential attachment were vitiated for want of notice and breach of natural justice under section 179(1) of the Income-tax Act, 1961.

Analysis: The notice under section 179(1) was served on the petitioner, a reply was filed, and the materials showed that the petitioner was aware of the proceedings and had sought deferment of recovery. On those facts, the plea of denial of hearing could not survive.

Conclusion: The challenge based on absence of notice and breach of natural justice was rejected.

Issue (ii): whether a director who resigned after the relevant previous year could still be proceeded against for the company's tax arrears.

Analysis: Liability under section 179 attaches to every person who was a director at any time during the relevant previous year. Since the tax arrears related to the period when the petitioner was admittedly a director, resignation later did not extinguish the statutory liability once recovery from the company had failed.

Conclusion: The petitioner remained liable despite resignation, and this contention failed.

Issue (iii): whether pendency of the company's revision petition barred recovery from the petitioner.

Analysis: Mere filing or pendency of a revision petition does not operate as an automatic stay on recovery. In the absence of a stay order, the department was entitled to proceed with recovery of the admitted tax dues.

Conclusion: The pendency of the revision petition did not recovery, and this contention was rejected.

Issue (iv): whether attachment of salary offended section 60 of the Code of Civil Procedure, 1908.

Analysis: The recovery direction was clarified to operate subject to the exempted portion of salary under section 60, and the record negatived the claim that the entire salary was impermissibly attached.

Conclusion: The salary-attachment objection under section 60 of the Code of Civil Procedure, 1908 was not accepted.

Final Conclusion: The writ petition challenging recovery from the petitioner's salary was without merit and failed in full.

Ratio Decidendi: A director who was on the board during the relevant previous year remains jointly and severally liable under section 179 for the company's unpaid tax arrears once recovery from the company is unsuccessful, and recovery is not stayed merely because a revision petition is pending.

---